Comments on: Sinking Funds: taking Budgeting to the Next Level

By: The cool kids are calling them “Sinking Funds” « Stay at Home Mom CFO – one mom, one income, too many issues…

Thu, 18 Feb 2010 17:51:05 +0000

[...] Fiscal Geek: Sinking Funds: taking Budgeting to the Next Level [...]

By: You Need a Budget 3 Software Review - Under the Hood

You Need a Budget 3 Software Review - Under the Hood — Wed, 10 Feb 2010 21:13:38 +0000

[...] feature that most other finance programs have missed. This can be called variable categories or sinking funds. This is when you have traded your budgeting white belt in for your yellow belt. Now you are saving [...]

By: threadbndr

threadbndr — Tue, 27 Oct 2009 20:42:33 +0000

I actually use both a sinking fund (in my high yield checking account) AND an escrow account (in a MM account that is linked to my checking).

The difference is that I use the escrow for those intermittent expenses for which I have known date and pretty good idea of the $ amount. Taxes, auto registration, insurance that has quarterly or semi annual payments – things like that. I’m planning to add funds to cover the insurance deductibles to this account, too. These funds are committed and therefore untouchable.

The sinking funds are for the ‘it’s coming, but who knows when or where’ things – auto repairs, vet bills (a part of these probably should be in the escrow for Mol’s yearly shots, but I’m not complicating this THAT much), gifts, major clothing purchases. If I dip into this fund, I do try to replenish, but like the OP – it’s also my overdraft/overbudget cushion. I track on a budget spreadsheet that I wrote for myself.

I like EoW’s idea to add a line item for ‘electronics replacement’. Or I could just add more funds to the ‘appliance replacement’ and retitle it ‘household/office replacements’. That’s a hole in my budget that I hadn’t thought about. thanks!

By: Quicken 2010 Software Review - Under the Hood

Quicken 2010 Software Review - Under the Hood — Wed, 14 Oct 2009 17:33:06 +0000

[...] generic spending limits but not really a comprehensive planning product nor an easy way to maintain variable expenses or sinking funds from month to month. With 2010 they might have actually done it. On the planning Tab under [...]

By: Evolution Of Wealth

Evolution Of Wealth — Sun, 27 Sep 2009 20:13:10 +0000

I think you bring up a great point of unexpected expenses. It is important to account for those. One thing I think is forgotten is technological change. Things today are changing so fast that it can be expensive to keep up. Whether it be your computer, tv, Blue Ray, video games or anything electronic. It might be something worth accounting for in your budget. .-= Evolution Of Wealth´s last blog ..A Penny For Your Thoughts"¦ =-.

By: This Week’s Financial Blog Reading » JoeTaxpayer

This Week’s Financial Blog Reading » JoeTaxpayer — Sun, 27 Sep 2009 12:03:59 +0000

[...] Geek wrote about Sinking Funds: taking Budgeting to the Next Level. An interesting way to view how you budget and prepare for certain expenses. When my wife and I [...]

By: Kevin@OutOfYourRut

Kevin@OutOfYourRut — Tue, 22 Sep 2009 17:00:21 +0000

Sinking Fund? Wow–I haven’t heard that term since my college accounting courses! Adding it to a personal budget is a great extension of the concept.

Usually, they were backward looking, to retire a debt, but it makes sense to set it up in anticipation of know expenses. A retirement account is a sinking fund of sorts.

Personally, to keep it simple, I like having one big sinking fund based on predictable monthly expenses. I know there’s a lot going around about $1000 emergency funds, but I prefer to measure them in months, not dollars. You can never know which expense category the next crisis will hit, so it’s best to be prepared in the most general sense.

By: paul

paul — Mon, 21 Sep 2009 19:54:14 +0000

You totally could stock it in an emergency fund but as Ashley pointed out it’s much harder to track your expenditures that way. My credit union pays me a great rate on our checking account so there’s not really a downside to keeping that buffer in one account. It’s a more formal approach saying that I know I will have to do car maintenance and rather than that being an emergency I will plan and budget for the eventuality. The emergency fund would then be relegated to helping with a job loss or a car accident. It’s not a given that I will get in a car wreck, but maintenance is assured.

By: Ashley

Ashley — Mon, 21 Sep 2009 17:16:51 +0000

I too like having subcategories for my savings. Craig the best way I can describe the benefit is that its like having an online envelope system. When the money in a certain subcategory is gone you're more likely to find a way to spend only that amount of money to get what you need. For me it's a mental barrier to keeping my spending within a certain amount. .-= Ashley´s last blog ..Credit Report for Richest and Poorest Neighborhoods in America =-.

By: Craig

Craig — Mon, 21 Sep 2009 16:00:07 +0000

I understand that they may be more variable expenses, but why not stock that money in the emergency fund? Seems like it is. When I had trouble I went into my emergency/vacation fund to pay it off. Been trying to put a little bit away each month but don’t have separate accounts set up for individual issues like car, just keep it all together.