My savings have seen a sort of whirlwind of activity as of late, which made me realize it’s been a while since I last checked in and let you know how things are doing. Well, there’s good news, and there’s bad.
Just as a reminder, here’s what my “savings snowball” looked like the last time we looked at it:
|Name||Goal Total||Progress||Monthly Payment|
|Bro’s Wedding||?||$0||All extra $$|
|Future Car Fund||$10,000||$76||$10|
So how’s that working out for me?
Bro’s Wedding: Here is the major fail. I haven’t put anything aside for this yet. See, my savings snowball used to be easy. The “all extra $$” thing worked quite well… when I had steady employment. I would throw handfuls of cash at whatever goal had that for the “monthly payment.” Now that I’m making my way on freelance income? It’s a different beast. I need to adjust my habits accordingly. As you’ll see below, I’ve done fine with the goals that had set monthly payments.
So, I need to set a minimum monthly payment for this. Some months are really lean, but I think I can pull off $25/month for now. Hopefully, I can get back into “all extra $$” once paychecks are steady.
Emergency Fund: This is just hopping along at $10 per month. I know, I should increase that amount. I promise I will when I get a job. But for now it’s actually doing better than expected. I thought I’d have to dip into this fund in order to buy new tires for my car the other day. Turns out all the mechanic needed to do was clean and reseal my tire. And he did it for free! So my e-fund is completely intact.
Future Car Fund: If you’ve been reading along, you’ll notice I moved this from my Citibank account to a new SmartyPig account. But, not much difference other than that — it’s still chugging along at $10/month.
Retirement: Once again, an amount that will increase when I get a job. Employment is important for savings, you know? But it’s growing at its own little pace of $5/month.
New! Charity Fund: The charity that I’m highly involved with, Students for Cambodian Schools, held a big fundraiser a few weeks ago. I gave a lot of my time (I only slept for 7 hours during the 65 hour fundraiser), but I still wished that I could give more of my money. So I started a charity fund in the Citibank account that I vacated my car fund from. And because I’m lazy, I left the automatic deposit at $10/month. That sounds good for now.
Getting Established Fund: Not included in the snowball chart above (because I’m no longer contributing to it), but worth talking about regardless. This is another place for good news: I haven’t dipped into it yet! Yep, I have neither touched this nor my emergency fund since classes ended. If all goes well, I won’t end up using the entire thing, and I’ll be able to roll what’s left over into another goal… like saving for my brother’s wedding.
New Savings Snowball
|Name||Goal Total||Progress||Monthly Payment|
|Future Car Fund||$10,000||$106||$10|
Conclusions: Well, different life/employment situations call for different savings strategies. You think that would be obvious to me, but sometimes it takes a few months of doing it wrong to see how to do it right. But all-in-all, I’m quite proud that I’ve managed to live off of my freelance income these last few months, instead of dipping into my savings. If I can keep that up (and get a job!), this will all work out.
The Yellow Piggy Bank says
Have you considered applying the Dave Ramesy’s Debt Snowball concept to you savings snowball by focusing on one goal at a time. My friend has been toying with this idea recently, it may work for you too.
“Snowball” and “one at a time” don’t seem to go together, to me. When dealing with a Debt Snowball, you continue to make the minimum payments on all of your debts. That’s what I’m doing here – paying “minimums” to most goals and throwing all I can at the goal on the top. When the top goal is totally funded, I move down to the next goal. (This already happened once – what you don’t see is that my Getting Established Fund used to be at the top of the chart, but has since dropped off because I stopped contributing to it.)
One goal at a time doesn’t make much sense to me, because some goals are too large to wait to start saving, while other goals are too soon to ignore. If I focus only on one thing for a long time, it will be years and years before I even have enough in my retirement savings to meet the $1000-$3000 investment minimum (at the firms I am looking at for my Roth IRA). Unless retirement savings were that one thing… but that would lead me into trouble as my brother’s wedding would come up before I had time to save for it! The system I have has been working well for me so far, excepting that I have to make adjustments based on my current income.
This appeals to me because I have it in my head that I must save huge amounts of money at a time. 50 dollars to this goal, 100 to this one. If I don’t have enough, I kind of give up. You are proving that 5 and 10 dollars a month WILL add up. kudos!
$10 a month for Charity and $5 for retirement seems a little backwards to me. For starters, I predict you’ll be able to grow, manage, and ultimately get more work out of your money than the charity. I think you’d be better served saving your $10 a month til retirement, then evaluating your ability to give to charity then. You’ll have a better idea of what is important to you, and a better idea of what charities can make that happen. What charities need out of 20-30 year olds is time and energy, not $.
All that said, I love your blog and think you’re doing an excellent job! Thanks!
Mike from Financial Freedom Forums says
I’ve not seen savings talked about in this way, only “debt snowballs” – I’ve got to say it appeals on an emotional level, you get to builds something for yourself while paying off debts.
It looks like you treat paying down debts and saving as two totally different snowballs – why don’t you combine the two? you could for put debts and savings in the same table with varying positions based on your priorities. Paying off a fairly low interest bank loan might take a lower place than building a good emergency fund, while paying off a crippling credit card debt would probably come above both of them.
Define your “minimum payment” for every target and go from there.
Glad I’ve finally found sotmhieng I agree with!