A Life Without Debt: Managing Once a Year Expenses

Those large expenses that don’t occur monthly are a big reason why some people end up in debt. Even people who are well intentioned and good at avoiding debt in other circumstances are often caught by surprise by these big expenses. Insurance, taxes, and other bills that are paid yearly rather than monthly are all examples of these irregular expenses. Even Christmas spending can fall into this category if you fail to plan for it. These expenses are easy to forget about because you don’t pay them month in and month out as you do with a utility or credit card bill. So you fail to account for them in your daily budget and then, wham! The bill for $1,200 in property taxes arrives in

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5 Responses to A Life Without Debt: Managing Once a Year Expenses

  1. This is one place where YNAB really excels, because it allows you to budget a little bit for those expenses each month to save up for when they come due. The only such expense I have is my domain name renewals, which are scattered throughout the year. I have $4.54/month budgeted for them. When it’s time to renew, I don’t have to touch my spending money to take care of it. Granted, they’re not huge expenses like insurance and taxes can be, but why not plan ahead for the little things, too?

  2. Julie says:

    I have done this all my adult life, however I do it on a weekly basis and keep track of it on paper.

  3. This is exactly how I take care of things like car repairs, paying for college books, and any bit of tuition my tuition assistance doesn’t cover. I opened several online savings accounts at Ally.com, named them accordingly, and determined how much I needed to have automatically deposited each month.

  4. Isabelle says:

    Me too, we add up our annual expenses and put 1/12th of that away each month. We also put away an extra

  5. Debbie M says:

    I do this but also have a funds for the less predictable things: car expenses (includes gas and insurance but also repairs), house upkeep, and health.

    How do I figure out how much to contribute? For the car expenses, I just kept track for a while and put that amount in. For the house upkeep, 1 – 2% of the value of the house is a rule of thumb I’ve heard. For health, I just went from nothing to almost nothing and will work my way up over time.

    I also save for my next car so I can pay cash.

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