Tag Archives: Finances

I’m sinking

This week I want to talk about sinking funds. More specifically the way that I do my sinking fund. For those of you who do not know what a sinking fund is, it is when you take an expense that you know is coming and you break down the cost over a period of time. This could be for car registration/maintenance, Christmas gifts, an annual trip, whatever you want to break up. It is kind of like lay-a-way for expenses because you put money aside for the expense a little at a time. When the expense comes up, you have the money necessary without having to shell out a large amount from your income. People will place the money in a savings account, I’ve heard of people placing the money in envelopes, however you feel comfortable keeping the money making sure that you do not dip into those funds until the expense comes up.

When I first heard about this a few years ago, I thought this was the best thing and thought I wanted to do this. But the way my finances work, I couldn’t see how to do it. Recently, I decided to do a monthly sinking fund for three of my larger bills: car payment, PNC loan, and medical bill. These bills are the main largest bill that I have that I one bill be paying on a while (car and PNC loan) and two I want to get rid of soon (medical bill). As I stated in my last post I want to pay off that medical bill asap (November) so that I can free up that money for something else, so I’m paying an extra $100 monthly that will allow me to pay it off by the end of the year.

What I decided to do is take the payments for each bill and divide them by 4 and that is the amount that I place in an account so that when the payment is due I then transfer over/pay the bill without feeling the bite of the large payment.

So this is how it looks:

Telluride car payment: 679.14/4=169.785

I round this up to 170 and that little extra goes towards balance.

This makes the final payment equal to: 170 x 4=$680

I pay an extra $.86 each month.

Again, that’s not much, but over time it will be helpful.

The PNC loan is 289.03/4=72.2575

I round this up to $73. The amount that gets saved over the month is $292.

The medical bill with the extra $100 is: 229/4=57.25 that gets round up $58. The amount that gets saved over the month is $232.

The PNC loan and the medical bill both get saved in another bank account that I have and the total for the month for both of those bills is $524. The total that needs to be saved to make the payment is $518.03. I have an extra $5.97 each month that I have not applied towards anything yet, but I will do something with it later.

I have several bank accounts; I’ll talk about that in a later post; I keep the money that is for my PNC loan and medical bill in the PNC account. I am currently getting paid weekly, this will most likely change starting at the beginning of next year (God willing, and everything works out okay at my job). I transfer the money for the loan and medical bill weekly from my credit union to the bank. I get a deduction in my interest rate for my PNC loan if I have automatic payments on that loan and that was a quick arrangement with the payment coming from the same bank. I lucked out and got my car loan financed through my credit union, so that money gets transferred weekly into that account, no worries. It is really a relief that to be able to do things this way and I don’t feel stressed out when those payments are due.

So, that’s how I do my sinking funds. After I pay off my medical bill, I will add a new large balance bill to my sinking fund total. Are you a sinking fund fan? Let me know how you are doing your sinking fund or if you have found another way to make the payments without feeling the angst of making a large monthly payment. I’m working on some new inserts for my planner that I want to share with you guys in my next financial post. I think they are going to be really helpful for me, I’m curious to get your opinions. I’ve recently baked some really yummy things that I want to share with you guys, so I’m not sure if my next post will be about those or a continuation of finances. Let me know which you prefer. Until next time.

signature_thumb

Advertisements

Leave a comment

Filed under Finances

6 Month Check-in

I haven’t posted anything financial related lately. I know that I said I was going to do a 3 month check in with you guys to keep me accountable. I have not done that. Should I give my excuse now or forgo it and just say that I’ve done bad. I think I should give my excuse because it’s a good and valid one. First, I will say that the things that I said I was going to do to manage my finances, I did do. I make and maintain a monthly budget, I keep really good records of my spending, and I have been working to pay down my debt. We’ll call this my semi-annual check in.

Now what I haven’t done is completely stop using some of my lines of credit and I have not paid off that medical bill by my previous projection, of August. So let me tell you what happened – yes I’m going to the “See what had happened was” statement. But first….

Last week I created a debt payoff spreadsheet so that I can “see” when things will be done.

Debt payoff

I even figured out how to calculate the monthly interest that I will be charged so that I can accurately see the payoff.   You find out the APR, divide by 365, multiply that number by the end of the month balance, and multiply that by 30 (days in a month).  

Calculating APR

I went to the websites of each card so that I could find out what the interest rates of the cards were.

Interest Rates

I want to print this off and place it in my planner so that I can look at it and highlight the payments and confirm the next balances. I did not complete the payoff dates for all of the items, but I will; I wanted to see where I would be by the end of the year.

Ok, here’s my statement. What had happened was….there are three credit lines that I still have open that should have remained Paid Off when I paid them off at the end of last year – Old Navy, TJMaxx, and Zulily. These cards/credit lines are usually used around the holiday season and the beginning of the school year. Old Navy has jeans that Babydoll loves to where and they actually fit the backside of someone who has one (and we have them, not Nikki Minaj or Kim Kardashian level, but we are blessed). TJMaxx is probably one of my Babydolls favorite places besides Urban Outfitters and Zulily is my go-to when I’m looking for a great deal on shoes or things that help me organize my home and craft accessories. I paid off Old Navy right after I had bought Christmas gifts for everyone. It turns out that some things didn’t fit and they wanted to return them. When we went to return them, they decided that they wanted other items that ended up costing more than the originals. Then there was a sale on jeans – the jeans are $40 on sale, so I wasn’t missing that sale, hence the balance. This should be paid off in October. 

OldNavy

TJMaxx happened because my anniversary and Father’s day came up when I was in the midst of doggie foot crisis and most money was going towards that. I will make my last payment on in a few days in September. 

TJMaxx

And finally, Zulily had the foldable sewing table that I have been trying to find, the Cuisinart food processor that I needed to replace, and the organizational items that I have been using to organize my kitchen cabinets. All of these will be paid off by the end of the year.

Zulily

I thought I would be paying off my Clearbalance medical bill by the end of this month (August). My plan was to take the extra money from the student loan that I have a break from this year and put some in savings, a good chunk on the medical bill and then pay some extra on the student loan. I made that decision at the end of February so that I could start in March. I put it off a month because we went to Paris and I used that money to pay another bill. When we came home my doggie baby started having problems with her foot. The numerous doctor visits we went to trying to get her healthy ended up taking whatever extra money that I had as well as some that I charged. She had surgery the end of June (you can read about it here) and I started doubling up on the medical bills that same month. The new projected date for that payoff is now November.

Clearbalance

That’s only about 3 months longer, but that’s a little over $200 that I could be applying to something else.  $600 that I could use for something else; maybe that Nordstrom bill. 

A lot of people use the “every dollar” plan. I have looked at it and I had to be honest with myself and admit that I would not be able to stick with it. I thought about the envelope method. If there is a way that I can make electronic envelopes, then I would do it. But taking out cash and placing it in an envelope will not work for me. I use my bank card as a credit card as much as I can because I get a rebate when I use it that way and I use that money to get some Christmas gifts along with the money that I save using Ibotta. There is something that I started doing that has had some success for me recently that I will share with you in the next post because I’m feeling that this one is getting wordy and I don’t want to bore you. Think sinking fund but with a twist.

If you have suggestions, I would love to hear them. If you would like to send words of encouragement, I will gladly take those as well.  Until next time when I will be discussing my “sinking fund”.

signature_thumb

Leave a comment

Filed under Finances