Wednesday, May 28, 2014

{Rainy Day Funds}

I know, I said I would keep my money posts to my Money Matters Page. But I figured this is my blog - I'll do whatever I want! Y'all know I roll that way - don't be surprised!

Some might think this falls under YNAB's second rule - Save for a rainy day. I don't though, and here's why: I consider Rule 2 more like "I know it's coming, let me get ready for it now." For me that's things like vehicle tags, membership dues, Amazon Prime - whatever. These are things I know are going to happen, and I need to be ready to pay for them when they show up. Other YNABers (yes, that's what we call ourselves) may think of it in a different way. That's kind of the beauty of the program.

I think of RDF's more of Rule 3 - Roll with the punches. We've had lots of punches around here, so we have lots of categories for these "will happen but when?" things. Here are some of ours: vacation, emergency fund, house stuff, car stuff, school supplies, and on and on; altogether we have 19 of these suckers. And no, I don't think that's too many. Think about it - we recently had a hailstorm. We had friends who had a garage window broken and another that had her windshield broken. Now imagine both those things happened to you. If that happened to us we'd have to have about $1,500 before repairs could even start on anything (homeowners insurance and auto insurance X2). These are the funds I'm talking about here people.

But it's hard to put money towards that many categories every.single.month. I mean, if you want to put more than a buck twenty in each one, and for a while that's what I did. We got nowhere fast and had to shift money around all the time when we needed something for the van (or house) and didn't have enough budgeted. LED lights are pricey folks (but way worth it)!

So after all this blah blahing up there I'm going to share what we've done with our RDF's. It's working much better than the 'give money to every category' way. I split my categories into two groups - those that must be funded every month (emergency fund, hunting, school supplies, medical) and those that get funded on a rotating basis (vacation, clothes, home and auto insurance deductibles). This way we can put more into the five categories I've chosen for the month so if something happens, we don't have to steal quite as much from somewhere else. Right now I'm focusing on Gifts, Vacation, and New Bed! The other two change from month to month. Once our big run of birthdays, graduations, anniversary's, etc are over that one will get cycled normally. Vacation isn't losing focus until we have enough to spend 10 days in Holland, sharing Erik's history with Zach. New bed will be a priority until we have a new bed. I'm not talking about just the mattress here either. I want it all new!

So if you have a bunch of money stashed in savings for those "whatever" moments, think about giving them jobs. That way you know what you're working for (Holland, an in ground pool, a motorcycle) and you don't spend that money twice!

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