One of my goals this year was to get a rehandle on the simple topic of cash flow. For me, this breaks down into three simple subjects:
- Automatic Savings
- Debt Repayment
- Automatic Expenses
To be frank, the idea of figuring out my automatic savings seems like the easiest of those threes mini-goals…and since I am 3 and a half months into the year without doing anything we are going to grab that low-hanging fruit first.
If You Don’t Have It You Can’t Spend it
I am not the first person to say it, but you can’t spend what you don’t have. Since I started my personal finance adventure after getting my first job I have had automatic cash and investment savings set up. I choose to use a different bank rather than the one that holds my main checking – again, out of sight out of mind.
Weekly / Monthly Cash Savings
Emergency Fund – $30/week ($120/month) – I am at about 50% of where I’d like to be. As soon as I clear up the debt repayment part of this project (next post) this is my first addition.
Vacation Fund – $30/week ($120/month) – I use this account to fund my family’s vacations. I also drop money via bonuses and other lumpy income. It never covers the full cost of a trip, but does help pay down the credit card.
Housing Projects – $30/week ($120/month) – Similar to the above account, it never pays for a project in total, but helps with the unexpected costs that come up from time to time.
None of these account balances are as high as I’d like. As soon as I pay down some of the recurring debt that money will be redirected immediately to these accounts.
Non-Qualified Investing
Dividend / Short Put Account – $50/week ($200/month) – Easily, my favorite asset despite not being my largest (by a long shot). I don’t see myself diverting more funds towards this account until my cash reserves are larger.
Investment Club #1 and #2 – $150/mo and $170/mo – They are still going strong after more than a decade for the first and about 4 years for the second. I am not sure I feel as strongly about the first one as I have in the past. Seems to have become largely stagnant.
Qualified Investing
401(k) – $300/paycheck ($600/month) – This doesn’t include my match. My 401(k) has some horrible investment options so at this point I basically just keep upping this as my salary goes up to get the match
Wife’s SEP IRA – N/A – The wife’s business has really slowed down so we have stopped contributing to this account. I am hoping we can pick it up again in the future as it is the right thing to do.
Children’s 529s – $550/mo ($275/child) – Feels like I’ll never be able to save enough for college, but it has to be done.
Conclusion
I am glad I did this exercise, but I didn’t get a ton out of it other than to highlight what I’d like to increase which I guess has value. I am pretty sure when I go through the other two categories of spending I’ll find holes and gaps.