Long Term Bills

I said in my last entry that I would talk about what I call long-term bills.  This isn't a new concept.  I've seen the idea called sinking fund, or a freedom fund.  All it really amounts to is taking bills that are substantial, due regularly, but infrequently, and putting a bit aside every month or every payday.  You may not see much point in it at first, when you think of the things that you could use that money for.  But a day will come when you are very glad that you did.  Today is one of those days for me.

August is one of those tight months for us.  Our car tags are up for renewal.  And the semi-annual car insurance bill is also due.  I spent just over $500 on Wednesday just on stuff to keep my car legal.  Before, this would have been a source of major stress and probably would have meant hitting the emergency fund.  But this morning when I sat down to pay the credit card, all I had to do was to move the money from the Long-Term Bill account to the CC Payment account.  Each month, the car tags end up being about $17.50 and the insurance about $60 (plus another $20 for the other car's insurance).  It's so much easier to put a little aside each month than to try to scramble up the money all at once.

I have several things that I use this technique with.  In addition to tags and insurance, I save a little for Christmas/Birthdays/other gift giving occasions each month.  I also have a couple of expensive hobbies.  Both tend to require large purchases during specific times of the year and it's very nice to have a fund when I need it because I set aside $20-40 a month during the off-season.  Psychologically, it's nice to have that money earmarked because I don't feel guilty about spending it on its intended purpose.