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While tidying up the budget for 2010, do NOT forget Lump Sum Payment Planning. If you follow Dave Ramsey, you know that Lump Sum Payment Planning is budgeting for NONmonthly items like real estate taxes and home repairs.
Whether you follow Dave Ramsey or not, it is essential to recognize these items. A short fall in the budget can spell inconvienence and disaster.
I have to admit, I did not fruitfully take these items into view last year and we came up short; particularily in areas of Christmas gifts, kid’s school fees, and kid’s clothing (if they’d stop growing so darn fast!). This year, I plan on including some of these items into my 2010 budget spreadsheet.
Here are some areas the I am going to consider or thought that you might take into consideration. They are as follows:
- Saving for a House – Maybe not in the form of an annualized or quarterly payment, but you still need to decided, “how much do I need to save per month to meet my down payment needs?”
- Real Estate Taxes – If these are not included in your current house payment, then you need to save for these yearly. I know many of people who are shocked by their taxes due even though they knew it was coming due (then it sounds to me as if you were not ready for that house when you bought it).
- Renovating – Plan on renovating that kitchen? How much are you going to need to save to reach that goal? Don’t put it on the credit cards. Tis not worth it.
- New Computer – they are outdated within no time. As software keeps upgrading so will your computer. Eventually, if you plan to stay plugged in, you will need a new computer. Save now.
- Tax filing fees – Ugh, I just read the bashing on twitter yesterday about paying someone to file your taxes. I agree, but my husband was paying someone before we were married and I can’t seem to pull him away from his tax preparer. And it doesn’t help that you can do your taxes the easy wayâ€”for FREE â€” using TurboTax Federal Free Edition. *sigh* So we pay our $300 a year to file our taxes (yes, I hate it). Gotta deal with it, need to save for it.
- House Maintainance (10% of mortgage payment) – it’s definitely going into the spreadsheet this year! I know that we need to upgrade our appliances and water heater this year. Plus there is always something or rather that needs to be replaced or fixed due to normal wear and tear. 10% of our mortgage payment is going in the pot!
- Dental Work – I hear some people are getting braces. That $2,500+ bill is a good one to plan for.
- Plastic Surgery – a tummy tuck, breast augmentation, get rid of the crow’s feet, Botox, etc… Costly, costly.
- Fertility Treatments – A woman with whom I work with was going through fertility treatments. So, I know that it is by all means it is expensive. Ultra sounds, injections… Crazy expensive. (Yes, she is now happily pregnant) 🙂
SCHOOL and/or KIDS
- Adoption – Raising a child and adoption can take some hefty funds to accomplish. If you know you would like to adopt in the future, start today in saving.
- Child’s College Fund
- Child’s Current School Fees – I didn’t plan for all those fees associated with my children’s school this year. I had to payout for yearbook, pictures, school p.e. uniforms, fundraisers, etc…
- Travel – Almost Fearless, quit her job and the family is out traveling the world (she’s 7 months pregnant, too). Trekking the world requires planning and cash flow.
- Vacation – Planning that 2 week road trip or a nice trip to Hawaii. How much will it cost as a total? How much is that going to cost you broken down by 12 months?
- New (Used) Car – Well, I’ve heard of people making their car work over 1,000,000 miles, but I don’t think it is likely for most of us.
- DMV Fees – We all know about our annual car registration. You can’t pretend its not coming due.
- Car Maintainance – My car is at 86,000. I bought it brand new. Always kept up the scheduled maintainance and oil changes. I am lucky to say that I’ve had NO MAJOR problems with it. 😉 But all this maintainance does add up – be prepared for the expenses and it won’t hurt your pocket book.
- AAA fees – If I break down on the side of the road or get a flat tire, AAA is there for me. I me feel safe having this service and is worth the $75 annual fee.
- Christmas Budget – You’ve heard me rant that I didn’t prepare for this one. Although, we were able to have a Debt-Free Christmas it would have been nice to spend a bit more money for the holidays.
- Date Night – If you have a significant other in your life, it is important to make time to have a beer, go to the movies or dinner once in a while. I’m putting this one in the budget spreadsheet.
- Spend Freely Fund – make this for yourself or set up for your significant other. I tend to manage the finances – as long as the funds are going strong my hubby doesn’t have a problem with me taking control of the reigns – I realize I need to set up a separate spending fund for him, too. Going in the spreadsheet.
- Clothing Fund – And you’ve heard me rant about this one, too. My kids grow so darn fast that I have opted to start a clothing budget to cover their needs.
What are some other areas you can think of including in Lump Sum Payment Planning?
Good Idea Money Funk! I just started a “date night” fund myself – I’m not budgetting it as an extra expense, rather mine is coming out of my restaurant budget, since it will most likely include food of some kind. I’m doing what a past co-worker of mine does – every paycheck (or every week), each of us contributing a set amount in cash to a jar. Then when we feel like it, we have enough to go out for noshes and a drink (or a movie, or the opera, or a weekend getaway, or…).
For those with pets, vet bills can be rather expensive! I save $50/month for our two cats. They will have regular checkups, shots, etc, then also they might have the unexpected accident and surgery. And older animals can have much higher medical costs, with deteriorating health and medicines. I’ve decided not to cap saving for my kittens, just so I always have a big chunk “just in case.”
And of course, I’d love to save for an IRA, but that will have to wait until the debt is gone…
I totally need some tummy augmentation. 🙂
I now have to revise my budget! There are so many things I’ve left out. I’m great with budgeting my regular monthly expenses, I’ve got that down to a T. But, now I see I am missing so many important areas. Argh! 🙂
We escrow our own property taxes and insurance. Each month we set aside the money in a separate ING account for just that. It works pretty well! I think now is a great time to think about lump sun payment planning. 🙂
@Mrs. Money I also do the “self-escrowing” of our property taxes with an ING account. I have a seperate one for insurance which holds the cash for Home and Auto insurances.
@Money Funk, Great list. This is one of my favorite topics because if you don’t plan for these, your budget WILL GET BLASTED.
In general, I agree with you about paying someone to do our taxes. However, since hubby has his own business, it gets more complicated. He’s been doing his taxes himself for several years, and this year he consulted a tax guy to ask him some questions. Turns out, hubby has been filing incorrectly for several years! Good news is that he’s been paying too much, not too little, so we *might* get a nice refund. Gone are the days when I could use the EZ form for everything, and at this point, I’m not upset about paying a professional to do it.
Putting aside money for home maintenance is a great idea. We’ve only been homeowners for 6 months and the house was in great shape when we got it, but you never know what will need replacing in the near future! The house will also complicate our taxes this year, but I think we’ll be okay doing it ourselves, since neither of us are self-employed. Hubby’s parents used to pay someone to do his taxes when he lived at home and only had one W-2 and one 1099-I. $180! It was so wasteful! lol
The $180 was for when Mr. Saver was single and living home with parents, lol. Can’t imagine what it would cost us together, now, married and with the house (and my crazy 1099s).
This is one of the most complete lists I’ve ever seen. It rings clear to me how ‘irregulars’ can bust a budget if overlooked. I would probably add “dr office co-pays” under medical/dental category. Good post.
Money Funk, I will let you know when my series of Hawaii posts get highlighted. It will make you want to go to Hawaii EVEN MORE!
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