Just as an update, so far the schedule is working great for the weekdays! I’m not hitting everything on time (yet) but I’m getting a lot more accomplished each day, including getting to the gym after work everyday, and having study time. My focus on each task continues to improve as well. Will continue through the next week, and hopefully more time can be found in the day!
On the emergency fund front, in general, we haven’t really developed a category for expenses that come up infrequently, but consistently, nor have we developed much of an emergency fund.
Now, definitions of emergency funds can differ dramatically depending on budgeting philosophy. For two examples on the opposite ends of the spectrum, see Dave Ramsey’s take (3-6 months of expenses saved in a liquid account) vs. Mr. Money Mustache’s (rely on springy debt, allow the rest to grow as investments). We have frankly been sitting, unplanned, between the two extremes. At any given point we have between $1,000 and $2,000 in a Vandguard ETF, and we generally spend down our accounts each week. This is no longer working as a strategy for us, because expenses come up, and invariably, we have to scramble to cover them.
What we have decided on moving forward, is that we are going to put $170 per month away, to cover consistent, but infrequent expenses, normally consisting of the following:
- Car repairs (oil changes, new tires, things generally falling off or blowing up. In general, probably like $50 every quarter for oil for two cars, and another like $500? for random other stuff)
- Professional licensing fees ($600 per year for bar license, about $100 every two years for nursing license, $100 per year per bar association)
- Car registration fees ($250 for two cars)
This means that we need to sock away AT LEAST $1,800 per year. $170 times 12 months gets us to $2,040, so there’s a little space for unexpected expenses, without putting away massive amounts of money to get eaten up by inflation. Once we hit that goal, the $170 per month can be diverted into the investment account, until we need to start refilling the savings.
Other emergencies (surgery, car completely dies and someone needs to rent a car for a week, unemployment) can be stuck on the credit cards until we can move money around to pay it off, hopefully within the same month. With the Fidelity account, we should be gathering enough money (at $100 per month, $1,200 per year) to make a dent if something big comes up.
The idea is that we will have a little bit of liquid cash to take care of the uncommon expenses, but the majority of our savings will be somewhere it can (hopefully!) earn a bit of interest.