Two months ago, when I paid off my credit card, I came up with a savings plan for my newly freed-up money. In case you don’t remember, or haven’t read that entry, the idea is very similar to a debt snowball. Rank up savings goals in priority order, save a set amount toward each of them every month, and throw any extra savings money at the goal at the top. Once the top savings goal is reached, start throwing all extra money at Priority #2.
Here’s what my Savings Snowball looked like when I made it in August:
|Priority||Name||Goal Total||Monthly Minimum|
|1||Textbooks||$400||All extra $$|
|2||Student Loan Interest||$1,500||$50|
|5||Future Car Fund||$10,000||$10|
Two months later, here’s what things look like:
|Name||Goal Total||Progress||Monthly Minimum|
|Student Loan Interest||$1,500||$584||All extra $$|
|Future Car Fund||$10,000||$25||$10|
Some things you might notice:
Textbooks: I put more aside than I originally planned. As I was saving, I was also buying the textbooks for my first term of the year, and the bill was higher than I expected. So I put some extra cushion room into this account.
Student Loan Interest: This is now the main focus of the snowball. I’ll tell you, I never would have thought I’d make this much progress in only two months! I’ve been acting like a squirrel, hiding nuts for the winter. Soon my income will dry up a bit (it always does in November/December), and I’ll be glad I got a head start on my savings before then!
Getting Established Fund: I wish there was more here, but that’s the nature of the savings snowball – this doesn’t get focus until my student loan interest is taken care of. Still, things are on the right track, so I’m not too concerned.
Emergency Fund: If this number looks high, it’s because I already had it started before the savings snowball. Also, it’s fed by sources other than just the snowball!
Future Car Fund and Retirement: Chugging along! Once the student loan interest is done, I plan to increase the minimums for these. Maybe. It depends on how things are going at that point.
My savings snowball might not be perfect, but it doesn’t have to be. If at some point I decide, for example, that I wish I had put more toward Getting Established than other goals, I can yank money out of the other savings accounts and move things around. Nothing about this is set in stone.
Some people think I should put more toward retirement sooner. Or that my emergency fund goal is too high. Or that I shouldn’t work on anything except my emergency fund. But it’s working for me, for now, and I can move any of the money at any time, as long as it’s all just sitting in different savings accounts.
Which is the beauty of the savings snowball.
What do you think? Do my goals need adjusting? Are you ready to start a savings snowball of your own?