Most of us subscribe to the "snowball" method for debt reduction.....you know, you throw all your extra money at one debt, then roll it into the next, and so forth and so forth.
But I started thinking about all my little piles of "savings." Am I doing myself a disservice by trying to save for everything by putting a little here and a little there? Or should I be taking that bulk amount and save for one thing at a time? And as a spin off...what about "free" money....like Swagbucks (more on this in a minute).
So here are my piles of money, and their balances as of this week, how much we add bi-weekly, and when the money is need:
Camp - $190; $15; Needs to be funded at $950 by June 15
G-man's birthday party - $42; $40; Needs to be funded at $800 by November 1, but may need sooner
Christmas - $32; $30; Needs to be funded $800 by November 15
Computer Fund - $230; $30; No due date but probably needs to be about $700
Between the 4 areas, it is $115 bi-weekly. What if I put $115 into ONE account, and once it was funded, then move on?? If I did this....here would be the dates the account would be "funded":
Camp - $190; Needs to be funded by June 15 -APRIL 18
G-man's birthday party - $42; Needs to be funded by November 1, but may need sooner - JULY 25
Christmas - $32; Needs to be funded by November 15 - OCTOBER 17
Computer Fund - $230; No due date - DECEMBER 26
HOLY COW!!! If I just concentrate my efforts, I will have everything funded well ahead of time, so the money will be waiting for me when I need it for each. Plus, it gives me a little cushion room. PLUS, I get to accomplish it ALL by the end of the year.
An observant fellow might have noticed that Camp needs to be funded first, and by contributing $15 every 2 weeks, I would only be at $355. That is way off from where it really needed to be My plan for that was to use my third paycheck in March to make up the difference. But that was sort of a risky idea.
I love this new plan. Just by concentrating my efforts, I get where I need to be much faster, with less risk (aka, needing to make up for shortfall). All of these are on auto transfer, so all I have to do reset what account gets what.
Now, I mentioned Swagbucks. My plan has been to use my Swagbucks to buy a dining room set (which isn't needed per se....but I would like to have). I have been exchanging my 700 Swagbucks for $5 via Paypal. Would I be better off throwing these snowflakes at my other things....or just keep them separate (how freakin' cool would it be to buy a whole dining room set with "free" money!!!)
Has anyone done this method before? Should I keep saving for it all at once, or concentrate my efforts? Thoughts??? Do I just over think this stuff??????
I guess we do something similar. If we get a tax refund or those 'extra' paydays, then all of our extra accounts get funded once per year at 100%. We have Christmas, Vacation, Auto Insurance & License Taxes & various kids activities. Our new car fund gets whatever is left over. I seriously like being able to tick each fund off one by one, much more satisfying than little bits each month.
ReplyDeleteYou know what, I have never thought of this before and, like you, I don't know why not! I think this snowballing thing is a great idea! You just have to stay consistent and pay yourself like it's a line item (but that's no different than when you're paying into a bunch of savings pots at once). I really lurrrve this idea!
ReplyDeleteI like your new way of saving. I'm sure putting a little into each account biweekly can be frustrating at the rate that each account is increasing, but you'll feel so much momentum and satisfaction when you hit your first goal in April.
ReplyDeleteI trade my swagbucks in for Amazon ecards. It is only 450 points for a $5 ecard and I plan to use them for Christmas gifts.
I have done both. I prefer to do it the way you're doing it now. I organize them according to the order they need to be filled in. Then one lump sum goes into the accout. for example, I fill Summer 2011 first, then I fill in back to school and then I'll fill in xmas, etc.
ReplyDeleteI found that I was more motivating this way as things fill in quicker.
I would have never thought of this, but it seems like a genius idea! You could even try to get that computer fund completed by Black Friday and save a few dollars by shopping the sales, or using discount codes online! That's a really smart idea and something we'll implement more then likely!
ReplyDeleteI think that's a great idea!! ANd you'll hit your goals so much faster! we haven't really had to save up for any small things, like computers or such...but I did split up our savings into 3 sep accounts, 1 for a home down payment, 1 for travel and 1 for emergencies. the home down payment we're not allowed to touch except for the 4.5 months when Eric is unemployed in the fall. well see how we do! but i think what you're doing is great!!
ReplyDelete@Anon - I thought about using the "extra" paychecks and such, and decided that it would be too easy to not do it. By having an autodebit every two weeks, I have to do it.
ReplyDelete@Provider - I have no idea why I didn't think of it sooner either!
@Family - I am excited to hit my first goal too. Last year, my MIL paid for camp for the kids, but we don't expect her to do that again, if she does....then the camp money will fall into the next account that needs to be funded, and we will be that much further ahead.
I decided against using my Swagbucks for a particular place because then I was locked into their pricing. I redeemed some Paypal cards when they were on sale,so that was a little bit of a savings. My dining room set is on Overstock, and I thought about getting the $10 Overstock cards.
@Jolie - Good to hear from someone who has done it both ways and to hear I am on the right track.
@Mandi - I did think about the Black Friday sales, and I might be able to fund it if I use some overtime, side hustle money, etc. When I figured out the power of rearranging it all and that I would be able to do it ALL this year, doing nothing more than I currently am doing...it was awesome!
@Newlyweds - Oh wait, dear grasshoppa.....all those small savings things come with time. I would love to throw all of this money at debt, but I also know that I have to pay for camp in cash, that Christmas will still come even if I am in debt, and that G-man's 40th b-day is in November. I am REALLY hoping that we are able to pull off some mega side hustle and overtime and crush all of this!