Guest Post - "Peering Into Your Crystal Ball"

This is one of my favorite posts from my friend Tracie over at Penny Pinchin' Mom - it really reminds us that we need to always be looking ahead and planning to secure our financial futures.  Thanks, Tracie!

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Doesn’t it seem like something always needs replaced or fixed?  Our house is about seven years old.  Some of the paint is slowly beginning to chip from the trim.  Our minivan is six years old.  It recently needed new tires.  Our pickup is getting up there in years and may need to be replaced soon. 

We already know about these repairs/purchases that we will need to make.  We are going to be prepared for them when they come.  We of course couldn’t put the tires on ourselves.  My husband has vertigo, so will be unable to paint our home and unfortunately, new pickups are not in specially marked boxes of Cheerios.  So, that means we have to prepare and save.

When saving, there are several “pots” in which you need to place money.  You need to always have your emergency fund in place (which is 3 – 6 months of your family’s monthly income).  You will need to save for home repairs.  You should earmark money for saving for that new vehicle.  And don’t forget about the holidays!  EEEEKS!!  How will I ever remember and plan for all of this?? 

What we have done is created a five year savings budget.  We know that in five years, we will need that new pickup.  So, we have forecasted what that will cost and divided it by the number of months until we need to act upon it.  For example, if we know we’ll spend $15,000 on that pickup in five years, we divide $15,000/60 months and that equates to a monthly savings of $250.00. 

We also know that the house will need repainting in 3 years (or less), so we have determined that it may cost us around $5,000 to have this done.  So again, we used our standard formula of $5,000/36 months or $138.00 a month.

Of course, who knows if other things will come up between now and the time we are ready to make our purchase.  Perhaps the pickup won’t make it five years  - at least we’ll have some of the money we need for that down payment.

None of us has a crystal ball, but we all KNOW many of the financial obligations that lie in our future.  By simply planning ahead, you’ll be more prepared to face them head on.  And the best part – you can pay for them in CASH!!!

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Tracie has helped her family eradicate over $37,000 in 37 months!  She shares her money saving tips and deals at Penny Pinchin Mom.  She and her family live in Missouri with their 3 young children.