They say the best way to eat an elephant is one bite at a time. The point is, that when you look at the size of the thing, it is overwhelming, but by working at it one small bite at a time, you will make progress and eventually you will complete the task. The same principle applies to our finances. Be it saving for retirement, eliminating your consumer debt, or paying a huge bill.
In our state we have to pay taxes on our personal property. So, at the end of every year we owe a few hundred dollars in property tax for our cars due on December 31. A bill for $350 can be challenging at any time, but right after the Christmas spending spree makes it even more difficult.
The great news is that for $29.16 a month I can have all of the money saved up for that bill when December rolls around again. This is part of my budgeting with ING Direct that I use. I create a savings account for each “elephant” sized bill and divide by 12 to figure out how much I need to save on a monthly basis. A side benefit is the interest that is being earned all year long on that savings.
If you haven’t tried saving up for large bills, I promise that you will absolutely love the feeling you get when you do. It almost makes me excited when the bill comes in, because I don’t have any question of where is the money coming from. It has been sitting in a savings account just waiting all year for that bill to come in.
I use this method with car insurance premiums rather than using the monthly rate that some companies offer. Normally there is a fee charged for the monthly billing option and you can save yourself a few bucks a month by paying the 6 month premium all at once.
Oh and don’t forget to use the interest you earned to take yourself out to lunch, because you’ve earned it.