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Unexpected expenses

February 9th, 2014 at 07:03 am

Hello everyone
This past week has not be the best. I am still reworking my budget due to things I forgot. Mostly insurance and items related to my two teen girls. I did not know my oldest daughter would order her class ring this year. I thought they did the in 11th grade. She is a sophomore. Her deposit is due on Wed. My youngest daughter needs a new dress so I spent $50 yesterday for that. I am paying for all the insurance and girls expenses out of my budget. That leaves no money to pay extra on debit. I will just be able to make all payments. While I am feeling down and out, I now know how crucial sinking funds can be. I have a few questions:
1. What do you have sinking funds for? I need one for insurance, clothes, school stuff. What am I missing?
2. Where do you keep your sinking funds? A separate account?

Thanks for any advice. I am not giving up. I am determined to have one debit paid off by the end of the year. I am just getting a slow start.

15 Responses to “Unexpected expenses”

  1. creditcardfree Says:

    My daughter is a Junior and rings were pushed on them last year. She wasn't really keen on the designs. We said we would just buy her a ring she liked later. So far we haven't made the purchase, but she has reminded me a couple times.

    Our escrow/sinking fund only includes Christmas, auto insurance and auto registrations. I have kept the funds separate, but right now they happen to be in our checking account. I keep track of the balance of those funds in a spreadsheet, so I don't spend that money.

  2. creditcardfree Says:

    I actually would suggest a slush fund for the things that are hard to predict. It's not your emergency fund, but excess money that you know will get spent. At one time I kept ours around $500. I don't really keep as close track of this anymore, but when you are really working on paying off debt I think it is helpful.

  3. Riverbendgirl Says:

    Thank you so much. A slush fund is a great idea. I am going to start on that as soon as possible. I need to work on my sinking funds immediately.

  4. MonkeyMama Says:

    I don't keep it separate, but keep enough in savings to cover all the slush stuff. (I do track the amounts separately. I currently have minus $1,000 in my sinking fund, but it should work out to $0 by end of year. The negative is okay because is just offset by my other savings funds. Not that this works best for someone with less cash).

    We save monthly for all of our insurances, car registration, medical and dental, school lunch, car repairs, etc. For miscellaneous, last year we spent on concerts, passports, replacing broken electronics, vet bills, smaller home repairs, and after-school activities. For anything we don't know, we just try to estimate. Larger expenses have to come out of more long-term savings. 2013 was kind of crazy. 2012 slush fund misc. was anniversary dinner, activities, anniversary gift for parents, kids birthday, emergency room, software. Just to show how different our spending is every year. 2012 was more "fun" stuff. 2013 was a lot more Murphy type spending. {This is basically where I put absolutely everything that is not a regular monthly bill}.

    In addition to the fairly predictable (insurance bills), we set aside $750 per vehicle annually for maintenance, and about $200 per month for the misc. items I mentioned. Just keep tracking and adjusting until you figure out what works for you.

  5. Joan.of.the.Arch Says:

    I think getting class rings early is a good idea. If kids get them in junior or senior year, they will usually get less wear out of them, as most seem to stop wearing them shortly after they are graduated. I guess it comes to feel like "kid stuff" once they are in the world of college and work.

  6. MonkeyMama Says:

    P.S. 11th grader can not earn own money to pay for wants like a ring?? I don't know your whole situation, but this jumps out at me.

  7. Kiki Says:

    I don't think it is a slush fund or a sinking account. You have identified two areas that were not in your budget previously: insurance and your girls. Give them their own line items in your budget and allocate a savings goal for the insurance every month so you can pay the yearly in one payment and two line items, one for each daughter.

    Slush funds and sinking accounts really are for those expenses that pop up suddenly and without knowledge. And I think that after a year of tracking spnding no one should need those accounts because you should have everything identified. Keeping $1000 or so available for the true pop ups is one thing, not identifying potential expenses in your budget is another.

    I save money every month for the yearly expenses: auto and home insurance, gym renewal, car registration, vacations, gifts and celebrations. That way there are no "pop ups" in my budget.

  8. creditcardfree Says:

    @kiki, a sinking fund is NOT for unexpected items. It is for saving for those things you mentioned like insurance. Often for larger expenses like auto insurance that might really derail spending if not saved for ahead of time. A birthday gift generally doesn't derail a budget, or shouldn't. A slush fund is for pop ups because not everyone saves for every little line item. The slush fund itself sort of becomes a line item, if that makes sense.

    I had a class ring my parents purchased for me, I think my Junior year. I did wear it, but later they also bought be an emerald ring for my birthday. I still have the emerald and love it, but the class ring was cashed in when gold was peaking. It just didn't have any sentimental value.

  9. snafu Says:

    OK, a set back but it's important to keep moving forward. It's frustrating when there are unexpected expenses but managing money is a challenge and we do our best to stay on track. Name it escrow, sinking fund or what you wish but it's smart to have a sum set aside for unplanned expenses. When we had a community emergency evacuation several years ago, we discovered the hard way how important it was to have $ 100. cash We use the same sum for double function.

    in hope of being helpful...

    DDs need to understand it's your goal to clear debt as quickly as possible and how much you need them to co operate with your plan. Does DD 1 really want a HSch class ring or is she just swept up in the promo? It's often an item that's appreciated for only a few months and left to languish in a box for the next dozen years. Is it her plan to go to college or university? would she wear her ring there? I suggest she put some 'skin in the game' and contribute half the cost by doing chores for pay or baby sitting etc. Can your half the cost be her Birthday gift, paid forward?

  10. scfr Says:

    Oh gosh, I'm probably going to sound like an old crank, but if your daughter wants a class ring couldn't she pay for it herself? I never bought a class ring precisely because my mom told me that if I wanted one I'd have to pay for it myself and it didn't mean enough for me to pay for it with my own money. (If my mom had offered to pay, I probably would have gotten one and then worn it only until I graduated.) For a brief period of time in high school I felt sorry for myself for not having one, but I got over it quickly and have never once looked back wishing I had one.

    It was completely reasonable for my mom to prioritize keeping a roof over our heads and food on the table over a class ring.

  11. Looking Forward Says:

    Right now all my savings just goes into one account. I call it our EF, but it is for other things too. Just paid the yearly car insurance and DD's new glasses out of the account.
    My reasoning is in a true emergency I would clean out all savings accounts if I needed the cash anyway. Just like if I need an extra $100 to cover an annual bill I would get it from whatever account anyway. Maybe that isn't how others would do it. Maybe someday I might have multiple accounts if I have "plenty" of cash for it to make sense to me to do that.

  12. PNWMom Says:

    Neither one of my girls wanted a class ring...they didn't find them attractive at all and to me, once kids graduate, they are done with high school and ready to move on. Maybe you could save for a nice but inexpensive piece of jewelry for her high school graduation that she would likely wear for a lot longer.

  13. FrugalTexan75 Says:

    We didn't have class rings, but we did have a class keychain. That, and the class sweatshirt were the only things I got my senior year. I didn't go on the class trip - I couldn't afford it, and my parents certainly couldn't. (I paid for the keychain and sweatshirt.) How often is your DD really going to use/wear the ring? Is it really worth it? If so, then what is she willing to do/give up in order to get it?

  14. snafu Says:

    PS as CCF mentioned, would DD be happy with a birthstone ring instead, it's a piece of jewelry she can enjoy forever as opposed to a short term high school ring that will quickly morph into clutter.

  15. danielhermann Says:

    Tough luck! First and foremost, you should prepare a budget and try to ensure that it is complete and correct. Then track your actual expenditure against your budget. Secondly you should explain to your kids that money is tight and you need to reduce debt and therefore a maximum of two splurges per annum are going to be allowed and they ought to prioritise them. Put a cap on these figures. Cut costs whereever possible. Put everything you are able to save into a separate account. Use it to pay off your loans.

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