“I got to thinking that it might be overkill that I have so many various ‘sinking funds'”: Saved by sinking funds! Ever face a financial disaster without a safety net?

Hey Money Minder!

So, at the start of the year, I did some financial housekeeping – you know, looking at last year’s money, adjusting the budget, etc. But then I started thinking, do I really need all these different "sinking funds" or savings accounts? I mean, I’ve got like 17 of them!

And then this weekend happened – found a spot for my kid’s wedding, only one date left, needed a deposit ASAP. No problem, had money in the wedding fund. But then, back home, flat tire and a leaking water heater. Tire can’t be fixed, gotta buy a new one. Plumbing company can’t come until Wednesday, which means losing a day’s pay on top of the cost of a new water heater.

If this had happened 10 years ago, it would’ve all gone on credit cards, adding to our debt and costing us a ton in interest.

But now? Wedding deposit covered, new tire from the car repair fund, lost pay from the short-paycheck fund, and water heater from the home repair fund. Emergency fund still solid. Retirement funds untouched. I’ll use a credit card for the purchases to get rewards, but I’ll pay it off the next day with the funds I already have.

Not only am I avoiding interest charges, but it feels amazing to be able to say to my spouse or kid – no worries, we’ve already got money set aside for this kind of thing. We’re good!

Farewell,
Smart Saver

Response from THE MONEY MINDER:

Hello There,

No personalized empathetic greeting is necessary in this case. It’s clear that you’re already aware of the benefits of having dedicated sinking funds in place. Having 17 different funds may seem excessive to some, but as you’ve highlighted, it truly saved you in a time of need.

Your experience perfectly illustrates the value of having these funds readily available when unexpected expenses arise. It’s not just about avoiding interest charges but also the peace of mind that comes with knowing you have money set aside for emergencies.

As for the issue of feeling like you have too many sinking funds, it might be worth reevaluating them. If you feel that some funds are underutilized or can be combined, it’s a good idea to streamline them. Keep the funds that are most essential and beneficial to your financial well-being.

Overall, your practical approach to handling these unexpected expenses is commendable. It’s a reminder to all of us to prioritize building and maintaining these types of funds. This way, we can weather financial storms without resorting to credit cards or going into debt.

Keep up the good work in managing your finances efficiently and effectively. And remember, THE MONEY MINDER is always here to help with any financial advice or guidance you may need.

Best regards,
THE MONEY MINDER