SINKING FUNDS | How to Create and Implement Sinking Funds 

debi powell You just described my *exact* life about 7 years ago! We were ok. We were not in trouble. But we were NOT proactive. We should have been getting ahead, and we weren’t. We still had a credit card balance even with a good income and relatively decent fixed expenses! The FANTASTIC news is that with a good income, you can make progress FAST if you are truly committed and you have a plan!

debi powell also. Don’t be embarrassed. Most of us (myself included) just never are taught this stuff, and the nature of most people is to consume. We have to teach ourselves otherwise! Don’t be too hard on yourself. Our past behavior can sometimes be our biggest teacher! 💗

So funny I was JUST telling my hubby about your video and how it really has me thinking about how we should keep track of what we're doing. Girl, we could really stash some cash if we didnt act like money was coming through the faucets when we turned them on!! We have NO debt, large house paid off, 2 cars paid off, and zero credit card debt. We do have Home Owners Assoc fees, and of course real estate taxes (to the tune of $10,000 a year if you can believe THAT!) so we still have lots of bills coming in with just the upkeep of our house/and private school for our daughter, etc) And girl, we STILL dont SAVE a lot of money!! We do have investment accounts, (honestly, not sure what all we even have!) I should be hiding in the closet from feeling so irresponsible NOT watching our money (we want to retire comfortably and at 56 yrs old, we need to start stashing it/saving more!) I have an Erin Condren LP and will make a Sinking Fund page at every month, but need to print the Dave Ramsay worksheets and get started! You're a FABULOUS teacher.... thank you! I'm feeling overwhelmed where to start, but doing to give myself a few months grace period to just start, in order to get a grasp of where we're spending/etc. Have a fabulous weekend!

OMG this is me right now as I am watching Jen's videos. I've followed Jen for a couple years with all the EC planner stuff. I've ignored (avoided) this part of it. Our income has been good for a while, although part of it comes in random spurts. We could have been so much far ahead in life if we had been more disciplined. I need to do this for our security.

This is me and my family but going to turn it around in 2019

You'll be set for life if you start now!!!!!

I hope you are well 😘

Our healthcare system is such a mess! Grateful we planned, heartbroken for those who struggle.

You can do it!!!!!!!!

It's such a good feeling! Happy for you!!!

I'm so glad you found it helpful!!!

Shalonda Swansonp

LOVE that they taught this!!!

Thank you for watching!

Thank you so much! I'm so glad it was easy to understand! I LOVE SFs and I just love when people grasp them because they really make a HUGE difference!

Tanya DeMillo exactly my thought! I'm going to use my medical FSA account as my sinking fund. I deposit enough to cover everything annually and I deposit each pay period, so sounds like it qualifies. Unless I feel I need more than what is on my FSA debit card, I'm proceeding that way.

Tanya DeMillo I would say yes as long as it covers your yearly out of pocket max. Ours is $5K for example, but only $200 currently goes in each month from work (though we could add more). So we're still short in that arena, if that makes sense.

I'm so glad it made it more simple!

Both! Although I do include most OTC meds (ibuprofen, cough medicine, etc) in our grocery budget, because I usually pick it up while grocery shopping and count that more as personal care. Anything that isn't in that basic category comes from Rx/Medical.

Necessary sinking funds are part of a complete budget, so they come first. Depending on how intense you are on your debt payoff, you can add the less-necessary ones later!

applejuicyjuice on the EveryDollar app/site it allows you to turn certain items into a sinking fund. It has a piggy bank logo.

Great questions! I'd budget whenever you want to in the month as long as you're consistent! If you have an HSA, I'd just cover the gap between what your HSA holds and your out of pocket. Check with your bank on the Reg D charge, because it's a federal fine, not a bank fine. I'd keep the SF separate from house, yes!

I prefer pen and paper, too!

YES! Essential sinking funds are important even when you're paying off debt!

First, a complete budget with at least necessary sinking funds! Then, $1,000 EF, then debt payoff. Exactly for the reason you said!

Jacqueline O’Connell one day at a time. Start where you are and move forward! Each month is a new start and up for tweaking.

It's such a great feeling! Thanks for watching!

Shayna Marina thank you so much for your kind words! Happy for you and your husband! 💗

Ah, yes! Our property taxes are all in escrow - included in our monthly mortgage payment!

Depends on which baby step we're on! Right now, we're in debt payoff mode, so we have our small emergency fund saved and don't contribute anything else to it monthly. I choose amounts for clothing and decorating based on the rest of our budget - how much can we reasonably contribute? I have held off on home decorating for a year or two now because it's not a necessary expense, but I keep that amount pretty small. For clothing, I've looked back at what we typically spent and cut from there. We do $60/month for the kids' clothing fund now ($20/kid/month) and that includes coats, shoes, socks, etc, and regular clothes.

There really shouldn't be an issue of "too many" because it varies from person to person what is necessary. We have 20-25, because that's the life stage we're in (homeowners, with kids, etc). I would just go by what is necessary in your personal situation!

I know this is late but according to Jordan Paige of FunCheaporFree you should budget $100 per person.

Great question! How will you know how much to set aside? How will you know which expense require which dollar amounts? You can create your list, total it up, and transfer that amount each month (which is what we do, all at once), but if you're not monitoring, there are categories that have variable expenses that will get away from you. The percentage you'll need is totally dependent on your situation and life stage, so there's no set percentage for SFs. You can back off details later once things are under control, but for someone just starting, you need information to be in control.

Thank you so much! I'm so glad it's been helpful!!!

Ashley - Ideally, do try to cash flow these quarterly expenses by separating the amounts you need to pay for them by deducting (or saving) them from your paycheck the month prior to payment. This said, if the amounts for each are too high to extract them within the prior month, then by all means add these costs and then plan to deduct/save these amounts in 3 equal parts from your monthly paychecks or 5 to 6 equal parts from your biweekly paychecks. By the time those bills arrive to you, you will ready to welcome them at your door. You go girl!

Paula Thompson necessary sinking funds before you pay off debt! You can add the wants in later or a little at a time! Except I’d keep spending money ;) everyone needs a little freedom to spend.

JenPlans thanks jen for clarifying

When I've done this, I just write the actual amount I contribute to the fund (even if it's zero) and then write a note off to the side about it!

JenPlans That makes perfect sense. I absolutely LOVE your method and am so glad I found your video at the beginning of the year. Thank you so much for sharing!