Need help in overcoming budget-busting expenses? You know the big ones – Christmas, the quarterly insurance premium, the annual property taxes, etc.
Here is a simple way to smooth out these large expenses.
In the example, you can see some certified, bona-fide budget-busting expenses. Wouldn't you agree with me that a $450 or a $950 hit in a single month's budget would BLOW UP a budget? ABSOLUTELY! To eliminate this peak-and-valley, feast-and-famine style of living, take the time to list out all of your KNOWN, UPCOMING expenses and their associated annual cost.
In the example above, the annual budget-busting expenses total up to $4,400 per year.
Divide this number by 12 months, and you arrive at $367/month. If you save $367 EVERY SINGLE MONTH, you WILL be able to absorb these budget-busting expenses without the huge headaches that you may currently be experiencing!
Don't believe me? Ask anyone with a Christmas fund or a home mortgage escrow account! These are really nothing more than budget-buster smoothing tools! Why? Because mortgage companies and businesses have realized that if the costs are not smoothed out and absorbed monthly, the chances are unlikely of you having enough cash on hand when the bill arrives otherwise.
Do I need to be saving for these expenses if I am not out of debt yet? Things like clothing, dues for memberships, and car taxes. We are using the tools that you teach and have reached the emergency fund and are now working on debt snowball. It is challenging but you can not argue with something that is clearly working.
I wish my property taxes were $450. I have to save $200 per month just to pay property taxes and insurance. We have to use escrow to do that.
Another benefit to not living large…. the smaller the house, the less taxes, insurance, maintenance… it all adds up and in the end, and takes time and resources away from both God and your family!
Thank you Joe for your teaching… you rock dude!
I totally agree with the Christmas fund thing .. my husband has had one at work for years now. Well he was out of work a lot in oct and nov so when the check came in we decided to catch up the bills and just buy a lil Christmas stuff each week for the 3 kiddos.. BIG BIG mistake! Christmas fund from now on is JUST THAT! We will NEVER make that mistake again. I love taking your advise bits and pieces here and there, that way the hubby is learning when we talk just not “taking a class” which he is against. 😉 ..
Thanks for sharing your personal stories and questions!
Until I started budgeting for the KNOWN, UPCOMING expenses, our budget was always being crunched when each bill came due!
Best of luck!
Could you post on HSA’s? Or a link to a really great website with good, reliable info on the HSA topic?
[…] So in this example, I would include a line item of $483 in my monthly budget for Known, Upcoming Non-monthly Expenses. This would allow me to bring a stop to the feast, famine lifestyle!!! Want to read more about planning for known, upcoming non-monthly expenses? Click HERE. […]