Curious about some of you who are budget minded here....

[DawnM]

Particularly DR type followers.

We have been very intentional with our budget.....YNAB has "every dollar is assigned a job" idea, which I like.

However, it seems that every single month lately we have something come up that isn't in the budget and wasn't planned.

Do you have a "unspecified" category?

For example:

May- $300 medical expenses due to insurance changing coverage
April- Car broke down, about $400 in repairs
March- Major storm caused about $500 in damage due to tree falling
February- $350 in airfare due to father's unexpected surgery
January- $200 for unexpected eye glasses replacement

I realize none of these is huge, but they weren't planned and none has EVER happened before, so it isn't like they were expected to happen.

Where/How do you categorize these?

Just curious. Before this year, we rarely had any of these come up and now this year for some reason, they have hit hard.

Thanks,

Daw

 

[dtauer]

These are all emergencies which come out of your 1 - $2,000 emergency fund. This is the key as these emergencies should not affect your budget.

Once you cover them, you cut back to bare minimums again on paying back your debt and build back the emergency fund.

Once the emergency fund is back, you start budgeting extra again to paying off debt.

I don't agree with all of the DR teachings, but I think this is a great one. Too many times these emergencies come up, it's tough to cover them out of the budget, frustration sets in, and you never make progress.

All of the items would have been covered by your emergency fund and would not have impacted your budget.

 

[Marionnette]

Particularly DR type followers.

We have been very intentional with our budget.....YNAB has "every dollar is assigned a job" idea, which I like.

However, it seems that every single month lately we have something come up that isn't in the budget and wasn't planned.

Do you have a "unspecified" category?

For example:

May- $300 medical expenses due to insurance changing coverage
April- Car broke down, about $400 in repairs
March- Major storm caused about $500 in damage due to tree falling
February- $350 in airfare due to father's unexpected surgery
January- $200 for unexpected eye glasses replacement

I realize none of these is huge, but they weren't planned and none has EVER happened before, so it isn't like they were expected to happen.

Where/How do you categorize these?

Just curious. Before this year, we rarely had any of these come up and now this year for some reason, they have hit hard.

Thanks,

Daw

Yep. All of those get paid from the emergency fund. That's why it's important to build it up after you pay down your debts. $1000 doesn't go very far when there seems to be something almost every month to whittle away at it.

 

[DawnM]

I think our problem is this: we have adequate emergency savings but we somehow have this mindset that we don't want to touch it unless it is a REALLY big emergency! Which I have no idea what that would even mean!

So, instead, we squeeze it into our budget from other places and try to make it fit/work, which is indeed frustrating.

Dawn

These are all emergencies which come out of your 1 - $2,000 emergency fund. This is the key as these emergencies should not affect your budget.

Once you cover them, you cut back to bare minimums again on paying back your debt and build back the emergency fund.

Once the emergency fund is back, you start budgeting extra again to paying off debt.

I don't agree with all of the DR teachings, but I think this is a great one. Too many times these emergencies come up, it's tough to cover them out of the budget, frustration sets in, and you never make progress.

All of the items would have been covered by your emergency fund and would not have impacted your budget.

 

[DaniB]

I think our problem is this: we have adequate emergency savings but we somehow have this mindset that we don't want to touch it unless it is a REALLY big emergency! Which I have no idea what that would even mean!

So, instead, we squeeze it into our budget from other places and try to make it fit/work, which is indeed frustrating.

You know... looking at my budget spreadsheet, I think this is what we have been doing as well! However our emergency fund isn't over $1,000 yet. I'm going to have to look at restructuring our allocations in the budget. But not yet... another paycheque and we'll have our Visa paid off!

 

[StitchandPooh'sMom]

I think our problem is this: we have adequate emergency savings but we somehow have this mindset that we don't want to touch it unless it is a REALLY big emergency! Which I have no idea what that would even mean!

So, instead, we squeeze it into our budget from other places and try to make it fit/work, which is indeed frustrating.

Dawn

We do the same thing, sort of. We have an emergency fund for catastrophic things like a layoff - it is never touched, thank goodness. We also have a vacation/unexpected expenses fund that we will take from if we really need to. But mainly, we plan the budget so we have a couple of hundred dollar cushion each month so we can cover smaller (under $500) emergencies and other unexpected expenses. We are not budgeted to the dollar - we just have a set amount that we budget for each category, with some left over from our income.

 

[dtauer]

I think the missing piece is that there are really 2 emergency funds.

The first is for short term emergencies, just enough (1-2,000) that the setbacks you are referring to are covered without having it impact your budget.

The second is 6 months living expenses and it sounds like this is the emergency fund you are referring to.

If you follow the DR plan, you build the first emergency fund to keep emergencies from impacting your budget. The second fund is created after you have your debt paid off.

Since you already have your full emergency fund, maybe it would help conceptually to take a thousand or two out of the fund and call it your short term emergency fund. The bigger emergency fund would then only be touched for those "REALLY big emergencies".

 

[2disneyboys]

I think our problem is this: we have adequate emergency savings but we somehow have this mindset that we don't want to touch it unless it is a REALLY big emergency! Which I have no idea what that would even mean!

So, instead, we squeeze it into our budget from other places and try to make it fit/work, which is indeed frustrating.

Dawn

LOL this is us.. since we got BS#1 done and moved onto BS#2, and now BS#3, we have had some of the most random things happen!!! crazy... over the past 6 months, we have paid out about $1600 in "unexpected" expenses...and we have somehow squeezed that out of our budget, not out of the emergency fund... its like once it's there, we dont' want to touch it!!

 

[bettymae1121]

Well, this only works if you have room in your budget, but you could try to have an "oh poop" line item. If nothing happens to make you say "oh poop" that month it can just roll over to the next month (if your "oh poop" amount is $100 and in May nothing happens, then in June you'll have $200, $100 from May that didn't get spent then $100 more for June). This would cover unplanned expenses that you just can't forsee but don't exactly rate as "emergencies" either. I generally leave this in my regular checking account rather than keep it in savings, that way it's just there when I need I need it. It hasn't happend yet, but if I ever had enough "poop" free months where I had a lot of "poop" money sitting there, I could always either transfer some of it to savings or spend it on a treat. But since something always seems to pop up every other month, it gets used before I get to an amount that I'd want to transfer/spend it.

It's probably not the way the experts would recomend one do it, but it works for us!

 

[MrsPete]

I think the missing piece is that there are really 2 emergency funds.

The first is for short term emergencies, just enough (1-2,000) that the setbacks you are referring to are covered without having it impact your budget.

The second is 6 months living expenses and it sounds like this is the emergency fund you are referring to.

This is how we handle things, though I don't consider them both "emergency funds":

I consider one the untouchable emergency fund; literally, in 21 years of marriage, it's only been touched to move it from one bank to another. We aren't actively adding to this one because it's in a place with an awful interest rate, BUT we keep it there because it's 100% available at a moment's notice, and because it allows us to know that our checking account will never go so low that we'll pay a fee.

I consider the second account my short-term savings. When lightening struck the TV, I bought a new one from short-term savings. When we bought a car, the money came out of short-term savings. When we go on a big vacation, the money comes out of short-term savings. When our oldest starts college next year, we'll dip into this account for tuition and other expenses.

 

[ilovemk76]

We are not DR followers.

We have a MISC catagory. If we buy something out of the norm it goes there.

See below for your specific expenses.

Particularly DR type followers.

We have been very intentional with our budget.....YNAB has "every dollar is assigned a job" idea, which I like.

However, it seems that every single month lately we have something come up that isn't in the budget and wasn't planned.

Do you have a "unspecified" category?

For example:

May- $300 medical expenses due to insurance changing coverage - medical
April- Car broke down, about $400 in repairs- auto mantainance
March- Major storm caused about $500 in damage due to tree falling - house
February- $350 in airfare due to father's unexpected surgeryvacation or misc
January- $200 for unexpected eye glasses replacementmedical

I realize none of these is huge, but they weren't planned and none has EVER happened before, so it isn't like they were expected to happen.

Where/How do you categorize these?

Just curious. Before this year, we rarely had any of these come up and now this year for some reason, they have hit hard.

Thanks,

Daw

We put them in the category that they are under. That may result in us paying more than planned for that month but we are more interested about the yearly outlay.

 

[curly5]

We are the same....it comes from our emergency fund. We do more like 2K as our emergency fund cause it makes us...mainly me...feel better.
We have had things happen one after the other...not TRUE emergencies but inconvienences. Looking back I think we took a lot of it out of our monthly budget instead of our fund. I had the same mindset...it wasn't a REAAL emergency!
Take heart....it will pass and you can then focus on paying off debt. Now that's a great feeling to look forward to! We made it in March!

 

[bumbershoot]

All of the items would have been covered by your emergency fund and would not have impacted your budget.

I disagree that they wouldn't impact your budget. They might not impact it THIS month, when you're using your emergency fund, but they will impact it NEXT month, when you're paying the emergency fund back. (kinda like a no interest loan when you think of it that way, eek)


I give a name to all of the regular expenses. I let the rest of it just sit there in my interest-bearing checking account, until the end of the month. If we have an expense like the things you are mentioning, or even something smaller like dance recital expenses (this is DS's first recital and they did NOT tell us how much it was all going to cost by the time the recital came around!!!), etc etc, that gets taken from the "slush". But I keep an eye to holding on to AS MUCH of that as possible.

Once the next paycheck comes (we're paid on the last business day of each month, for the month before), then it gets used/saved/snowballed/whatever.


I just thought about it being too much like using credit, even if the credit was only inside my accounts, and I didn't like using emergency fund funds unless it's absolutely dire.

 

[JaymeC]

Yes, we budget for that stuff. It doesn't necessarily go under miscellaneous (though we do have a misc category). For example, the medical goes under medical as well as the glasses in our category. When we set our budget, we set it for the year. So we try to plan some for unexpected medical expenses and account some extra money per month for that (with two very active little boys... well needless to say we know to be prepared for extra medical expenses)

Similarly the car breaking down would be included in the monthly budget for car repairs. The airfare would go into our vacation budget (even though it's not much of a vacation!) And the $500 from the tree would fall under housing repairs/upkeep.

Every single month, whether we spend the money on those topics or not it gets put into our savings. Ie: You budget for $200/month for medical. Our premiums are only $100, so that extra $100 gets put into savings to cover the possible cost of extra medical expenses. Or you budget $50/month for car repairs, and put it into the savings in order to cover the cost of anything that may pop up. So in a way you may be 'borrowing' from one fund or the other if something comes up (a $500 medical expense in January), but then it's already budgeted to be paid back throughout the year.

You can also just save for an "uh-oh" fund and take from that fund as needed throughout the year. To me, that's not your emergency savings because it seems as if we have an emergency every 6-8 weeks in that case

I hope this makes sense, and good luck! It's always fun to really dig into the budgeting process.

 

[DawnM]

Oh, we are already out of debt other than the mortgage.

Dawn

We are the same....it comes from our emergency fund. We do more like 2K as our emergency fund cause it makes us...mainly me...feel better.
We have had things happen one after the other...not TRUE emergencies but inconvienences. Looking back I think we took a lot of it out of our monthly budget instead of our fund. I had the same mindset...it wasn't a REAAL emergency!
Take heart....it will pass and you can then focus on paying off debt. Now that's a great feeling to look forward to! We made it in March!

 

[DawnM]

May- $300 medical expenses due to insurance changing coverage - medical
April- Car broke down, about $400 in repairs- auto mantainance
March- Major storm caused about $500 in damage due to tree falling - house
February- $350 in airfare due to father's unexpected surgeryvacation or misc
January- $200 for unexpected eye glasses replacementmedical

My only problem with this is that we haven't had these expenses in only 6 years for any of the above. Now all of a sudden, they are there.....and probably won't come again for a long time for those particular needs/categories......I think it would be better for me to put them in a general fund and use them than to categorize them.

 

[DawnM]

I see......we do have several different funds, but they are all (in my mind) untouchable funds! I guess I need one that is touchable.

Dawn

I think the missing piece is that there are really 2 emergency funds.

The first is for short term emergencies, just enough (1-2,000) that the setbacks you are referring to are covered without having it impact your budget.

The second is 6 months living expenses and it sounds like this is the emergency fund you are referring to.

If you follow the DR plan, you build the first emergency fund to keep emergencies from impacting your budget. The second fund is created after you have your debt paid off.

Since you already have your full emergency fund, maybe it would help conceptually to take a thousand or two out of the fund and call it your short term emergency fund. The bigger emergency fund would then only be touched for those "REALLY big emergencies".

 

[ilovemk76]

May- $300 medical expenses due to insurance changing coverage - medical
April- Car broke down, about $400 in repairs- auto mantainance
March- Major storm caused about $500 in damage due to tree falling - house
February- $350 in airfare due to father's unexpected surgeryvacation or misc
January- $200 for unexpected eye glasses replacementmedical

My only problem with this is that we haven't had these expenses in only 6 years for any of the above. Now all of a sudden, they are there.....and probably won't come again for a long time for those particular needs/categories......I think it would be better for me to put them in a general fund and use them than to categorize them.

When I do our budget I add extra to these type of categories and try to account for unexpected cost or increases.

I do the same for insurance. Just because my auto was $500 this year does not mean it will be $500 next year. I add a small amount to each category each year.

This is how we do it but it might not work for you.

 

[Planogirl]

I like the idea of a smaller emergency fund. Right now we are dealing with senior year events and graduation and following a budget right now is like driving an obstacle course. We have all of that to contend with not to mention replacing a car's starter, looking at a severe window leak in the house and so on.

That smaller emergency fund can see you through days when everyone seems to have their hand out. You only run into issues when those emergencies start running into the $1000's. (Been there, done that.)

 

[crisi]

Have an emergency fund. Have an "unexpected events" fund. Treat the "unexpected events" fund like your emergency fund - refund it as quickly as possible when you take money out.

Sounds like you do, just rename it so you touch it.

Money doesn't do you any good if it isn't usable.