Those Occasional Expenses

Bills that come in every month are predictable and easy to cope with. The ones that can throw us off are those that come in less often.

Insurance premiums, property tax, back-to-school, Christmas, and heating oil are predictable. But they fall outside the normal pattern of monthly payments. There are several ways to build up the money for these bills. You can use a Christmas club account for Christmas. You can also use it for anything due near the end of the year, such as property tax.

Another way is to divide the amount of the bill by the number of months between payments, such as six for a twice a year insurance bill. Subtract that amount from the check register each month. Then add it back when the bill comes, and write the check to pay it. If you have a separate savings account, you can actually move the money instead of just subtracting it in the check register.

For a while, I added up ALL of the irregular bills. I added an amount to save for a possible condo repair or car repair. I divided the total by twelve, and put that amount aside every month. With rare and minor exception, this method let me always have the money to pay each irregular bill as it came along. That year I bought a refrigerator, a wall air conditioner, and a (very cheap) used car, all for cash.

Some banks offer a program where each time you use your debit card, they transfer a dollar to your savings account. This can be an easy way to build up some savings. You do have to remember to subtract that extra dollar from the check register.

Staying ahead of this type of expense lets you avoid getting behind.


Those Predictable But Irregular Bills

Things like property tax, car registration, the half-yearly car insurance bill, holiday spending, vacations, big car repairs, replacing appliances are all things we know will happen. Because they don’t happen every month like rent/mortgage and utilities, it’s harder to plan for them.

Years ago I had a system for that. I added up all of those expenses for the year, divided by twelve, and put that much in a savings account each month. It worked very well. I never had to use credit to pay anything, and felt a certain financial serenity that was very nice.

An article in the Dollar Stretcher today informed me that that method is called a “sinking fund.” According to Dave Ramsey, this is different than an emergency fund. The items in the sinking fund aren’t unexpected emergencies, they are expected but irregular expenses.



Marie Brack is the author of Frugal Living for the 21st Century: Adventures in Using Your Money Wisely. It’s available on in both Kindle and paperback versions.