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Saver's remorse?

September 26th, 2006 at 12:27 am

I'm waiting for my Emigrant Direct account to be set up. In the meantime, I'm wondering if this sort of saving for a large ticket item is prudent at this juncture. It was one thing when potential childcare opportunities were sporatic but now I've got one set in stone and some of the sporatic are potentially more regular.

I'm wondering if I shouldn't either make it part of my Emergency Fund, the money I'm setting aside in Emigrant. Or if I should just use it to pay off debt. Basically, I'm looking at a guarenteed $100/mo (although don't know about the tax ramifications yet) plus potential for extra. Since it's guarenteed, I have a hard time saying I'm using it for something frivolous, like a bed.

Or perhaps...I should change it from Bed Fund to Necessity Fund. A good bed is a necessity but so are tires. I can stash the excess money away and just use it for whatever Necessity comes up. Like for example, I need two new tires. I was going to pull the money out of my Emergency Fund, but it's not really an Emergency more of a Necessity. At some point too, I imagine my car will give up the ghost. Once it does, I will only have my Emergency Fund to use for a downpayment. But if I have money in a Necessity fund, that could make things a little brighter.

For some reason I just feel with the sudden influx of extra money, that I'm being irresponsible to save for a Bed. But just for a general, all purpose 'larger items that are bound to come up' it seems to make more sense in my HeadSpace.

I think I need to think more on this.

I suppose the stupid mantra that's behind this all is a signature line I saw on the creditboards a while ago that states 'a penny saved is a penny not going towards paying off debt'. I realize the importance of some savings, which is why I'm working on building my EF, but in my head, anything more than that is frivilous.

But on the other hand, I like to have backups for my backups. For example, I know that I spend a little bit of money so I created a 'Personal' category in my budget and if I don't spend it all it goes into my savings when the next check arrives. But on top of that, I also try to give myself a cushion in my checking account of another $20. No reason, just mainly so it doesn't turn out that I get down to a whole $0.10 in my bank before the next check arrives.

I like the idea of an EF but I'm worried about potentially spending it for non-emergencies that seem like emergencies at the time.


2 Responses to “Saver's remorse?”

  1. Bookie Says:

    "A penny saved is a penny saved." It really doesn't matter whether you save it as an emergency fund, a necessity fund, or for a new bed. What matters is that you are making regular contributions. Later on you can decide what to do with the money. Later on things will likely be different.

    The nice thing about an on-line savings account is that it introduces an automatic time delay. You can't get at it immediately, so the temptation to spend is lessened. I like that cushion of time.

    Good luck. Smile

  2. Kris10leigh Says:

    If it were me, I would throw it all at debt. But that depends on what your payoff goal is. Our payoff goal is one year and I know I can do anything for just one year. So after that year, when we are debt free, THEN we will start saving for things like a bed.

    On the other hand, if you are taking a more realistic approach and have a goal of, let's say 5 years, I think what Bookie says is great. "A penny saved IS a penny saved." Just save it regularly for now and decide what to do with it later.

    You might consider a "freedom account." Add up al the expenses for things like new tires, taxes, and other non-regular "bills". Estimate how much you need for each and divide that by 12 months. This is the amount you should regularly fund this account with.

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