Comments on: Sinking Fund Eases Strain Of Annual Expenses http://frugaldad.com/2009/03/21/sinking-fund-eases-strain-of-annual-expenses/ Tips for living frugal while still having a life Fri, 20 Nov 2009 21:33:01 -0600 http://wordpress.org/?v=2.8.5 hourly 1 By: YYC27 http://frugaldad.com/2009/03/21/sinking-fund-eases-strain-of-annual-expenses/comment-page-1/#comment-28630 YYC27 Fri, 17 Jul 2009 16:15:16 +0000 http://frugaldad.com/?p=2048#comment-28630 This is a great post for people who have troubles budgetting for those big annual expenses. I do something similar. I don't have a separate account for it, though. I just keep track of it all in an excel spreadsheet. Every paycheck is allocated to various budgetted spending categories, or set aside for expected bills. As I spend the money, it's deducted from the allocated ammounts. I make sure my allocations always balance out with my account ballances. It's a pretty anal system, really, but the accounting student inside me loves it .. heh. I also find budgeting for things bi-weekly, as paychecks come in, keeps me honest during those two three-paycheck months a year. Instead of blowing the third paycheck on beer and popcorn, my regular ammounts for bills, etc., are still allocated out. This is a great post for people who have troubles budgetting for those big annual expenses.

I do something similar. I don’t have a separate account for it, though. I just keep track of it all in an excel spreadsheet. Every paycheck is allocated to various budgetted spending categories, or set aside for expected bills. As I spend the money, it’s deducted from the allocated ammounts. I make sure my allocations always balance out with my account ballances. It’s a pretty anal system, really, but the accounting student inside me loves it .. heh.

I also find budgeting for things bi-weekly, as paychecks come in, keeps me honest during those two three-paycheck months a year. Instead of blowing the third paycheck on beer and popcorn, my regular ammounts for bills, etc., are still allocated out.

]]> By: Rajeev Singh http://frugaldad.com/2009/03/21/sinking-fund-eases-strain-of-annual-expenses/comment-page-1/#comment-24792 Rajeev Singh Wed, 20 May 2009 19:42:22 +0000 http://frugaldad.com/?p=2048#comment-24792 Sinking fund is very similar to teh depreciation fund being used by large corporates. It works on the same principle of saving regularly for replacing the high ticket purchase item like machinery etc. It is an important concept in accountinga nd works very well. Sinking fund is very similar to teh depreciation fund being used by large corporates. It works on the same principle of saving regularly for replacing the high ticket purchase item like machinery etc. It is an important concept in accountinga nd works very well.

]]> By: Final Review of My Mvelopes Trial (a.k.a. Finicity) | Fiscal Fizzle http://frugaldad.com/2009/03/21/sinking-fund-eases-strain-of-annual-expenses/comment-page-1/#comment-21619 Final Review of My Mvelopes Trial (a.k.a. Finicity) | Fiscal Fizzle Mon, 30 Mar 2009 18:13:28 +0000 http://frugaldad.com/?p=2048#comment-21619 [...] also easy to plan for irregular or unexpected expenses with sinking funds. We’ve set up envelopes for each of our irregular expenses, including insurance, health, and [...] [...] also easy to plan for irregular or unexpected expenses with sinking funds. We’ve set up envelopes for each of our irregular expenses, including insurance, health, and [...]

]]> By: Self Employment Tax Lessons Learned | Frugal Dad http://frugaldad.com/2009/03/21/sinking-fund-eases-strain-of-annual-expenses/comment-page-1/#comment-21593 Self Employment Tax Lessons Learned | Frugal Dad Mon, 30 Mar 2009 10:01:36 +0000 http://frugaldad.com/?p=2048#comment-21593 [...] things a bit, I set aside 30% of my self employment income (freelance writing, ad sales, etc.) in a sinking fund at a designated online checking account.  When the time comes to make quarterly estimates, I [...] [...] things a bit, I set aside 30% of my self employment income (freelance writing, ad sales, etc.) in a sinking fund at a designated online checking account.  When the time comes to make quarterly estimates, I [...]

]]> By: DavidK http://frugaldad.com/2009/03/21/sinking-fund-eases-strain-of-annual-expenses/comment-page-1/#comment-20992 DavidK Mon, 23 Mar 2009 13:42:26 +0000 http://frugaldad.com/?p=2048#comment-20992 <i>"Note, I’ve changed the amounts to keep you guessing..."</i> Haha, yea you did change those values. You don't take vacations any more FrugalDad. :-) “Note, I’ve changed the amounts to keep you guessing…”

Haha, yea you did change those values. You don’t take vacations any more FrugalDad. :-)

]]> By: Frugal Dad http://frugaldad.com/2009/03/21/sinking-fund-eases-strain-of-annual-expenses/comment-page-1/#comment-20861 Frugal Dad Sat, 21 Mar 2009 23:49:12 +0000 http://frugaldad.com/?p=2048#comment-20861 @Jimmy: Though I didn't mention it in the post, your example of estimated taxes is another great use for sinking funds. I siphon off a percentage of my online earnings into this account to pay quarterly estimates on top of my regular earnings. I was not as good about this last year and it's making April look quite painful this year!

@Jimmy: Though I didn’t mention it in the post, your example of estimated taxes is another great use for sinking funds. I siphon off a percentage of my online earnings into this account to pay quarterly estimates on top of my regular earnings. I was not as good about this last year and it’s making April look quite painful this year!

]]> By: Jimmy http://frugaldad.com/2009/03/21/sinking-fund-eases-strain-of-annual-expenses/comment-page-1/#comment-20853 Jimmy Sat, 21 Mar 2009 20:34:46 +0000 http://frugaldad.com/?p=2048#comment-20853 Just when I thought I knew just about everything there was to know regarding personal finance... This post is absolutely GOLDEN. The sinking fund would have helped me tremendously as I'm now looking at a $400 withdrawal from my checking account next week to cover my federal taxes. Just when I thought I knew just about everything there was to know regarding personal finance… This post is absolutely GOLDEN. The sinking fund would have helped me tremendously as I’m now looking at a $400 withdrawal from my checking account next week to cover my federal taxes.

]]> By: Steven@HundredGoals.com http://frugaldad.com/2009/03/21/sinking-fund-eases-strain-of-annual-expenses/comment-page-1/#comment-20843 Steven@HundredGoals.com Sat, 21 Mar 2009 15:56:59 +0000 http://frugaldad.com/?p=2048#comment-20843 I do the exact same thing with my auto insurance premiums (though they seem to keep going up, making it harder to estimate need) and it works well. I don't even notice the small amount of money missing from my paycheck, and when the time comes to pay the bill, if I'm a little short I can just move some money around to cover the balance. That hurts a lot less than having to come up with a lump sum payment. I do the exact same thing with my auto insurance premiums (though they seem to keep going up, making it harder to estimate need) and it works well. I don’t even notice the small amount of money missing from my paycheck, and when the time comes to pay the bill, if I’m a little short I can just move some money around to cover the balance. That hurts a lot less than having to come up with a lump sum payment.

]]> By: Christy http://frugaldad.com/2009/03/21/sinking-fund-eases-strain-of-annual-expenses/comment-page-1/#comment-20841 Christy Sat, 21 Mar 2009 15:39:09 +0000 http://frugaldad.com/?p=2048#comment-20841 I'm curious why it is called "sinking" fund? 'Cuz you're sinking money away? I do this with my vacation, property taxes, car repairs, car insurance and other annual/irregular bills. And I divvy the interest on the account up between the various categories for a buffer. My reward is that if I have extra $ left over in that category when the bill is paid, I get to keep half. :) The other half stays in that category for the following year in case of a price hike or something. I’m curious why it is called “sinking” fund? ‘Cuz you’re sinking money away?

I do this with my vacation, property taxes, car repairs, car insurance and other annual/irregular bills. And I divvy the interest on the account up between the various categories for a buffer. My reward is that if I have extra $ left over in that category when the bill is paid, I get to keep half. :) The other half stays in that category for the following year in case of a price hike or something.

]]> By: Do You Dave Ramsey? http://frugaldad.com/2009/03/21/sinking-fund-eases-strain-of-annual-expenses/comment-page-1/#comment-20836 Do You Dave Ramsey? Sat, 21 Mar 2009 14:52:47 +0000 http://frugaldad.com/?p=2048#comment-20836 Good write-up Jason and I like the use of the 'sinking fund' terminology. I call this a "known annual expenses" category in my tools and I have a Cash Account Management tool designed specifically to allow allocation, accumulation, and management of multiple objectives in a single account. (these tools are free on my site) I beleive this type of discipline and rigor are MUST HAVES if someone is to truly win with their money. Thanks for sharing! Dave Good write-up Jason and I like the use of the ’sinking fund’ terminology.

I call this a “known annual expenses” category in my tools and I have a Cash Account Management tool designed specifically to allow allocation, accumulation, and management of multiple objectives in a single account. (these tools are free on my site)

I beleive this type of discipline and rigor are MUST HAVES if someone is to truly win with their money.

Thanks for sharing!
Dave

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