Some time ago Jeff at Delivery Away Debt wrote about sinking fund accounts describing them as such, “A sinking fund can best be described as a pool of money that is set aside to cover future payments. Think of it as a piggy bank that you put money into and when the time comes you get to smash the little piggy and use the money you’ve been saving.” I’ve used sinking fund accounts for my entire adult life, but I never knew there was actually a name for such a thing.
Amanda from Frugal Confessions commented to my post Tough Times at the Accountability Household asking if we were prepared for income taxes for my husband’s business and also she complimented us by saying, “You’ve done a great job at setting aside money for your other large expenses–so congrats to you!” Thank you, Amanda for the nice compliment. Your comment got me to thinking about the expenses we do save for, and I thought I would take the time to share with you exactly what we save money for each month and why.
- AAA. $16/month. The tow radius is 200 miles, and we can have up to four tows each year. This offers peace of mind if I am stranded, or if my husband or son is stranded, help is a phone call away.
- Tires for our main car. $75/month. $900 each year. I am the only one driving my vehicle, and I put from 1200 to 1400 miles on each month. This means I need tires once every two years. I will continue to save this amount as the price of tires may increase. We are careful with our tire maintenance so we get the most out of our tires.
- Auto emissions and tabs. $13/month. $150 annually.
- Electricity. $320/month For years I paid a set amount to the electricity company each month to build up an extra amount to cover the summer cooling costs. Mr. Accountability thought it would be a better idea to set aside the money ourselves, instead of letting the electricity company hold onto our money.
- Gifts and Christmas Fund. $50/month.
- Auto Insurance: $105/month
The amount that we currently save each month for upcoming expenses: $579
The year before I started this blog, we did not have money set aside for anything, and we had to go into deeper credit card debt when the auto insurance came due, or when we needed tires for our vehicles.
This makes me happy to see that we are making progress like this.
Do you keep sinking funds? Did you know that’s what they were called?