When to start Sinking Funds?

[adavant]

I have done "sinking funds" before in my budget for those once a year / blue moon items. HOwever, we've creeped back into more debt, used up our emergency fund and are pretty much back at baby step #1. So, I'm wondering when do we start sinking funds?

[mauimagic]

Can only give you my unprofessional opinion, but since those bills will be coming up if you do or if you don't - you might as well start them right away.

[Grainlady]

You obviously realize the value of that pool of money. As mauimagic pointed out, those bills WILL come, so it's time to get pro-active NOW.

1. Sell something.

2. Reduce expenses as much as possible.

-cancel or cut cable TV

-cancel or change cell phones (get a TracFone instead of a monthly bill and drastically reduce use - I pay $100 a YEAR for a TracFone and never use all the minutes - which roll-over)

-slash the food budget - avoid eating out and cook simple, inexpensive meals from scratch

-make sure you aren't getting money back from the IRS each year - increase your deductions if necessary

-stop contributions to a 401 or IRA account/s until you get caught up

3. Find a source for additional income, even if it's temporary.

4. Put those annual or bi-annual bills in your budget to begin with and contribute to covering the cost each pay-day. Divide the amount by 12 and make sure you place that amount in the envelope to cover the cost, so when it comes due you have it covered. You shouldn't be covering these bills with your emergency fund - they are a budget item.

5. We used to cover these kinds of items by having a certain amount taken out of hubby's pay check each pay day and put into a special savings account.

6. I build my Emergency/Christmas account by saving all my $1 bills and putting them into the Emergency/Christmas account once a month. I manage to save at least $500, and as much as $1,000 each year. I also save $240 each year by cutting my own hair. I budget $20/month for a hair cut and put it into the savings account. "Found" money is also added to this account. Found money is gift money, the money we got from selling metal and aluminum cans we "harvest" from walking the ditches, rebates, money from a garage sale, etc.

Good luck getting back on track...

[mombottoo]

I'd start asap. If you wait you will run into an unexpected expense and not be prepared for it. We all get off track every now & then, getting back on track is the 1st step to winning the battle.

[adavant]

I agree there is no better time than the present to get back on track. My question is, "where do I start?"

How do I know what amounts to put in my "sinking funds"?

What is the best way to keep up with them?

Thanks!

[Luckybustert]

I agree there is no better time than the present to get back on track. My question is, "where do I start?"

How do I know what amounts to put in my "sinking funds"?

What is the best way to keep up with them?

Thanks!

I think the amounts depend upon what you're saving for and when you expect to incur the expense. I've found the best way for me to keep up with them is to have automatic deductions from my paychecks put into savings accounts. And for me, preferably savings accounts that are difficult for me to access.

[adavant]

Thanks, I'm going to give it a try.