I love writing the word "CRUSHING". It is such a strong word. It also describes just how it felt when my budget used to encounter a huge non-monthly expense like Christmas!
We would not save a dime all year for Christmas and then realize on December 1st that it was probably time to start saving for it! The December budget would be CRUSHED so that we could pay cash for Christmas presents and avoid debt. I would feel like a snake who just ate an antelope. I would lay around saying, "I can't believe our budget ate the whole Christmas bill."
It was NOT fun!
Well, I found out how to eliminate these budget-CRUSHERS! Ready for the answer? Here it is. PLAN for them and save toward them monthly.
Look at the example below. There are four budget-crushing non-monthly expenses for this family. If they save $358 every single month, the money will be there when it is needed! Yes, it will tighten up the budget on a month-to-month basis, but it sure smooths it out too! The budget-crushing months filled with ramen noodles can be banished forever!
If you have a mortgage with an escrow account, think about it this way. Do you ever worry about paying for your property taxes or homeowner's insurance? Why? Because they collect the taxes and insurance from you on a monthly basis! That way, there is no concern that the taxes and insurance will be paid on time.
The day that Jenn and I started to do this was the day that our budget became a whole lot easier to stick to!
I have created a Monthly Escrow Account Form (Excel) that you can fill in to develop your own escrow account! It is located in the TOOLS page along with a number of other very useful items!
Hm, your art reminds me of the snake from The Little Prince. Was that intentional?
http://photos.ronamber.com/Images/France1999/ElephantInSnake.jpg
So…I assume this money just goes in to one savings account. What’s the best way to keep track of that one lump amount in savings and how much of that is Christmas money, etc?
Joe, I have been taking your course at my church for 5 wks now and just listened to your save $1000 now webinar. I am a dog groomer and needed to order supplies, so, I looked up retailmenot and got a %10 off code for my supplies. My bill went from $278.09 to $250.28. I am thrilled to have your help and suggestions. BTW, I have saved up over $500 so far in 5 weeks!
God Bless and keep up the great work!
Shirley