One of the tips I've picked up from reading all the blogs here is the idea of an Escrow account for expenses that aren't on a monthly basis. I think I first saw this on Creditcardfree's blog, but I remember reading about this idea on other people's blogs as well.
These non-monthly expenses are a real problem for me, because I forget about them until they are due. Then I have to find $500 for the car insurance, and since it's not an expense I am expecting, it has to come from money that was meant for savings. I think if I tucked this money away in a separate account every month, then I would have it when I needed it, and I would actually spend less in the previous months because the Escrow money wouldn't be available to spend on something else. So I'm going to give it a try, starting in April.
One question, though -- since I'm jumping into an Escrow account mid-way between all of these expenses, should I try to put extra in now so that I have the full amount available when the big bill comes due, or should I just put away the monthly amount for now, and pay the extra out of savings the first time the bill comes due? Does this question even make sense?
Setting up an Escrow Account?
March 29th, 2009 at 03:01 pm
March 29th, 2009 at 04:07 pm 1238342833
March 29th, 2009 at 04:46 pm 1238345180
March 29th, 2009 at 05:06 pm 1238346409
March 29th, 2009 at 05:07 pm 1238346477
March 29th, 2009 at 07:01 pm 1238353264
March 29th, 2009 at 10:38 pm 1238366328
However, if you just start the monthly payments and then you are short for an expense, simply add money from your current budget, or apply to a credit card. Look for ways to find extra dollars to start getting this account to the balance it needs to be. Rebates, coins, aluminum cans, garage sale, ebay and craigslist sales are all great places to start.
March 30th, 2009 at 02:46 am 1238381166
March 30th, 2009 at 03:10 am 1238382643
It would be good to get the money in a high interest bearing account. The interest adds up. I have found that I have been able to take advantage of 3 and 6 month CD's because of the different funds that I have in this account.
Once you set it up and fund it monthly, you will love it.
March 30th, 2009 at 04:34 am 1238387684
As for your question, do the best you can knowing that you will be short for the first year. Start the allotment and make up the rest from your budget, savings, etc. whatever you would normally use to pay the expenses. I keep the money in an interest bearing account and keep the interest in the account b/c for some expenses you may come up short even with the account depending on when the expense is due. But at least you will have some of the money saved up. Good luck. You'll love it.
March 30th, 2009 at 04:56 am 1238389016
I've always had an "escrow" account of sorts. I can't imagine life without one.
March 30th, 2009 at 05:07 am 1238389643