Savings Categories
Feb. 1st, 2007 11:12 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
livingdebOnce upon a time I had student loans. I owed $50/month on each of four loans. I paid an extra $50/month toward my loan with the highest interest rate. Once that was paid off, I took the $100 I'd been budgeting for that loan and paid it toward my loan with the second highest interest. I continued this method until my loans were paid off.
One could argue that this was stupid since the interest rates were rather low and I should have been saving toward retirement or something instead. Oh, well, too late now.
When I paid off the last loan, I started saving that $250/month toward a car. When I got a car, I split that $250 into a fund for car upkeep (gas, taxes, insurance, repairs) and a fund of savings for a house. By "fund," I mean imaginary envelope. All the money was in the same place.
Since then I have continued adding and switching categories. Now I have the following categories:
* next car ($50/month)
* car expenses ($106/month)
* house expenses ($133/month)
* home renovations (ideally $208/month based on 2% of my house value per year; currently $100/month)
* medical ($42/month in my medical savings account for predictable expenditures, $58/month additional money)
* long-term fun (vacations, furniture, computers, and other big things; $212/month)
* lending (under consideration)
* charity ($242/month)
* other ($195/month or whatever's leftover)
* various retirement stuff
I haven't made any changes since I got this house ten years ago except to increase the categories for inflation and raises until this past few months (when I separated out home renovations, medical, and now possibly lending).
It looks like I'm saving a lot, eh? But I'm saving it all to spend. It does all get spent (except, so far, the retirement stuff). Sometimes a category will go negative, but that's okay so long as the total is still positive. It's much cheaper to give this sort of loan to myself than to get one from a credit card company or other for-profit lender.
It strikes me though that if a category has been negative for over a year, it might be time to re-evaluate that part of my budget, don't you think? Based on data over the last two and a half years (the time during which I've owned my current car), my current car is costing me half again as much to maintain as my last car. That is mostly due to needing more repairs, not to increases in gas prices. Annoying, but really, who can complain about a car whose total cost is $156/month ($206 if you include the purchase price, i.e., the amount I save each month for buying my next car). That's less than most car payments.
I'm hoping that "other" category can go toward early retirement, but right now it's negative. That's partly because that category equals the amount in all my savings vehicles minus the amount officially saved in the other categories, and some of my savings are in stocks, which are volatile. Most of the negativity is probably from underestimating my spending on stuff like food and fun and thus not actually saving enough. I'm re-evaluating these factors now.
In fact, it's time for a major overhaul.
One could argue that this was stupid since the interest rates were rather low and I should have been saving toward retirement or something instead. Oh, well, too late now.
When I paid off the last loan, I started saving that $250/month toward a car. When I got a car, I split that $250 into a fund for car upkeep (gas, taxes, insurance, repairs) and a fund of savings for a house. By "fund," I mean imaginary envelope. All the money was in the same place.
Since then I have continued adding and switching categories. Now I have the following categories:
* next car ($50/month)
* car expenses ($106/month)
* house expenses ($133/month)
* home renovations (ideally $208/month based on 2% of my house value per year; currently $100/month)
* medical ($42/month in my medical savings account for predictable expenditures, $58/month additional money)
* long-term fun (vacations, furniture, computers, and other big things; $212/month)
* lending (under consideration)
* charity ($242/month)
* other ($195/month or whatever's leftover)
* various retirement stuff
I haven't made any changes since I got this house ten years ago except to increase the categories for inflation and raises until this past few months (when I separated out home renovations, medical, and now possibly lending).
It looks like I'm saving a lot, eh? But I'm saving it all to spend. It does all get spent (except, so far, the retirement stuff). Sometimes a category will go negative, but that's okay so long as the total is still positive. It's much cheaper to give this sort of loan to myself than to get one from a credit card company or other for-profit lender.
It strikes me though that if a category has been negative for over a year, it might be time to re-evaluate that part of my budget, don't you think? Based on data over the last two and a half years (the time during which I've owned my current car), my current car is costing me half again as much to maintain as my last car. That is mostly due to needing more repairs, not to increases in gas prices. Annoying, but really, who can complain about a car whose total cost is $156/month ($206 if you include the purchase price, i.e., the amount I save each month for buying my next car). That's less than most car payments.
I'm hoping that "other" category can go toward early retirement, but right now it's negative. That's partly because that category equals the amount in all my savings vehicles minus the amount officially saved in the other categories, and some of my savings are in stocks, which are volatile. Most of the negativity is probably from underestimating my spending on stuff like food and fun and thus not actually saving enough. I'm re-evaluating these factors now.
In fact, it's time for a major overhaul.