Creating the plan

Now that I’ve set my goals for the year, it’s time to create a plan to reach them. In my experience, focusing on one goal at a time is the best way to go, because you get there faster, when all your resources are targeted in one direction – plus, it makes planning easier!

Having said that, I don’t know that we can hold out another full year, before buying a new couch – the one we have now has been broken for a while, and it may not hold up that long. We always get a tax refund, and it’s usually enough to cover the price of a new couch, so that’s what we’ll use our refund for this year. If it’s not enough, we’ll decide how to handle the purchase, based on how much we’re short.

In the meantime, all “extra” money, aside from bills & expenses will go into our job loss fund. Our budget is zero-based, which means we budget down to the last penny of our income. So if our bills & expenses add up to $1500 for the month, but our income is $2000, we’ll budget the remaining $500 for our job loss fund.

On top of that, I collect “snowflakes.” Some of our bills & expenses change – like groceries, electricity, etc. We know roughly how much we spend in a month, but sometimes it’s less, sometimes more. We budget high for each bill or expense. If our highest electric bill for the last 12 months is $168.50, our budget is $170 per month. This is a safety net, so we don’t have to find money elsewhere to cover the bill. But once the bills & expenses are covered, we often have a few bucks left over here and there, in various categories. For a long time, I’ve referred to this money as “snowflakes.” But I realize this is odd and makes no sense to a lot of people,  namely my mother-in-law, who’s questioning has made me change the term I use. I think it’s more clear to call it “virtual change” so now, I have a virtual change jar! It’s a category in my budget, where all the “change” from bills & expenses lands until the end of the month. At the end of the month, the entire amount goes to our highest priority, which right now is our job loss fund.

The virtual change is a nice boost, but we don’t depend on it, because we never know how much it’s going to be. So for the sake of planning, my calculations are based only on our monthly savings. I figure we can complete our job loss fund by October. If we dump in the virtual change jar each month, it should be sooner, but our goal is October – and it’s doable, based on the math.

If we aren’t able to fully fund a new couch with our tax refund, we’ll probably dump the virtual change jar into our new couch fund, until we can pay for it, then switch to the job loss fund. This will guarantee that both will be done this year, but our October target is not in jeopardy.

Since we’re throwing everything we have at the job loss fund this year, we won’t be saving monthly for Christmas, as we’ve done the past two years. This thought made me a bit nervous at first, until I realized that, once we’ve completed our job-loss fund in October, we’ll still have 2 months to save for Christmas. This is plenty of time, given the target amount of our Christmas fund and how much we can save in a month. So I’m at ease with that.

But what about our irregular expenses? Last year, we saved for those all year long – and saved enough to cover this year. But what about next year? If we’re not saving for those all year long, because we’re saving for the job loss fund, will we be able to handle those irregular expenses next year?

Yes!

Since we won’t be throwing all our “extra” money to saving for the job-loss fund, we can spare enough to cover most of the irregular expenses as they happen in any given month. The larger ones aren’t due until the end of the year, so we’ll have the entire year to save for them – and that will be one of our goals next year.

In addition, we’ll be focusing on our car maintenance/next car fund. It’s on our list for 2021, and we’ll do what we can – after the job loss, couch and Christmas funds are complete, but it’s last on our list, because the job loss fund gives us more peace of mind. We already have a car maintenance fund – we just want to boost it and begin saving for our next car. And Christmas has a specific date, so we need to be prepared.

So now you know my goals for the year and my thought process for accomplishing them. The plan may change throughout the year and certainly, this isn’t the only way to do accomplish our goals, but it’s a solid plan and for now, we’re going for it! I love hearing new ideas, so if you’ve got some, share them with me: bobbi@centsablechat.com