Friday, November 14, 2008

Non-monthly Expenses

Are you familiar with the quote "people don't plan to fail, they fail to plan?" I find this quote to be very true in so many aspects of life, including our finances.

Many of us have expenses/bills that we pay on a non-monthly basis. I remember when those expenses used to be "emergencies" for me. Yeah, right! They were emergencies that could have been avoided so I ask you, were they really emergencies? Not at all, I failed to plan so consequently I planned to fail.

Since failure does not look good on me, I had to take a different course of action. Today I have a dedicated checking account for non-monthly expenses. Each month I deposit $210 into this account. Most of the costs are known but there is one that is unknown, car repairs. I drive a 10 year old car so I can reasonably assume that there could be maintenance costs above and beyond oil changes and tire rotations. If the car maintenance is more than the accumulated balance, I can tap my "car fund." My car fund is in a designated savings account. This is where I save money for the sole purpose of purchasing my next car in cash - that's right, no more car payments for me!

It took some time for me to get my system in place. What used to be an emergency soon become an inconvenience; what used to be an inconvenience is now just business as usual. For example, when I had to pay $590 in October for my annual car insurance premium, I didn't even notice the payment. How do you handle your non-monthly expenses?

**If you can't read the picture's legend, U is unknown but probable. Also, "frequency" is how often I pay the expense, "amount" is the total amount on an annual basis and "allocation" is the monthly amount deposited into the designated checking account. The only exception is Trash, which is $54 quarterly. For some reason I didn't annualize the payment in the "amount" column (which would have been $216, i.e. $54 * 4)...perhaps I need to update my spreadsheet. Nonetheless, the allocation amount is correct at $18.


Sandy said...

Great blog. I love the design. Thanks for visiting mine.

Ms. MoneyChat said...

Thanks Sandy! I look forward to visiting your blog often.

Budgets are Sexy said...

that's a freakin' GREAT way to do it :) A nice little budget for your non-monthlies - i love it!

if only others would do something similar...

Katharine said...

That's great advice. My spouse and I have always treated these like you said. We've made other bad judgments and are trying to get our finances under control because they have been controling us.

Thanks for the great tip!