Budgeting Plan

How to pay off debt and build savings

How to pay off debt and build savings

After a couple months of figuring out exactly how we wanted to structure all of our bills and accounts I thought I would share with you all what are plan is. I think it is genius!

Me: “We will have 7 bank accounts!”

You: “Seven? Are you crazy?”

Me: “Yes! I probably am, but let me explain the genius plan.”

There will be 3 checking accounts and 4 savings accounts.

1 checking account will be were our paychecks will be deposited.

2 checking accounts will be our individual accounts we are referring to our allowance accounts

1 savings account will be for holiday/birthday presents

1 savings account will be for vacations

1 savings account will be for $10,000 emergency fund

1 savings account will be for house buying

Bank Accounts

Checking #1

After our  401k contributions are taking out of our paychecks they will be directly deposited into this checking account. This checking account will not have any cards associated with it, because it will make it too easy to spend money out of it if we can just swipe a card. There will be checks only and automatic bill pay. From this account we will pay everything. In theory there should never be more than a couple bucks left in this account at the end of the month.

Checking #2 & #3 (10% each)

These are our allowance accounts. We will have mini “paydays” twice a month into our accounts. From this account we will pay for our food, gas and fun money. These will also help us learn to save for things that we really want so that we can both get used to planning out our spending a bit better.

Holiday/Present Savings (1%)

The idea behind this account is so that the holidays do not creep up on us and we are left feeling like we need to pull money out of a more important savings account.

Vacations Savings (Tax Returns)

This account is set up a bit differently than the other savings because it will NOT be added to on a monthly basis. This will be made up strictly from our tax returns. It might sound a little odd to not actually save for vacations but for us it should work out pretty well. It will require a bit of creativity at times to plan our escapes but who doesn’t like a challenge?

$10,000 emergency savings (2%)

An emergency savings is important to have for those times when the unexpected creeps in and you need to pay a deductible, or medical expense or one of the cars needs a new fill-in-the-blank right away. The ultimate goal is to have at least $10,000 in this account at all times.

House savings (7%)

We are planning on buying property and building a house. This dream of ours requires some serious down payment money. This account will be completely off limits for any reason other than potential bankruptcy.

Monthly Breakdown

The amounts we plan to our contributing will differ month to month slightly for those months that we have “extra” paychecks. When we have all our debt paid off they will change in a very drastic way then, but that time is years ago… unless of course we receive a little debt fairy and they come and make all of our debt vanish.

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