Back in early September, I talked about setting up personal escrow accounts to help me save for big expenses that come along every couple of months: car insurance, pest control, car service, ad valorem taxes on the cars, travel and a general emergency fund. Inspired by J.D.'s post at Get Rich Slowly, I added up all the expenses, divided into monthly amounts, and figured out where I could make room in each paycheck. The total amount right now isn't enough to completely cover each individual expense, but it's working a lot better than our previous method (ignoring things until they came due).
I didn't really get things set up until December, but am I ever on a roll now. It's like once the ING account was opened, saving and budgeting has become easier. Well, it's not really saving, more like delayed spending, but forward progress nonetheless. Subaccounts are my new, dear friend. Now that we have specific places to put money away for various things, both of us are finding it easier to try to come in under weekly budgeted amounts, so that we can put a little extra away beyond the standard escrow amounts. Only part to the extra is going to escrow, some goes to debt. All of it should go to debt in a perfect world, but in our world, we do the best we can.
Insurance
For most of September and October, all of this money went to actual car insurance payments, both of our policies are due within a month. This escrow category also went toward replenishing our savings account in November. We have less than 3 months until the first premium comes due, but we're making progress.
Pest Control
Haven't really made much progress on this front, despite the fact our termite bond payment is due at the beginning of April. It's only $300, so I'm planning to save that amount before it is due.
Car service/ad valorem taxes
We've only pulled $10 into this account, but we have until summer before the first bill is due. I'll need an oil change before then, so this category needs improvement.
Travel
this is one of the best motivators, we're planning our first non-essential trip* in April, and we already have a couple hundred dollars saved. I don't have a specific target, but I would like to at least save up enough to cover our lodging. I'm hoping to save enough to pay for the entire trip.
General emergency fund
Our new emergency fund online account is in addition to our joint savings and other various accounts that comprise our emergency fund. The money is a little spread out, and it's hardly an efficient system, but we have enough saved to focus energy on budgeting and planned spending. I received a bonus for opening the account, which is about all I have in there at the moment. Eventually I'd like to have at least 6 months expenses under general emergency fund. Such a long road to reach that amount.
* Pretty much all travel is non-essential, but for us, it's important that we be there for sick/injured relatives, wedding-related events of good friends and holidays with family. It's not like we can just put these events off until we have money, so we haven't taken a vacation that doesn't fall under the earlier categories since July 2005. We've made an executive decision to take an early 3rd anniversary trip at the end of April this year. We're both really excited and it has increased our motivation to live more frugally, in order to take this trip but to also live within our means, so it's a good thing.
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