Hello! I thought I'd offer a response since no one else has... I've been teaching a financial class over the last few weeks, and one of the important lessons I've learned is that there is no perfect month. Every month is different, with different priorities, challenges and expenses. Therefore, I've learned that it is important to look at the finances every month, before I receive any money and spend every dollar "on paper," before the month even begins. Every dollar has a name--that's the exercise you're doing with the Monthly Spending Plan by assigning all of your income to buckets. So, I've started to have a monthly discussion with my wife about the finances--just 15 minutes or so, just to make sure were still on track and that I haven't overlooked any of the needs that are on the horizon. It also gives us a chance to reassess the previous month's spending pattern as well.
Regarding your concern about things popping up.... There will always be these things, and just like there is no perfect month, there is no perfect plan. Therefore, it might be a good idea to allocate a small portion toward a bucket called Miscellaneous or as one person puts it, Blow Money. This will allow for those unexpected trips to a fast food restaurant without ruining your plan. Of course, you'll want to keep this amount relatively small, consistent with your income, so that it's not a vacuum for money. Also, you'll want to build up an emergency fund. Initially, save for a $1,000 emergency fund. This will help keep you from having to go into debt to pay for bona fide emergencies. After you have this emergency fund, aggressively pay off your debt using a snowball- method, then, once you have everything paid off except your mortgage, come back and build up your emergency fund to 3-6 months of you expenses. The emergency fund will help keep emergencies from breaking your spending plan and to give your family some security, and give you freedom to change jobs or seek out new opportunities, if appropriate. That being said, it is important to have a bucket for everything. Now, you might have general buckets, like Recreation, which could include a whole bunch of things from eating out, to movies, vacations, etc. And Auto, which includes fuel, service, insurance, registration & property taxes. Though I might suggest including the car payment in your debt reduction bucket instead of Auto. If you don't have a bucket for everything, then you'll have some expenses that are outside of your plan, and you won't be able to do all that you want to do with your money. Regarding your specific question about day care. I'm assuming that since you say "reimbursed" that you have to front the money yourself for day care, and then your employer pays you back at a later date for the money that you spent. Based on this fact, and that you are not sure whether or not you will use the program as you receive your paycheck, I'd recommend that you allocate the average cost of daycare expenses in every paycheck you receive. The money will grow in the bucket paycheck to paycheck until you need it. Here's how it would work: Suppose that the 4-weeks of day care costs $1,000. Suppose also that you earn a paycheck every month for $5,000. Since you have to pay for day care approximately once every three months, set aside $335 every paycheck, then after your third paycheck, you'll have $1,005 saved up. At this point, you can turn off the allocation to your day care plan and put the money somewhere else. If you use day care, great! You have the money saved up in your checking account, and you can pay for the full cost. Then, when your employer reimburses you, make the deposit into your account and put it in your day care expense bucket. This money will just sit in that bucket until you need it next time. If you don't use day care, that works great, too! Just leave the money you have saved up until the next time that you do. You need to save the $335 initially to be sure that you have the money and you don't have to put day care on the credit card, however, once you have saved up for it once, since your employer reimburses you when you pay for daycare, you can use that $335 for some other purpose. Hope this is helpful! Grace to you, Blair On Feb 2, 2009, at 7:22 PM, lterenzi wrote: > > My daughter is in a year round school program. She goes for 9weeks and > is off for 3 to 4 year round. On some of those off weeks she goes to a > day camp. Can I create a bucket for this and just turn it on and off > as I need it? I never know what months we will use the camp until they > arrive. > > Now the second part is we get reimbursed the cost of this from our > Flexible Dependent Care through my wife's employer. Should I just > deposit them and slide them over to Savings, count them as income? > > This is my biggest issue (and it's mine NOT Moneywell's) There just > always seems to be little things that pop up that just don't fit > neatly into a bucket or things that we just pull from Savings from to > cover. Do I have to have a bucket for everything? > > Going back to watch videos and read articles again... I am gonna get > this dammit... > > --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "No Thirst Software User Forum" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/no-thirst-software?hl=en -~----------~----~----~----~------~----~------~--~---
