Budgeting can be difficult at times. Some don’t see it that way. They just put out a budget every month that is exactly the same as any and every other month (what Dave Ramsey calls “the perfect month from heaven”). When we really stop and think, though, we all know that no two months are exactly alike.
What are Gotcha Expenses?
- HOA dues
- Dentist visits
- Life insurance premiums
- Christmas
- Wedding anniversary (you don’t want to forget that!)
- Trips (both personal and ministry-related)
Budget for the Gotchas!
What, then, can you do to be ready for these budget “gotchas”? Here are 4 things to consider.
1. Save monthly for some.
The old-fashioned “Christmas accounts” at a local bank were there for a reason. There are some things that are quite easy to save for. My wife and I put money away each month for Christmas, for example. We do this for a few reasons. If nothing else, Christmas never moves on the calendar!
Also, though, by having that money at hand, we can jump on a good deal earlier in the year if we know what someone might want. We put the money away in cash in an envelope throughout the year. If you don’t trust yourself as much, open a special account, either online or at your local bank. Then, just have a small amount put in there each month. When December comes, you’ll be ready.
2. Use “extra” money.
Most of these “gotchas” are things that we know are coming, and a vast majority are items where we know the amount well in advance. Instead of just blowing a bonus check or some money given for a special service, use that money to help pay for one of these. That way, it barely touches your budget, if it affects it at all. As a preacher, I am asked at various times to come and preach for one night.
Often, the congregation is generous enough to pay a little money for these speaking times. My wife and I always try to do three things with this money. We give, we “pay ourselves back” for the expenses (gas, food, etc.) incurred, and then we plan to use the rest. Often, that leftover money goes to a “gotcha” item.
3. Set aside money for two (or more) months.
What I mean by this is to set aside half the amount the month before something is due, and then the other amount the month it is due. For example, if your HOA annual dues are $300, why not budget $150 for two months (or $100 for three months if money is tighter), instead of trying to find $300 in a single month. Get that money in cash, and put it in an envelope until the time comes to actually write the check or call in the payment. This spreads out the large expense without making one month really hard to manage your bill payments.
4. Don’t incur late fees and penalties.
Check and recheck the due dates on these categories. Often, late fees for dues and services are huge, and will make paying them even more of a burden. Some ofter a grace period, but only if you ask.
The real key to handling these situations is to plan ahead. It is amazing to me how some people claim a “gotcha” on something that happens quarterly, semi-annually, or even yearly. Taking a few moments to look down the line will help ease the pain of paying for those larger items that can often destroy a monthly budget.
How do you avoid or pay for “gotcha expenses?” Leave a comment below!
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{ 11 comments… read them below or add one }
All too often I got caught unawares by quarterly or yearly known (but ignored) expenses, so finally I got smart & opened a separate savings account for these expenses. To give myself a cushion, I divide the previous year’s bill by 10 or 11 (not 12) and set up automatic transfers from the checking (where my paycheck is deposited) into this special savings. When the bill comes due, I have the money put aside so I can pay it immediately. I do this for ALL expenses that aren’t monthly, and it certainly has reduced my stress related to these types of bills.
One thing though – I have to NOT look at the money accumulating in that savings account, or else I would be tempted to spend it. I keep track of transfers in/out of that account on a separate spreadsheet but am now considering creating a bunch of ING accounts, one for each expense. Am not sure if it would be worth the effort or not. Thoughts anyone?
Instead of opening up a lot of ING Direct accounts, you may want to just track how much money you have allocated for each expense. That way, you don’t have to mess with multiple accounts, but you’ll keep things “virtually” separated and know how much money goes where. I hope that helps!
I actually did just that: opened ING accounts. Heres what I did: opened an ING checking account (which is the acct that requires paperwork etc etc) — then opened the savings accounts in the ING checking (under it? along side it?) — ING makes it super easy to open more savings accounts (presumably as many as you want) I had something like 20 open at one time and renamed them according to those ‘Gotcha expenses’ — But the catch is that you can only move money OUT of each savings acct so many times per month (five? less?). So if you want to put money into the ING savings no problem, as much as you want, but pulling money out, only so many times per month. So for me, it really was not easy to manage with this rule in place. I’d thougth about writing out all the ‘Gotcha’ money I ‘spent’ from the ING savings accts then reconciling once per month but this requires having extra money in the ING checking to cover those expenses. Is it worth it? Anything that helps you sure and that isn’t bothersome and difficult (by your own preception). For me, its a bit difficult if the ING savings accts have to have a lot of money per month coming in and going out.
As a preacher, do you undergo extra scrutiny for your lifestyle and how you use your finances? I am training to become a minister and have been thinking about how other people supporting me in the ministry would affect my financial decisions. I liked that you took speaking bonuses from churches as an opportunity to fund the savings for unexpected expenses. It seems like a good way to recognize God’s financial provision beforehand to prepare for what could have otherwise been a “gotcha” moment. Thanks for the insight.
Mac,
Personally, I have not “noticed” the scrutiny about that, but I have had friends who have dealt with that at times. Usually (not always, but usually) it is because the minister has been very unwise financially.
If you wish to carry this conversation further, please contact me and I would be glad to help you think through this a little more. Thanks for reading.
I use a ledger system to set aside money for any expenses that come up throughout the year. For instance, each paycheck money is set aside to pay our property taxes even though this is only paid a few times a year. All of our money is kept in one big pot but with the ledgers I can see where each dollar is designated. We also ‘borrow’ from ourselves if necessary and then ‘pay ourselves back’. You can read a bit more about the way we budget on our blog.
We have money taken out of our check and deposited to a savings account automatically. That way you never need to worry about it. Plus, we try and put some away in a separate savings account for emergencies each month. Thanks for the post!
It really helps to write down all the known “gotcha” expenses for the year, divide by twelve or the number of paychecks and put the money away a little at a time. But then there are the real “gotcha” expenses that you never saw coming, like an unexpected doctor bill, a car repair, etc. The most one can do for those is try to guess how much they might be and add them into the total, and put away extra just in case.
This is an area where I have tried to make improvement recently. After this past Christmas, I realized that although I don’t know exactly what I will be spending the money on, I KNOW I will be spending money at Christmas. We recently started a “Christmas Account” through our ING Direct savings. There isn’t a ton going in there (hardly even notice it) but over the year it will add up and relieve the big burden of trying to find those extra dollars come December.
I am with you on this one. The biggest challenge is remembering that things will happen and to always be prepared for those times. I do better with this on some things but still get caught when something like the washer breaks down and needs to be replaced … Sigh!
Our greatest financial liberation came when we finally set up our “Safety Net” or “Emergency Fund”. Once that money was in place, the gotcha’s, whether true surprises or overlooked recurring expenses, became nothing more than trival annoyances. What a difference that has made in all aspects of our lives, including our marriage.