Get your mind out of the gutter. I am talking about cushioning your bank accounts!!!
Do you routinely leave a little extra in your account, for those just in case moment? Does the thought of a ZERO balance terrify you? Or do you drain your account to the bare bones, and let it all ride?
This has been a subject of discussion around our house lately. It started with our "extra" money in our checking account last week. If you remember, I had about $700 left in the account, with a week to go in the month. Very odd. Everything (minus one bill) was paid. I was sure that I screwed something up. I put $300 in our savings account as a "just in case" and left the $400 for the week for gas, groceries, co-pays, etc. And to date....we still have money in there!
We rarely have extra money in our checking account. RARELY. If anything, it is the opposite, where I might have to float some money from our savings account to our checking account for a few days until we get paid. So having a cushion was a treat.
Which brings us to our "savings" account. This account really is a joke. It has sort of been the "just in case I screw up our budget" account. We deposit $75 a paycheck in there, and in the ideal world, we would never touch it. But we do. MUCH less frequently than we used to, but sometimes (like I took money from there when I went to my mom's). Right now, it has about $650 in there (plus my $300 I am holding).
Before you get all wiggy on me about emergencies.....we have a separate account from a credit union that is our emergency fund. Per Dave Ramsey, you should have $1000 for emergency fund. Well, we have about $1450. And $23 gets added every month.
Our car payment is an auto debit, and we rounded up for the automatic deposit from G-man's pay. Hence, the weird number.
*We are weird......I know.
If you add all the cushions together, you have about $1300 this month....$1000 if you take out the beloved $300 from last week. Dave Ramsey would say take that and use it in your snowball. It isn't doing any good sitting in the account.
If used in the snowball....basically it would wipe out my Student Loan 1 that is the current snowball victim. It could also pay 1/3 of CC3 which is the highest current interest rate card (again, this isn't counting the $300 which is earmarked to pay off CC1, which is the actual highest rate card).
Part of me really wants to do it. Really. But I can't.
I am convinced that as soon as I do it, something will break with the car, or the house, or whatever. And then I will have to drain our real emergency account. And what if bad things keep happening and I can't build the emergency fund back up? Then we have no liquidity.
Should everything be budgeted for? Yep. Is it? Nope.
Like the cars. We do have a "car fund" for maintenance, repairs, etc. But it isn't enough and I know it. Right now it has $75, and we add $15 a paycheck. It isn't much, but it is more than we were doing. And it came in handy when I had to get new tires and we didn't have to put it on a CC. But if a major repair was needed....$75 won't get us far.
So what do you do? Do you leave a cushion in your account? Do you think I am silly and overanalyze this?