Which Buckets to Empty? | brokeGIRLrich
So earlier this week, I was looking at my bank account and realized that soon, I will need to figure out which bucket I plan on tapping by the end of next month, if I can’t upright my currently sinking money ship.
And what I mean by bucket is bank account.
One of my freelancing financial systems has been to create “buckets” to tap. Up until now, I’ve been really lucky that I’ve only been building my system up instead of having to use it, but it looks like the time has come.
My bucket system looks something like this:
- Checking Account
- Emergency Savings Account
- Car Savings Account
- House/Mortgage Down Payment Account
- Health Savings Account
- Brokerage Account
- Roth IRA (which I’ve had for more than 5 years)
- 401k/403b/Keough 401k
That is generally the order I always figured I would tap things if necessary, though part of me is going back and forth through whether to take some money from emergency savings, car savings, or mortgage down payment savings right now.
I think I’ll leave the mortgage account alone, but the fact is, barring something terrible happening, my car still has several years to go before it has to be replaced. And my mindset has also been, I can only spend what I’ve managed to save on a car. I would really like to buy a new car when the time comes, but I’ll buy whatever I can afford based on what I’ve managed to save in that account.
And I dance around this because tapping my emergency savings account is like a mentally traumatizing act to me. Even though I was happy with the number it was at and still squirreled away and extra like 3 grand this spring while I was teaching and saw the writing on the wall for my job.
See, for me, I feel very financially comfortable as long as there’s more than $1,000 in my checking account or I’m working a steady job and know the next paycheck is just a few days away if it’s less.
And what I mean by comfortable is that I feel like, yes, of course friend, I can grab takeout with you. Or, of course boyfriend, I can keep paying for gas to drive to the opposite end of New Jersey each weekend to see you without stressing about that cost. Or I can just go grocery shopping and buy what I want to eat without stressing about that cost of the groceries. Or I can looks for Groupon things to do on the weekend to take advantage of these last few weeks outdoors before we all become mole people again. That’s what having at least $1,000 in my checking account does for me.
Which is like a privileged situation, I know, but I am also aware that in this case, I also worked hard and made smart choices for 7 years to build these buckets.
This post is prompted by the knowledge that barring a change in circumstances, I’m going to drop below that number soon and have to make some life changes and/or start using my savings. Which I hate. I am stingy about the savings and it makes me sad. I just a little depressed about considering a budget lockdown. Or perhaps it’s just part of the 2020 depression as a whole.
I am waiting on three things that will plug some holes in my financial situation without tapping the buckets: a tuition refund for two classes from the community college, my security deposit from my apartment, and my unemployment claim to go through. So fingers crossed that those things make an appearance and, even more so, that I just get a new job soon.
I think it’s probably best to attack it from two directions:
1) Start thinking about what sort of cutting you can do in terms of spending to help stem the flow just in case one of your three changes/situations don’t pan out–especially things like unemployment with how it’s going with the government.
2) The emergency fund exists to help you make ends meet when there’s an emergency. I don’t know of another emergency bigger than a global pandemic 🙂 Don’t feel bad about using it for what it’s for, but make a plan for how you’ll fill it back up in the future.
Keep truckin’!
Chris@TTL recently posted…Why Do People Work? The Purpose of Work Is to Create