Yesrerday morning, the Mountain Man and I made some decisions. We’ve been working really hard for the past two years at saving money. First it was for our honeymoon, which was really fun to save for, because it was only months away, and required what we considered aggressive saving for a couple who hadn’t been saving at all.
We got back from our amazing honeymoon with cash to spare. We liked the savings momentum we’d built, so we decided to keep going. I find it hard to save without a goal, though, so our aggressive saving became a little passive. We decided to start thinking about buying a house, so re-invested in our savings for that goal.
Along the way our “emergency” fund became one and the same with our down-payment fund, which is less than ideal. We can’t look at the account and easily see what’s what, and we think we have more for a down payment than we really do.
Then we both (seriously – within two weeks of each other!) got laid off. Our saving came to a screeching halt as we were on one unemployment check for a few months. We handled it well though – we decided to move into the ‘burbs where we were able to get a favorable rental, instead of staying in our beloved neighborhood and burning through our savings just to pay rent. We maintained our savings and did not acquire debt, even while we were both unemployed for 5 months!
With our goal still to buy a house, but with the Mountain Man’s daily commute costing us hours of our lives each day, enjoyment of each other’s company and the Mountain Man’s time with the Pie, we’ve decided to move back to our beloved Seattle. For now we’ll rent, so that we can be very close to his work, and we’ll try to find a house to rent that will allow us to continue saving.
We also decided to finally break our ING accounts apart. We’d had the one “Emergency and Opportunity” account, which contained our emergency cushion, down-payment savings, and our desires for future vacations. I like cleanly divided funds, a clear separation of systems, so we split. We now have a fully funded (perhaps overly-funded) 6 month cushion of savings as the “Emergent-C” fund. Since we plan to rent for a year, the new “H0-Down” fund is small and a little sad looking, but we have time to rebuild. We also have a new “Vac-Op” account for vacations and opportunities that arise (like that cool new pyramid scheme I’ve had my eye on buying into) as well as a “Pie” account, a now-tiny fund that we’ll slowly grow so that there is some money when the Pie goes to school. She’ll likely have to take out loans, but this will at least help.
Alternatively, we could buy pies. I vote for huckleberry.
Most of the fun of opening these accounts, before the thrill of soaring totals can be felt, is naming them silly things. So we do.
Now our savings machine is built and better maintained. We’ve dusted off the cobwebs, oiled the joints, and made some improvements to make it more functional. Now saving will be easier, and accruals will be more immediately visible. I may even go back to withdrawing my weekly/monthly budgets. I think it’s a good idea to do it at the beginning, and then occasionally (if not all the time) just to make sure we’re on track. If I only use cash, I can’t over-spend. And if I save before I spend that makes it even easier.
In addition to our ING accounts, we have a liquid savings account tied to our checking. This is the truly truly emergency fund. It’s small, enough to cover a major car repair or something like that. Since transferring money from ING can take a few days, I think it’s important to have that super-liquid savings for the true immediate emergencies.
Now I just need to get back on track with my saving procedures. I’ve let them fall by the wayside a bit, letting money pool in our checking account, which has quite low interest and isn’t doing anyone any good. As soon as either of us get paid, I had a little ritual for moving money around. I looked at what was left before we got paid, and transferred it into what was then our one savings account. Now it will go into the Ho-Down, since the Emergent-C is fully funded.
We then take the income, and make sure that the liquid emergency fund is full. We take out money for retirement, the Pie’s monthly savings payment, and pay off any credit balance that has accrued. Usually it’s just the car insurance payment or a few books that I snuck in there…
Everything will change again when we get into a rental in the city. We will have to pay more rent, our utilities will likely increase. But our expenses for transportation should sharply decline, and our quality of life should dramatically improve. It’s a trade-off. We are choosing to improve our lives and save a little less in order to live a daily life that’s fulfilling, while working toward our goals. That is, if we can find something we can afford.
Our saving machine will slow a little, but it is better organized. And we now know for sure that we have a 6-month cushion, which we will hopefully never have to fall back on. We can separate the “fun” saving like vacations from the “goal” savings like a down-payment and the “critical” savings like emergency and retirement.
We are lucky to carry no debt other than a student loan, and that came from a few years of (me) aggressively paying my debt down before we met. I absolutely advocate for building a one-month emergency fund while paying minimums, then attacking the debt, and then re-directing all the aggressive debt-reduction money into the emergency fund, then goals-related funds.
Saving can be really hard when I want to buy something shiny or new or with lots of buttons. Or books. But I have to keep my goal in mind. And although seeing the one big chunk of money is nice, I can now visit my ING account and see exactly where we stand with each goal. I can assess our progress and re-commit to our goals. And maybe gain the strength to pass up that One More Book.