Expecting the Unexpected

**snshijuptr** · 08-18-2010, 02:50 PM

I do have multiple savings accounts, and one is for what I call "Annuals" (insurance, registration, annual bills) and another I call "Frivolous" (holidays, vacations, fun stuff). Still I don't have any debt, and if I did, I don't think I would have a Frivolous account. Why are you taking vacations when you have so much debt?

**MonkeyMama** · 08-18-2010, 02:58 PM

Agreed.

I have a "short term savings" account for any non-regular/non-monthly bills. I actually put a hefty amount aside every month. By the end of the year the balance should be $0. I just kind of guage it at the end of the year. But, for me, includes property taxes, all of our insurances (billed once a year), vacations, car repairs, and just the little stuff that always seems to come up - school supplies and clothing, etc., etc. Definitely not an all-inclusive list - I left out much.

On top of that, I have "mid term" savings for larger and less regular expenses. Car replacement and home maintenance are the biggies. I put away about $5k per year.

Having ample savings is the key to avoiding surprises. Clearly there is nothing "unexpected" about any of the items discussed in the thread. (I presume that is why you put it in quotes). Maybe, unpredictable is a better word. "Irregular" might be the best term.

A start would be to look back a year and add all that stuff up, to see how much you should be saving. Every time something new comes up, then you can tweak it.

**disneysteve** · 08-18-2010, 03:24 PM

Originally posted by RayMetz100 View Post

I've classified the other "unexpected" things so far as...

Kids Clothes / School / Camp fees
Car maintenance over $50 and replacement (my and my son's cars are both worth $1000 each)
Home repairs over $50
Vacation
Christmas

It seems like every month or two any remaining money in my budget gets spent on these. I could also get a $300 speeding ticket or something else not on the list.

As you have discovered, all of the things on your "unexpected" list are truly not unexpected. Every single one of those is totally predictable and should be planned for in your budget. You know the kids will need clothes. You know they will attend camp. You know cars and houses will need repairs.

Getting a speeding ticket is just plain stupid. That should never happen.

And spending $600 for Christmas when your budget is so tight is something you really should be reconsidering. How many people are you buying gifts for? If it is more than immediate family, consider agreeing not to exchange gifts with anyone else and limit the family gifts to a modest amount, like $50/person.

**irmanator** · 08-18-2010, 05:23 PM

When I first started coming here I thought ppl were not in reality when they suggested things like that. LOL How far I have come in adjusting my thought process. Thanks to the smart posters here. I started with putting $2 week in ing. When I got used to that I increased it(many more times). It became like a drug to see how much I could save with out depriving us. So to this poster start small if you have to and adjust it up as you get used to it. It is possible and not too painful. OMG the stress you DON'T have when the money is there waiting for you to need it. It is an incredible feeling.

**buildmybudget** · 08-18-2010, 06:29 PM

Originally posted by irmanator View Post

It became like a drug to see how much I could save with out depriving us.

Agreed, paying yourself first is one of the best feelings in the world! =)

**jpg7n16** · 08-18-2010, 10:12 PM

Please post income and itemized monthly expenses.

Also post % contributing to 401k.

I suspect either your income is too low, or your housing costs are too high.

ETA: Or if this is listed in another post, could someone link?

**Seeker** · 08-18-2010, 11:28 PM

jpg7n16,

The OP is going through a separation. Or rather, was? I'm not sure of anything at this point, except that his original (first) posting to this website is now a 5 page long string of "How do I talk with my wife?" Next posting is of a separation? And now this.

He's got a good income as I recall, and his wife has a decent income that she pretty much did her thing with and he did his thing with his income. They have/had a lot of debts and there is/was a lot of jealousy and money was used as a tool for each of them; especially the "extra" money. They never really shared common goals or ideas in their 17 years of marriage, and quite suddenly he tried to take control and organise everything financially, she resisted and so we're here now.

Frankly, I'm not sure what is being asked for here.... and even with the numbers in previous postings, I'm not sure anything any one of us suggests, has any bearing on what he can change or should change. His financial life is rather out of his entire realm of control I think; at least until someone actually comes forth and describes which of the debts he's to be responsible for, which she's to be responsible for, etc.

You can click on his name and link to his previous postings.... most of which are in that first long one.

**LuxLiving** · 08-19-2010, 04:00 AM

Not unexpected at all are they? Some of us like to stick our head in the sand and ignore these things. Then we can wail at the water cooler how bad we have it.

What you are talking about? I call it Anticipatory Budgeting. It works. Add these items to your budget as line items and give them an amount monthly, biweekly or weekly as your income dictates. I made them all automatic savings deposits w/online banking which takes a lot of the hassle out of it. Some folks are good at lumping it all together, but I prefer to KNOW when all the money for the replacement tires is in the hopper! When I can pop off and buy new furnishings w/o blowing everything else out of the water. We KNOW brakes & alternators & roofs, hot water heaters and such will need to be replaced at some point, so start putting aside for these things. I also know I have to plan for driver's license renewals, batteries being replaced, oil changes, etc., etc., etc., etc., etc., etc., etc., ETC., ETC., ETC.!!!!! We have a general car repair fund and separate ones for tires & oil changes. When they get to that ***DING DING DING*** moment when they've reached a certain $amount? It can be like the clothes dryer bell going off - a reminder that these things need doing.

At first like the other poster said it can seem like an impossible task to get money put back for all these anticipated events, but it is doable over time. Start small if you have to, but do get ahead of the events and your financial life will never be the same!

Now a few years later some of ours have been scaled back from individual line items to a "Household Slush Fund" and it's a bigger pot that has a lot of $$s in it now, w/ one big monthly 'set aside', but at first I had to have a line item for each to get it through my thick skull that these weren't surprise events at all.

Line items come and go, but getting the mind around the fact that the budgeting process should be in constant tweak mode instead of a once and done? It's a good thing! At least it was for us.

Good luck w/your budgeting! Go forth & conquer!!!

**wincrasher** · 08-19-2010, 05:19 AM

I think instead of multiple accounts (and their fees, minimums and statements) to deal with, you could do it all with just a ledger or a spreadsheet.

Just establish accounts on a ledger and track expenses out of each, but it draws from one account. Might be easier to reconcile each month as well.

You could do this using a tabbed spreadsheet or even in Quiken or some other program.

**jpg7n16** · 08-19-2010, 06:34 AM

Originally posted by Seeker View Post

He's got a good income as I recall, and his wife has a decent income that she pretty much did her thing with and he did his thing with his income.

...

You can click on his name and link to his previous postings.... most of which are in that first long one.

Thanks, that makes it so easy to search for the posts! I'll have to remember that.

Here's what I found in another thread that you posted Ray - I have already told you the main issue you're dealing with.

It isn't that you're struggling because of small expenses that pop up - it's because of the housing costs you have. The struggles with these small expenses only exist because of the housing stretch.

Seriously. If you move into a place with $1200/month rent, all these problems will go away, and you'll be able to get traction with your finances.

Originally posted by jpg7n16 View Post

Recommendation #1: Start with the largest expense, and move to the lowest when determining what can be reduced.

Are you feeding only yourself? Or a family still? I don't know if the food expense is out of line, though you should evaluate it.

This is what I'm getting:

Income: $5,954.83
$5,894.83 (paycheck)
$60 (monthly insurance reimbursement)

Expenses: $5,732.92
House............................................. ........$2,025.17 (1st) + 354.75 (2nd) = $2,379.92
Child Support........................................... ...$770
Pocket Money+Groceries, $120/wk..........$520
Gas, Ray............................................... ....$340.00
Church giving............................................ ..$300
ATT Wireless.......................................... .....$200.00
Negative Cashflow Rental, Darrington.......$140.00
Credit Card, American Express........$134.00
Credit Card, Citibank #1...............................$132.00
Auto Insurance, MetLife.............................$109.00
Kids Clothes Camp savings............................$100.00 (this should be separated into clothing/vacation)
Counseling........................................ ............$90
Utility, Electricity, PUD...................................$77.00
HairOilClothesGifts ...........................................$70.00
Utility, Water + Sewer.......................................$60.00
Utility, Gas, PSE..............................................$ 52.00
Credit Card, Citibank #2.....................................$52.00
Auto Savings, target $1000.................................$50.00
Utility, Garbage........................................... ......$42.00
Savings, Kids, Chris+Kayla..................................$40.0 0
Internet, Comcast........................................... ...$30.00
Vacation Savings, target $300.............................$25.00
Savings, Kids, Shaun........................................$20.0 0

Remaining: $221.91

Things that I note:
The items I have listed in blue are all key problem areas of your budget with a potential to be reduced.

The items I have listed in red are all associated with consumer debt (and I'd like to put your mortgage, and rental in red also)

The items in orange would be better used in eliminating your large debt burden. (Like Jim pointed out)

Using the negative cashflow from your property, your total amount of expenses/month related to debt is $2837.92 (your house payment is only around due to the debt owed on the home). W/o the 1st mortgage, it's still $812.75.

Action steps:
***Sell home, move into a cheaper place.***
Reconsider cell phone contract (may not be able to if need full plan for work, but likely can reduce)
Address the cashflow issue with the rental (lower debt owed, refi to lower payment, increase rent, sell property)
Stop discretionary savings, and put it toward debt elimination.

If at all possible, lower the home costs! This has potential to save you substantial money. With the cash that frees up, attack your consumer debt. When the debt is gone, you'll have a great amount of cashflow to save and give to your children like you'd really like to.

**LuxLiving** · 08-19-2010, 07:01 AM

Yep wincrasher that works for a lot of folks. Ehh, I'm not into spreadsheets, and Emigrant & ING both have no fees associated w/multiple subaccounts. As I've gotten better at remembering that these aren't unexpecteds at all? and keeping up w/at what $ amount each of those should be allocated each month? I've gone to lesser sub- accounts. But FOR ME at first? I had to have them lined out very separately and put away separately. Other folks w/differing brainsets can do it that lump sum way easily off the top. I had to go around the long way and get it deeply cemented into the fuzzy brainwaves that these aren't maybes or possiblys. "The unexpected happens Mrs.Frugalis on a quite regular basis & this 'surprise' of which I keep stumbling over??? it's because I've been too much of a dullard to take note!!!"

Now I KNOW deep in my little pea-brain that come what may (antiquing or eating out op shows up) I've GOT TO put back $5.16 a month or I'm not going to have the money when time comes around for the tags on the vehicle to be renewed.

You quick studies just carry on doing the frugaloo and let the slow waltz girl catch up w/you later!

**RayMetz100** · 08-19-2010, 10:26 AM

A realtor got back to me and it looks like to sell my house, I'd have to borrow $20k before listing it and possibly another $20 if an offer came in. Saving $1300/month on housing expenses afterwards would take me about 2 years to pay that off. If my easier budget allowed me to spend half that savings on other things and interest, it would be 4 years before I broke even.

I think I'm going to keep my house and it's high expense. I'm considering renting out a room or floor of it. If I could clear $700/month that way, then the breakeven between selling becomes 4-8 years. Last time I expected 5% market growth I was dead wrong, but like in gambling even though you rarely hit the expectation, you still expect and plan with it when considering your future and short term history has little to no impact on the future expectation.

There is also a 25%-50% chance that my wife will move back with her income in the next 1-2 years.

At this point, I'd need more than a 10% pay cut to consider selling my house. Thanks for the comments. I will continue working my 5 new budget catagories.

**bjl584** · 08-19-2010, 12:03 PM

This could be as simple as starting an Emergency Fund. That way you can pay for life's unexpected costs without having to run up credit cards.

**wincrasher** · 08-19-2010, 12:13 PM

You know, a room-mate or two is not a bad idea. Sure you could find a couple of guys in similar circumstance and rent out some rooms. There certainly is no shortage of women throwing their husbands out of the house!

You get the benefit of the income and you get to watch over your place and protect it's value.

You might get lucky and your real estate market in your area improve in a few years.

Good luck!

Expecting the Unexpected