What is a Sinking Fund and How Do You Create One?

[@jeremyhelquist]

Re: no guilt since you saved it. I have a sinking fund for electronics (phone, tablet, laptop) etc. when I had the amount saved and went to purchase I still hesitated. Yes, I saved this money, but it’s still a lot of money. Makes you reevaluate if you still NEED that item. Lol 😂

[@johnlisapepper3440]

I have a separate savings account sinking fun for house maint and car maint. I love it when it's time to replace tires.or get air filters for the house. There's no guilt

[@alexc5369]

Exactly!

[@maryd7896]

Girl I totally agree with you! We have plenty of sinking funds (home repairs, car repairs, car replacement, pet, christmas gifts, even our Amazon prime renewal!). These are things we expect will happen, so my husband and I agree they shouldn't be thought of as an emergency.

[@22mmq]

My husband and I have a holiday fund and a baby fund. I just love that the money is there, it Gives me peace of mind

[@meganwilson1945]

Thanks for including the pets! So many of them don’t get care because they weren’t budgeted for.

[@dananderson6334]

We are still on bs2 and the sinking funds are in addition to our "starter" emergency fund. They have saved our butts more than once!

[@vincentortega4284]

Hi Dan me too, still on BS2, but slowly getting out of debt, hang in there

[@JayMontgomery]

Ditto

[@brantnerk2]

I have 10 savings account at Ally. My emergency fund, my summer money (I’m a teacher and don’t get paid over the summer), and 8 sinking funds including car maintenance, vacation, gifts, etc. It’s amazing and easy to manage!

[@KNIGHTDRAGON87]

I love Ally bank

[@vincentortega4284]

Wow! that a lot of savings account, I also use Ally; there great

[@todd2456]

I've heard good things about Ally bank too.

[@1981lashlarue]

That's strange that they don't pay you in the summer. I don't understand the reason for that. All the teachers I knew always got paid year round.

[@ryanthepianoman27]

Wow that’s a lot

[@rickiweaver11]

Thank you!! I appreciate the clarification, I always heard people talk about sinking finds and in my brain I thought it was something more difficult and I didn't want 20 different accounts etc. After your explanation, it turns out I've already been doing sinking finds... I just budget for the pets and car maintenance. Your explanation totally took the stress out of it. Idk why I just didn't take the time to look it up before, but I'm happy this video popped up in my feed. 😊 I too like, separate funds for certain categories that won't come out of our emergency fund. Like, to me our emergency fund is If one of us loses our job... I'd rather budget monthly for the stuff that I KNOW is gonna come up and leave my emergency fund alone...

[@calvinmiller3044]

I love how she actually disagree with Dave. Sometimes the Ramsey Network feels stale and repetitive. Good to know that there is some freedom of thought

[@KMF3]

There is no actual disagreement

[@davidfence6939]

considering most of the people that critique Dave aren't free thinkers themselves...

[@LA-ly1nt]

2:24

[@LA-ly1nt]

3:49

[@Esme26433]

Ramsey didn’t force you to do anything. He proposed a set of steps that you could adopt, partially use or reject. Up to you, right?

[@joycegonzales4994]

I divide up the property taxes and insurances by 12, and save each month for it.

[@Faith-un7ns]

I have my insurance account where I have weekly money being transferred in that account but I keep that separate from the sinking fund.

[@situated4]

Excellent beginning. Now, please strive to add your annual IRA contribution to invest on January 1st in full, HOA fee (if any), and a Christmas club of several hundred dollars for next Christmas time. Thx.

[@todd2456]

I have 8 sinking funds - all at Capital One online banking - car registration, household, life insurance, accountant fees/dues, fun money, dog care, quarterly taxes, healthcare (aside from HSA). It's easy to manage them since you can give them all nicknames. They are generally funded once per year for the following year with any end of year bonus, etc. That way, when they are due, it doesn't hit the monthly expenses. Works great!

[@situated4]

Please switch over to Ally Bank. Capital One are basically criminals, like Wells Fargo. Thx.

[@todd2456]

@@situated4 give me a better reason, and I'll consider it. So far, in 20 years, I've had zero issues.

[@rainacherienne1010]

@@situated4 I have Wells Fargo and no complains.

[@expertonmyself]

i have 6 sub-accounts: 1. savings (starter emergency fund) 2. christmas club that i can't access until nov. 1 3. tithes (for my father, who's on a fixed income) 4. car maint. & rep. 5. rent and other future items/bills 6. regular checking that i use when making debit card payments and i other than pending transactions, i only keep $100 in it so that i don't overspend. the "remaining" goes back into acct #5 as a holding place.

[@erikahipson4165]

I would love to hear more about longer term sinking funds. My husband and I recently bought a new (to us) SUV for our growing family in cash. We are hoping it will last us a long time, but we know eventually it will need to be replaced. How can we set ourselves up be able to purchase our next vehicle in cash too, not knowing whether it might be 5, 10, 15 years down the road?

[@automaticsteve9548]

I call this my "Non-emergency Fund". Yep, I'm going to need tires on the truck, the dishwasher is making a "funny" sound, this big ole tree next to the house needs to be cut down before it falls on it, I really like that miter saw, I want to buy my wife some really nice and shiny,,,,. Not an emergency, but things that just come along the way...

[@RioTDollTV]

Tires especially! Even the best replacement package still leaves you with an ordinary tire life. Why leave it unplanned when you generally know every few years there'll be this expense? When it comes to time management, someones failure to plan doesnt constitute an emergency on someone else's part. I feel like it's the same for money management- failure to plan does not make a recurring longer-term expense an emergency expense.

[@teacheraudrey1233]

I was actually telling my brother about this yesterday. Because what happens if I have another health set back at the same time my car needs fixed. This way I am better prepared. Thanks for sharing!

[@vickieclark5931]

Exactly. If that happens then you could wipe out your regular emergency fund and then have no savings and have to stop your life just to get that back. At least with sinking funds you can gradually save for them and they there at all times to protect your emergency fund.

[@paulinoaz]

Those are both emergencies that should be handled by your emergency fund (3-6 months of expenses) if you do not feel your emergency fund is enough to handle that then you increase your emergency fund to maybe 6-12 months of expenses. But sinking funds should be for non-emergency items you want but are too expensive to fit in your budget in one or two months. Things like vacations, big screen TV, remodeling the kitchen, saving for Christmas next year, etc.

[@Faith-un7ns]

Yes I agree, this way you always have your emergency money in case you lose a job while life is happening.

[@moneybee]

Sinking funds can be a great way to prevent going down with the ship in the event of hitting a financial iceberg, or even just for planned life events. Having a plan and concept of future expenses is so key!

[@alimama234]

Thank u MsRachel for explaining n defining Sinking Fund….hopefully not too late for me to start…I’m excited

[@GaPeach2018]

We have multiple sinking funds and call it our Freedom Acct. to differentiate it from our emergency fund.

[@erikavanesamagana8228]

Before watching this video I was already doing this. It’s so fun for me I love it.. I cash out my paycheck and move the money around into this expense binder which I bought on Amazon for like $6 and it has so many options in each pocket you get to label it and record how much money you’re adding to the pocket. It’s so fun for me, and it also motivates me to keep adding money to each sinking fund. I also have our family savings binder, I’m working on saving 3-6 months emergency fund.

[@rainacherienne1010]

I have the following sinking funds 1. Car 2. Moving 3. Pets 4. iPhone/MacBook 5. Medical. I want to add 1. Home (repair/appliances) 2. Vacation/Travel. That being said I cash flow these expenses but just in case I have the sinking funds as a backup. I also have the emergency fund as a backup of the backup. I like to feel extra safe.

[@GodGirl02]

I love this video! I started 3 sinking funds at the beginning of the year without realizing they were “sinking funds”... thanks for all the wonderful advice Rachel!!

[@alexc5369]

I only started 2 months ago how do you track them? Do you have 1 account or several?

[@GodGirl02]

@alex C I actually get them out of my checking account... every two weeks when I get paid I take out money for the envelope system ( I use Rachel’s new wallet)... then with the sinking funds I have 3 envelopes just stashed somewhere private in my room and add to them like that.

[@GodGirl02]

I just enjoy seeing the money grow and to me it is easier to have the cash than it be in my checking or savings account...

[@angelanderson7577]

@@alexc5369 It depends on how you would like to track it. If you don't want to do the envelope method with cash, you can use a notebook and pen or google sheets/excel. I personally use google sheets and I have a separate savings account for my sinking funds.

[@a33m3a]

@@alexc5369 i use an excel sheet. In the same excel sheet i have my monthly budget, what i actually spent for each category (groceries, utilities, shopping, etc). At the bottom i have a small table with all of sinking funds. I put how much i plan to budget for it, how much i spent, and the end balance each month. Every week i track my expenses; I open my bank statement and on the same excel sheet i write the date, the type of expense (grocery, rent, health insurance, etc), the vendor, and from which bank account it came out of. At the end of the month i check how much i spent on each category

[@jenniferremy7854]

It feels good to have that money for the specific expense you know you will incur in the future one day. It is definitely hard to get started but helps with stress when that expense comes up. Being a new home owner has made me realize I need that sinking fund. I think in baby step 3 you can have 1-3 sinking funds and then after that baby step you could have 5-6 sinking funds.Having separate savings for it is also great tip! Thanks Rachel

[@gilloyola7271]

I have Sofi bank, and I can create different vaults inside the same saving account I use those to make many sinking funds

[@evalina98000]

"A sinking fund is when you save a little bit of money each month for something specific". 👍🏽

[@rachelbomberger7943]

I LOVE sinking funds! Yes, I too, love the more detailed categorization....plus then I don't accidentally take it from another savings account.

[@jillpruett4772]

My favorite sinking fund is the one I started when we bought our house - for cash. Every month I set aside money for tax and insurance on the house like lenders require on mortgage. As I get good information on what the final bills will be I adjust the monthly payment. As I am on a modest Social Security pension an expense like that just is not going to fit into my cash flow without one. I also have another sinking fund for any expense less than monthly (semiannual/annual) that is over $50. I list all the expenses out for the year total and divide into an automatic monthly payment to the fund. Then the first of the month that has an expense like car rego I pop the scheduled money back into my checking account to pay it. All of this enables me to avoid add on fees for monthly insurance, and not panic if some of the bills are doubled up and messing up my budget and cash flow.

[@situated4]

I call this my "January 1st" fund. I save into it each month for the following year's recurring larger fixed expenses. On January 1st, those expenses are fully funded and ready to transfer into my checking account for payments, as applicable. These include, property tax bill, annual IRA contribution, HOA dues, term life insurance, home & automobile insurance and Christmas club. It takes a lot of pressure off during the year.

[@jillpruett4772]

@@situated4 Sounds like you own your home F&C. That alone gives me a lot of peace of mind.

[@MillionaireMindsetClub]

Also, you can always use sinking fun calculators to get an estimate of what you will save.

[@bh12485]

Do you have any specific sinking fund calculators you recommend?

[@gracee.k.2356]

I didn't know there's such thing, could you pls recommend us? Thanks

[@KMF3]

Never heard of a sinking funds calculator

[@karenm656]

Definitely with you on loving lots of sinking funds! I'm a free spirit too- funny that we love the detail!- been doing it the last few years, feel much more in control, knowing that ALL the expenses are covered. It made me actually think through everything that I spend money on.

[@matthewharrigan3568]

Ally buckets are great for organizing the different sinking funds

[@donnaswells3939]

Absolutely! I've done this for years! Before Excel, I actually asked for check ledgers from my bank and I marked each one for the sinking fund, car, LP Gas, vacation, vet etc and it made it easy to take out as needed. I knew what was there, and no guilt when used. Once in blue moon I did move money from one book to the other, but most of the time it was 100% right. Why did I use check/ saving books?? I guess it was an easier system for me to grab and see it, and I guess my crazy mind noted it more as banking than using a notebook.

[@clarenceoliveriii]

This is so crazy, yesterday in the shower I was thinking of doing something like this for my car because between my wife & I we have two cash vehicles that needs random repairs

[@mattburton9250]

Yes! 👏🏼 Sinking funds for the win 🏆

[@Pandorash8]

I guess Dave’s stance is that the emergency fund is a sinking fund for a rainy day such as a vet bill, car repair etc. But I understand the other thinking about having separate savings aside purposefully for those things, as long as you don’t lose sight of debt-payoff and investing goals. I personally have sinking funds for expected annual expenses, including Christmas, and a home maintenance fund (as I own three properties, so my fully funded emergency fund isn’t enough to cover all three needing a new roof for example).

[@vickieclark5931]

I love sinking funds cause they are an emergency fund for the emergency fund. Things like medical, pets, house repairs, & car repairs are obvious things that more than likely you will have an emergency for coming up. I keep my sinking funds separate so that I know what each is for. I use them for emergencies and for planned purchases. Like my housing sinking fun I may plan to put money in there for a new roof I know I will need one of these days, but if my hot water heater goes out then I will pull from it right away cause that is an emergency. It'll take a little longer for the roof, but I did not have to touch my emergency fund. It's just that peace of mind that I have cause you can never be too cautious with what life throws at you. Love this video.

[@alexc5369]

EF= for unplanned emergencies SF= for money management and saving towards goals and other events. You shouldn't be saving towards planned emergencies like hose repair or vet bills, that's what the EF is for. You could literally plan for every emergency and then your EF would become obselete. - to me that's a waste of time and money

[@hopenfaith6255]

That’s what I do. I try to put all my money in one account and I found out that I over spend it. So different sinking find is a great solution to control spending.

[@davidtheurer7373]

Quickbooks is a great way to track multiple sinking funds within one account. I would highly recommend Quickbooks to anyone wanting to budget and track finances

[@Faith-un7ns]

I agree with you on this one Rachel.

[@libbysworld7649]

Sinking funds have changed the whole spending and budgeting game for me. Aside from my emergency fund and savings goals, it's an absolute game changer. I'm in so much better control.

[@asomdwemaameafuanyame-kyeh6902]

Oookay. That's really a lot but it does makes sense. I always save towards stuff. Never knew there was a name for it though. So I give myself like a 6months planning period and work towards raising the money so I don't touch my investment or emergency account. I can say it is very stress-free and empowering. People always wonder how I am able to do what I do without debts or stuff like that. Thanks Rachel.

[@Jessicad654]

I have a hard time understanding the sinking fund because in my mind I imagine its called sinking because you're in an emergency. I'm trying to understand all these new concepts. I have always lived paycheck to paycheck and I'm putting a stop to it now :)

[@ilovegreen0150]

You can rename the funds to inspirational names❤️

[@jayjulez7543]

I love your spunky and silliness

[@MarinelliBrosPodcast]

Titanic stock (White Star Line) is a sinking fund.

[@sody2000]

great advice for a car. everyone thinks that when they pay off a car it's already time for a newer car. just drive them to their grave and then use your sinking fund. i just ran a Range Rover to 141,000 and it had major timing belt engine failure with 31 failures. done. usually cars go farther.

[@RioTDollTV]

I'm doing this! That was my last loan, and now I'm saving that car payment for car-related expenses, whether it be keeping that car on the road, or for buying its eventual replacement.

[@sody2000]

@@RioTDollTV good job! Stick to it. So awesome!

[@karenbee3636]

Love sinking funds! They have really helped me

[@tristangirod1855]

I love to hear that Dave Ramsey’s daughter can even disagree and comes up with her own custom way of doing things . Just remember you can only bend a stick so far before it breaks AKA make sure you stay discliplined

[@yodaflyz]

Perhaps once this pandemic calms down & I know my emergency fund will still cover 6 mouths of my living expenses as I'm expecting them stimulus checks will come back to bite us in the form of an inflation spike. I will consider making a sinking fund so I can afford to put gutters on the house & to pay for other regular home maitanace costs without having to touch that emergency fund. That way the emergency fund can be used for what it's intended to be used for, a real emergency.

[@situated4]

Yes. An emergency fund turns a crisis into an inconvenience and it's not an investment, it's insurance. Per Dave, insurance does not make you money, it costs you money. It’s not there to make you wealthy, it’s simply there to protect the other savings, assets and investments that do make you wealthy over time. Therefore, you must view your cash emergency fund as an insurance policy, and once you have it, guard it carefully. Use it only in the event of a true emergency, and hope that an emergency never comes. Remember, once that emergency money is spent the time it takes to replace it is always much longer than anticipated.

[@ryankiel4895]

Good video. This is where I think Dave can improve on his teaching like Rachel said. you can use your emergency fund for maintenance on the house and cars etc, but then the problem is you have to stop the other baby steps while you rebuild your emergency fund.

[@vitiligoboi]

4:38 😂😂😂 me over here with my separate savings accounts (all HYSA) but it works for me and I don't touch it unless I'm doing something regarding those funds

[@livingunashamed4869]

Sinking funds is like the emergency fund for the emergency fund. Save your real emergency fund for that "dire" emergency fund that comes out of nowhere.

[@vickieclark5931]

100% agree. The real emergency fund can be there for an emergency that you never knew could happen.

[@paulinoaz]

Sinking fund should not be for emergencies, it should be for big purchases you need to save for. Things like going on vacation. Buying a 75'' flat-screen, maybe you want to remodel a bedroom, things that are not emergencies but cost to much to budget into one or two months.

[@livingunashamed4869]

@@paulinoaz I disagree. Saving monthly for car repairs, house repairs, medical, new car, etc is smart so you'll have the money and not have to dip into your emergency fund to cover these expenses.

[@paulinoaz]

@@livingunashamed4869 then you should not have an emergency fund, if you want to take your emergency fund and divide it into categories (car repairs, house repairs, medical exp, etc) that is fine but with all your sinking funds for emergencies you just destroyed the entire reason to have an emergency fund. If I was you I would take the money you are putting into your "emergency sinking funds" and just add to your normal emergency fund to make it larger. Some people are not comfortable with a 3-6 month emergency fund, they feel they need more, if you feel that way then make your emergency fund 12 months, or even 18 months of expenses. Whatever makes you feel secure.

[@livingunashamed4869]

@@paulinoaz No, emergency fund is for that real emergency fund that you didn't plan for. Somethings you can't plan for or expect. But even Dave has an emergency fund for his emergency fund lol.

[@jacqjacq5920]

Love Rachel! Funny and refreshingly honest... 🥰

[@owlbefine8910]

Sinking funds are so helpful and I’m glad I started saving in them

[@peterpaulliveaction9298]

If its emergency then why not get it from emergency fund regardless if its expected or not? I think its better that way so we could focus more on increasing our income instead of thinking about what other emergencies should we be expecting next? Its a bit overwhelming especially for busy people imo.

[@MichaelJSNeves]

At 4:26 I believe people should open an account like Ally Bank and use their sub savings accounts it’s one savings account but inside it has multiple savings in it look up Ally Bank’s Saving Buckets huge game changer.

[@missyouhoo]

This isn't a plug but PNC online banking website ca separate your funds without a lot of accounts. The sucky part is that it's a brick n mortar bank so its sucky intertest on top of the generally sucky interest.

[@Julian-zd9kx]

Are those sinking funds for bigger items also on a savings account or are you gonna put the one for bigger purchases in something like a ETF fund?

[@rainacherienne1010]

I’ve invested mine into single stocks but that’s probably not recommended way.

[@angelaj3626]

I’m in Baby Step 1 when do I start sinking funds in Baby Step 3?

[@paullarsen1]

How do I create and use a sinking fund in EveryDollar?

[@lisasampson9187]

I always wonder if you always do sinking funds or do you wait until debt is paid off? I had $300 for my snowball but now with sinking funds I have nothing. We do get bonuses thT I don’t account for that I plan to put on debt but that part confuses me

[@timmyireland1]

I do this already. I didn't realize it had a name.

[@vincentortega4284]

Likewise, Jamie, I had no idea that's what it called; sinking funds are a lifesaver

[@Mphilonne]

Me too!

[@MsJoyce31202]

♥️

[@petespeicher8363]

I’ve always called these savings goals

[@melanierose9015]

A vet bill isn't an emergency. You know something will happen just like your car will need some help.

[@CathRas95]

I have auto fund, medical fund and home repair fund separate from my emergency fund.

[@catalinab7626]

Love the earrings!!!! And thank you for this video.

[@sobeida92]

Love your earrings Rachel 😍

[@FatihKarakurt]

Is the use of term correct? It means money set aside to pay off a debt or bond. This is just a savings account.

[@DavidEVogel]

It means money set aside to pay off a debt or bond. The definition is flexible, but the objective is to avoid debt. If your goal is $2,000 for new living room furniture, you set aside $100/month for 20 months. You now have cash to buy the furniture.

[@FatihKarakurt]

@@DavidEVogel So probable a better term to use is targeted savings account.

[@DavidEVogel]

@@FatihKarakurt Works for me.

[@Je.rone_]

I here a lot about sinking funds but i haven't used one

[@Faith-un7ns]

You should start one, it gives you extra money to plan on future events this way you can always have your emergency fund for if you lost your job.

[@Mwilder05]

Do you have all the sinking funds being funded while on Baby step2? I am on baby step 2 . I see it as another 1200 a month to toss at my debt. however. I like the idea of having funds in these areas/ Here are my sinking funds A month Medical Christmas Car Fund Mower Maint House Maint House Tax & Ins State Farm 6 Mo Bday/Holidays Clothing Kindle/Books Equals to $1200= each month

[@nildabridgeman8104]

You make it sound so enticing... Money tucked away specifically 4 my Suburban ❤

[@HangNguyen-ih8rf]

You don’t need a sinking fund if you live like you gonna be homeless tomorrow. The chance of one becoming homeless is much higher than getting cancer or accidental death. Tornado? Hurricane? Job loss?

[@MrYega-zq7rz]

love the idea

[@rebeccakull479]

Do you recommend having sinking funds even in the middle of Baby Step 2?

[@paulinoaz]

NO! when you are in debt you are only paying off debt. Sinking funds are done in Step 4, 5 and 6. Basically a sinking fund is the same as step 5 "Saving for kids college", because that IS also a sinking fund.

[@carolyn8103]

You can do both.

[@shanwilson3682]

Yes, for car repairs and other necessary needs coming up. Not for holidays or shopping trips. They come in baby step 4. Needs only at that step

[@Faith-un7ns]

No wait until you’re done baby step 3.

[@Courtz843]

Its so funny i barely agree with anything dave says but that part i do agree with

[@ashleyross5874]

My type a personality forces me to have sinking funds.

[@danuelliaramdeen7373]

Like this video. Great tips.

[@BeautyBox7]

Sinking funds make me excited LOL

[@sarahblissmorin4159]

Love this. Does anyone recommend a bank where you can divide a savings account into separate categories? I like seeing everything in separate categories so I know exactly how much I have saved for each fund.

[@AsadoMao]

My bank in the Czech Republic (Air Bank) allows you to create as many "envelopes" in the savings account as you want and you can even set a goal amount. Real nice stuff

[@laurenisaacs7053]

Capital one 360. You can have up to 3 checking accounts and 25 savings account per social security number. And they are all free and no minimum or maximum ammounts. You can also name each saving account.

[@tanyateamaiden]

Ally bank. You can create buckets for each saving goal all under the same saving account. 😊

[@Faith-un7ns]

Never heard of an account like that.

[@sarahblissmorin4159]

@@laurenisaacs7053 That sounds great! Thank you!

[@jeffdorris5321]

Nice work 🦋🦋🦋🦋

[@BackroadMoney]

We have a sinking fund account that we review annually. We just did ours, we think of everything from vacation to home upgrades for the year then add it up and divide by 12.

[@alexc5369]

Do you just use a spreadsheet or something to track?

[@BackroadMoney]

@@alexc5369 actually, I use a notebook.

[@Faith-un7ns]

Good idea!

[@situated4]

You need to separate these out into detailed separate savings accounts, or you won't be able to correctly and effectively track the proper allocations after awhile. Again, please remember, this path to financial wellness and prosperity isn't amateur hour. Thx.

[@BackroadMoney]

@@situated4 We have been doing this for years and I keep track in a notebook. To me it is easier and simpler than having 5 different accounts to track. We all have different ways that work for us and adding another 5 or 7 accounts on top of the 6 we already have is not efficient for me when I can apply basic math to achieve the same result with less stress. It seems we are both on the right track watching Ramsey videos, which puts us way ahead of the curve. Good luck to you and thanks for the comment

[@MsJoyce31202]

Sinking funds. ♥️

[@markg999]

I'm just not that detailed. I live well below my means so the money is just there when I need it for something.

[@situated4]

Please try them. Stop "winging it" and get on a detailed monthly budget. Don't be financially and intellectually lazy.

[@markg999]

@@situated4 We save and invest over 60% of net income and on baby step 7...I think we will be ok.

[@situated4]

@@markg999 O.k. Godspeed. But is sounds like financial and budgetary hubris, and that you're backsliding. Dave would not be amused. A detailed monthly budget is required regardless of any step you've achieved.

[@glendaw5221]

I can’t afford to “save a little” each month for sinking funds until I get out of debt. I’ve got savings in an IRA. My sinking funds add up to a major monthly amount. Property taxes, car, appliances. You are talking to people who have completed bs 2. Right?

[@vincentortega4284]

Glenda, I have not yet completed BS2, yet I do save a little besides my emergency fund for other known, or unknown expenses.

[@MV-tw9ku]

A lot of the things she mentions (vacations, hypothetical pet surgery, new car) are not things you'd worry about while being gazelle intense about paying off debt. Irregular expenses would need to be in your budget (like every 6 months i pay my car insurance). Do the best you can to tighten your spending to focus on getting out of debt; if something comes up, you'll handle it and get back on track. Later, you'll be able to save and plan for every replacement or upgrade.

[@Faith-un7ns]

Yes, complete baby step 2 first. You have your $1000 emergency fund in the meantime.

[@DavidGeorgiaPersonalFinance]

Sinking funds keep you from sinking your financial ship. It can keep you afloat and help you navigate the seas of life. See what I did there?

[@janae09]

I sea what you did there!

[@alexc5369]

🌊

[@paulinoaz]

Step 5 should be renamed and should not be "Save for kids college", instead it should be "Set up Sinking Funds". Because it is done after step 3 and not everyone has kids. I am a photographer so I have a sinking fund to buy a new camera, I have one for vacations and one for a new car. Just keep in mind sinking funds are NOT for emergencies like car or home repairs, that is what your emergency fund is for.

[@jenniechapman3553]

We started sinking funds in BS2 for larger non-monthly expenses like Xmas/b-days, homeowners insurance, property taxes, Auto and life insurance, school and kids activity expenses, pet costs, Etc. Breaking these out over 12 months helped to keep our budget and snowball stable.

[@rollingacresfarmstead206]

Im pretty sure shes talking about selling short and getting a bailout. Too soon?🤑

[@TheGayStoic]

Rachel, I would call it a ‘random fund’ account. Sinking fund sounds a bit desperate.

[@kristengraham3590]

Sinking fund is an accounting term. Companies will establish them to target specific liabilities.

[@barrykelly2722]

Ahhwww, cool. I had a stinking fund and didn't know it. Just 24 more years and I will have that 78 Pinto.

[@MsJoyce31202]

Spend all your money in one place 😏

[@Rez-rk3gb]

Dave Ramsey thinks he has a one size fits all plan. I agree with him on most things and you should avoid debt as much as you can, but unfortunately we all aren't worth $50 million+ like him. People don't have the luxury like him of having boat loads of money. The baby steps aren't right either. Just having $1,000 isn't enough, you need at least $5,000 before you can attack debt. It's just like only buying a house on a 15 year fixed where the payment is about 25% of your take home pay. If that was the case I would have never bought a house. I would be much worse off financially if I followed his plan. 30 year is fine, but just try to pay 2 extra payments a year. You can probably pay off a 30 year in about 20 years if you do it right. That's good enough.

[@kritika.shanker12]

Halsey?!!?

[@danmartens8855]

How DARE you disagree with Dave Ramsey! Don't you know who he is?

[@jessicaquintanilla9913]

The plain hardboard thessaly bat because sneeze individually ban inside a amusing soap. icky, hapless giraffe