The following is a staff writer post from MikeS. He is a married father of 2. So, with the cat, he ranks number 5 in the house. He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.
It has occurred to me that I seem to be managing my money less in terms of hard numbers and more in terms of how I feel. Granted, I still have set budget amounts for my normal monthly spending items, but savings is where things have shifted. It is possible that with the recent stock market volatility that I have grown hesitant to add more to my Vanguard account or it is because I just don’t like the way my Capital One savings account looks. Either way, I have decided to make a change.
My savings are not in a bad position, but I just don’t feel comfortable with the level that it's at right now. There have been some recent hits to savings that have been easily absorbed, but have reduced the overall level in the account.
Some things like pre-buying my oil for the winter are known and expected, but others like an unexpected vet bill were not. Since I divide my savings up into multiple categories, there always seem to some that have a positive balance and some that have a negative balance. I have been feeling recently that there appear to be more with a negative balance, than positive.
As it turns out, it is exactly 50/50, half are positive and half are negative. This is making me uneasy.
My plan of attack is two-fold.
My first step will be to redirect my monthly savings number from Vanguard, back to my Capital One savings. I am sure I could earn a better return in the market, even if it’s just from dividends, but I am not looking for returns right now. So, that’s $85 a month I can plow back into savings. I am also going to adjust some of the category savings amounts. With gas prices staying low for the foreseeable future, I am readjusting what I set aside for that every month. At the gas price peak back in 2013, I would set aside $325 a month for gas. I have since adjusted that down to $175. The most recent adjustment was from $200 down to $175. The extra $25 will be added into the $85 to beef up all savings categories. I will start with my general savings (emergency fund) and the eventually add to all the categories that are running a deficit.
The second prong of my attack will hopefully be with my annual bonus. I should be learning soon about the amount of the bonus. My plan is to use that to strictly augment my savings. There are no large expenses coming this year that require funds to be set aside. The only two things that will be allocated from the bonus are the Disney trip in a couple of years and some money for some small trips this year.
The catch is I do not know the amount of the annual bonus. I will find out soon, so right now I am just guessing. I already know, no matter what, the take-home is significantly less than the actual bonus. In my case, the number is actually about 46% less. Between the taxes and my 401k contributions, the bonus amount is substantially reduced by the time it ends up in my checking account. Knowing this however, I can more effectively plan out what I might do with various bonus amounts. At about that same time, I will find out if there will be a salary increase. That is another area that could help shore up the savings categories. Again, not knowing the value makes planning slightly more difficult.
Just a Little Higher
It does feel good to know that I am not in dire straits, that I do have at a minimum about 4 months of expenses completely covered. I just want that number to be a bit higher. So, it is just a matter of readjusting my cash flow to the areas of concern. How is your cash flow doing? Making any changes?