Author Topic: How do you "save" for big ticket items when you already have the cash?  (Read 9736 times)

MrsSmitty

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You always hear people talking about saving for large purchases rather than putting them on a credit card. But how does that translate when you live so far below your means? For example, we had to replace our busted furnace on short notice and had to put down 50% with the contractor to start work. So we wrote a check right there using the excess from our last paychecks that was collecting dust in our checking account. It felt like nothing. But other people would have had to save for it, or plan for it, or pay it off. It would be a big deal. We just used "extra" money that would have been dumped into a savings account. Which is great, but it's also kind of scary how easy it was.

We've been wanting to remodel a bathroom as well, but now I feel like we should wait since the furnace thing came up. But then again, why? We have the cash for both without even stretching. I'm worried that we're taking on too much too quickly and aren't properly planning for the big stuff. But we live so far below our means already that it's hard to know how much planning and waiting I should do. It's easy to say, save up until you can pay cash, but we already have the cash and then some. So should I just wait some arbitrary amount of time? Am I over-thinking this?

skunkfunk

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #1 on: October 06, 2014, 11:00:20 AM »
Are you FI? If not, why are you remodeling a bathroom? And if you're not and doing it anyway, are you DIY? If yes, I think you're over-thinking it. You could perhaps wait a bit and see if you still want the thing?

sheepstache

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #2 on: October 06, 2014, 11:09:23 AM »
You always hear people talking about saving for large purchases rather than putting them on a credit card. But how does that translate when you live so far below your means? For example, we had to replace our busted furnace on short notice and had to put down 50% with the contractor to start work. So we wrote a check right there using the excess from our last paychecks that was collecting dust in our checking account. It felt like nothing. But other people would have had to save for it, or plan for it, or pay it off. It would be a big deal. We just used "extra" money that would have been dumped into a savings account. Which is great, but it's also kind of scary how easy it was.

We've been wanting to remodel a bathroom as well, but now I feel like we should wait since the furnace thing came up. But then again, why? We have the cash for both without even stretching. I'm worried that we're taking on too much too quickly and aren't properly planning for the big stuff. But we live so far below our means already that it's hard to know how much planning and waiting I should do. It's easy to say, save up until you can pay cash, but we already have the cash and then some. So should I just wait some arbitrary amount of time? Am I over-thinking this?

I have no solution but sympathize with your very mustachian problem and encounter it myself sometimes.

retired?

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #3 on: October 06, 2014, 11:13:20 AM »
For near term stuff, I like to set up autopilot deposits from my checking to CapitalOne 360 account.  e.g. my wife and I like to go on an anniversary trip each 5 years that is above and beyond what we normally do for vacations.  We usually have the cash, but bucketing our savings (CO360 allows many separate accounts) helps to keeps things straight, i.e. we know we are going to spend that bucket in 2017.

For others without as much cash, covering the busted furnace would have come from a general "emergency fund".  But, the ease with which you were able to cover it should give you comfort, it is certainly not scary.

Would you already have X months worth of expenses in savings after paying for the remodel?  Does the remodel impact your FI timeline or ability to RE?  Do you already max out 401k etc.

Probably overthinking it.  We had our MBA redone right after I quit working.  We had planned to do it when the $$ were still rolling in, but it was something we wanted to do and had little impact on the overall financial situation. 

catccc

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #4 on: October 06, 2014, 11:16:41 AM »
I use a smarty pig account and start new "goals" for specific items.  We've got a lot of cash, but that is essentially set aside for FI.  So for instance, we bought a new mattress this year and had some car repairs.  The money for these specific items did not come out of our annual savings goal account, but out of specified accounts that were earmarked for particular uses. 

We used to just have one big savings account, but it was really too easy to be like, "Okay, Turks and Caicos?  I've got $6K right here for it (and it will hardly make a dent in the 50K balance)!"  We would use the cash in our main savings account if needed on short notice, but I like that if there is something big coming up, there is now incentive to save extra for it in a specially earmarked account.

The change was part of our transition to using YNAB.  Basically, I pretend the money in our main savings account doesn't exist, and we budget for movement of a portion of each paycheck to go into this main savings account.

2ndTimer

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #5 on: October 06, 2014, 11:24:48 AM »
I don't have a separate account for big items but we keep the checking account well padded against emergencies.  If I know there is something coming up that we want, I will tighten the sphincter a bit and let the extra build up in the checking account.  If an expenditure bites into what I think of as our emergency fund, I tighten the sphincter for a couple of months afterward until the balance gets back where I like it.

MandyM

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #6 on: October 06, 2014, 11:30:33 AM »
I don't save up for anything, but I do take a long time to make big purchases to make sure I really want/need it. Also, I've started to set yearly savings goals. As long as I hit those (fairly lofty) goals, I am on track and I won't sweat the rest.

Mrs. Frugalwoods

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #7 on: October 06, 2014, 02:05:59 PM »
We don't have segregated savings accounts. Since, like all you fine people, we live far below our means (and save 65%-85% every month), we just toss all of our money together. All of our combined income that doesn’t go into our 401Ks or to taxes is direct deposited into our joint checking account. We then decide how much to keep liquid and how much to put into our taxable investments account. We always keep a minimum of 3 months of living expenses in our checking account. This allows us to not micromanage our cash flow and easily deal with unexpected expenses without needing to liquidate assets in the taxable account.

Our purchasing decisions for big-ticket items are guided by our overarching ethos of frugality. Even though we can "afford" to buy a ton of stuff, we choose not to. When we do buy something, we try to be very thoughtful and measured about the decision.

Louis the Cat

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #8 on: October 06, 2014, 03:22:28 PM »
This is a question I've been pondering myself. We have recently been stashing money away for a just in case scenario that has not come to pass. (We were afraid a carpet installation was going to get out of hand due to asbestos but found a DIY product that we like better than the original traditional installation.) Then, the dog needed to have his teeth cleaned which turned into having two teeth pulled (he's 11). We pulled the money from the just in case fund to cover it but now I'm wondering if we should hold off on the carpet even though there's plenty of cash to do both. I'm leaning toward just doing it but it's a LOT of cash going out the door in one month, especially since I just had a dental emergency of my own (came out of the HSA). It's nice to know our systems are working but still a little scary when I pull up Mint.

Edited to add: part of our above-mentioned system involves separate savings accounts with Capitol One 360. For instance, we have a car maintenance account that gets a set contribution every paycheck and some deferred maintenance on the cars. We decide what the next thing in line to fix is and then, when the maintenance account has that amount, we buy the parts and do the work, then let the account start piling up for the next repair.
« Last Edit: October 06, 2014, 03:26:22 PM by Louis the Cat »

deborah

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #9 on: October 06, 2014, 03:46:30 PM »
Work out how much to budget for these things, and work out how much there is in of that part of the budget. This is a multi-year part of the budget, or you could proactively use it at the end of the year. This includes items such as replacing the old hot water service, the car, house maintenance requirements...  (bathroom renovations may or may not be included in this budget - but it would be bigger if you do).

MsRichLife

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #10 on: October 06, 2014, 05:35:36 PM »
For big purchases (that aren't emergencies), we put them on a list on the fridge for a set period of time before we are allowed to buy them. The bigger the expense, the longer they have to stay on the list. i.e. I needed a couple of extra tops to wear to work now that Spring is here. They were on the list for a month before I went shopping. DH recently bought a milling machine for his home workshop. It was on the list for about 6 months before he actually bought it because it was a large expense and we needed to be sure it was the right decision to get it.

Doing it this way ensures that purchases are well thought out and not just made on a whim. If we find that we still want the item after a month or so on the list, then we can buy it knowing that we've researched the best possible prices and thought about all the alternative ways of doing without the item.

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #11 on: October 06, 2014, 05:52:42 PM »
I have an fixed sum emergency fund for emergencies (which I replenish back to it's original amount from income or savings if I have to use it). I also have a fixed sum savings account for unneeded/fun things (I would consider a bathroom remodel unneeded) that I also replenish from income to it's original amount if used. I would replenish both of those accounts to full level before I allowed myself to spend any money on "other" unneeded things - like travel or fun stuff. Keeps a cushion in place so I don't have to use a CC, and give me a set limit that I must have in savings/emergency funds before I can spend more.  So if I want to buy something - like a bathroom remodel - I must have both my emergency fund at full level and my savings "fun" fund full level PLUS the additional amount to pay for the bathroom remodel before doing it.
« Last Edit: October 06, 2014, 05:56:56 PM by Spartana »

Metta

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #12 on: October 06, 2014, 05:53:25 PM »
We "borrow" the money from ourselves. Specifically, on our monthly cash-flow/budget spreadsheet we record how much we spent from the excess in our checking account and then arrange a payment plan to pay our checking account back. It's really a bit of tomfoolery with our checking account since we keep a pretty large cushion in it. We were once in debt and the idea of seeing that "debt" that needs to be paid back on our spreadsheet keeps us honest and gives us a small sense of urgency that ensures that the emergency funds do not stay depleted.

Yes, we are weird. We get that.

Paul der Krake

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #13 on: October 06, 2014, 06:23:15 PM »
I have yet to buy anything that cannot be bought with "leftover money", the kind of money that would normally go straight from the paycheck to the taxable account. The joys of not being a homeowner, I suppose. I just buy when the need arises.

You can make small deposits every month into the "furnace" or "auto" or whatever fund to stomach the purchase more easily when it happens, but it's just an accounting trick.

Rural

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #14 on: October 06, 2014, 06:25:12 PM »
We talk them over, then buy them if we decide we need to. Unless the big things is a bunch of building supplies that were part of the original house plan (still some of that going on). Then we just buy them when we get ready for them or, better, when there's a good sale on - that's what the barn is for, after all.


Our next non building big purchase will probably be a car, but I'm thinking that's a couple of years off. My commuter Kia is approaching 250k miles but is going strong still.

ETA actually we may buy a house for inlaws before a car. That would take most of our liquid funds - houses here are dirt cheap; we'd be looking at 25k, which we'd gradually get back from inlaws in "rent." They're in a bad area of what has become  dangerous town, so if they can sell for what they owe, we want to help with the relocation.
« Last Edit: October 06, 2014, 06:29:38 PM by Rural »

Mrs. PoP

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #15 on: October 06, 2014, 06:29:58 PM »
We just cash flow big one-off expenses for the most part.  If ever that weren't enough we keep a buffer in cash that's quick to access.  Actually makes talking about things like our planned (DIY!) kitchen renovation awkward with some people because they're assuming we're financing the whole darned thing.  Ummm... no.  We would never do that.

Blany

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #16 on: October 06, 2014, 07:42:39 PM »
Interesting strategies and principles playing out above.  Since I've been Mustachian (coming on 1 yr) I haven't had  a large expense but this is giving me some ideas on how to approach it in the future thanks.

rocklebock

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #17 on: October 06, 2014, 08:10:24 PM »
I keep 1.5x my average monthly expenses in checking. When I accumulate anything over that, I move it to a savings account, which I use first to fund my Roth IRA. Once I max out the Roth, the rest is for whatever I want to save it for (currently a car). I have a second savings account that contains my $5k emergency fund. I don't necessarily need all these separate accounts, but it's nice to see at a glance what my overall cash situation is.

Metta

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #18 on: October 06, 2014, 08:57:48 PM »
We just cash flow big one-off expenses for the most part.  If ever that weren't enough we keep a buffer in cash that's quick to access.  Actually makes talking about things like our planned (DIY!) kitchen renovation awkward with some people because they're assuming we're financing the whole darned thing.  Ummm... no.  We would never do that.

We renovated our kitchen recently and are carrying a $5000 debt to ourselves on our spreadsheet that we are paying down. I was chatting with a friend who also just renovated her kitchen and I said, "You know, I'd prefer to cook lunch for you instead of going out tomorrow. I'm still paying for the kitchen renovation."

Her: "Me too! Did you get a good interest rate?"

"Uh..." Finally, I said, "Yeah. One of those same as cash deals."

Sometimes it's just best to leave the financial details alone and have a happy lunch.


kaetana

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #19 on: October 06, 2014, 09:00:26 PM »
I'm worried that we're taking on too much too quickly and aren't properly planning for the big stuff. But we live so far below our means already that it's hard to know how much planning and waiting I should do. It's easy to say, save up until you can pay cash, but we already have the cash and then some. So should I just wait some arbitrary amount of time? Am I over-thinking this?

This is the part of what you said that makes me agree with catccc that you might benefit from using You Need a Budget (YNAB). It's basically the envelope budgeting system, but virtual. That anxiety you spoke of about making sure everything is planned for-- that's something that YNAB happens to excel at. I don't think it's for everyone, but if you're the kind of person who wants to make sure money is put aside for certain things, I don't think there's a better system.

You can do what YNAB does using a spreadsheet, by the way. It's just not going to be anywhere near as neat, easy to maintain, and nice looking/pleasurable to use.

Metta

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #20 on: October 06, 2014, 09:06:22 PM »
For big purchases (that aren't emergencies), we put them on a list on the fridge for a set period of time before we are allowed to buy them. The bigger the expense, the longer they have to stay on the list. i.e. I needed a couple of extra tops to wear to work now that Spring is here. They were on the list for a month before I went shopping. DH recently bought a milling machine for his home workshop. It was on the list for about 6 months before he actually bought it because it was a large expense and we needed to be sure it was the right decision to get it.

Doing it this way ensures that purchases are well thought out and not just made on a whim. If we find that we still want the item after a month or so on the list, then we can buy it knowing that we've researched the best possible prices and thought about all the alternative ways of doing without the item.

This sounds very admirable! How do you determine how long an item stays on the refrigerator list before it can be purchased? Do you do it by the amount it costs?

MsRichLife

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #21 on: October 06, 2014, 09:30:53 PM »
This sounds very admirable! How do you determine how long an item stays on the refrigerator list before it can be purchased? Do you do it by the amount it costs?

We aren't particularly strict about how long we wait for something. Sometimes I'll buy something immediately. For example, if a bargain comes along on Gumtree or similar, we usually just have a chat about why we think it's worth buying now. It's the bigger things or those things that are marginal in terms of 'need' that tend to end up on the list.

DH found a guy clearing out his entire workshop before moving overseas so he ended up getting a bunch of good quality tools for a bargain price. The items weren't 'on the list' but DH knew that in the long term he wanted to build up his tools so that he can work on some nano-businesses he's building. The purchase seemed like a good idea after we discussed it, so he went ahead and spent the money.

Sometimes I'll find a second hand toy or item of clothing for my son that I have been thinking about for a while and I'll just grab it if it's available. i.e. Lego duplo is a favourite in our house and our constructions had started using every piece we owned so when I saw a big bag at the op-shop I grabbed it.

But...If I want to buy a book or something that I know is just an impulse, I'll stick on the list and make myself wait. Sometimes I'll end up buying it. Sometimes I'll decide to do without.

Zikoris

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #22 on: October 06, 2014, 09:46:49 PM »
We just buy it. The only big-ticket items we get are vacations, and there's an annual budget for that, so as long as we don't go too crazy it all works out.

zolotiyeruki

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #23 on: October 07, 2014, 07:48:53 AM »
Here's how we do it:  Each year we forecast/plan our infrequent but expected expenses.  These are things like saving up for a new (to us) minivan, car insurance, HOA dues, Christmas, saving up for vacation, new cabinets for the school room, etc.  Based on those expenses, we automatically transfer $xxx each month into our "short term savings" account.  Then, during the year, as expenses come out, we draw the money out of the short-term savings account.

We've found many times that over the course of the year, our priorities change, so we make adjustments.  For example, we had budged several hundred dollars to rebuild our deck.  But over the course of the year, that project became a lower priority, so we reallocated those funds to other things, like buying me a new suit for church, installing pantry shelves, etc.

In your case, it sounds like you're hesitant to spend a huge chunk of money.  I know the feeling.  But if it's something that's you feel is worth it, and you've got the funds for it, and you're not jeopardizing other goals, then QUIT STALLING AND DO IT ALREADY! 

RelaxedGal

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #24 on: October 07, 2014, 09:38:55 AM »
We have the cash for both without even stretching. ... [W]e live so far below our means already that it's hard to know how much planning and waiting I should do. It's easy to say, save up until you can pay cash, but we already have the cash and then some. So should I just wait some arbitrary amount of time? Am I over-thinking this?

No advice, just commiserating.  I've been thinking of buying a new car for a while, but my old one works just fine, and I want an electric one just for the gadget factor.  So I shoveled the car money I had sitting around into a taxable account so it would be fruitful an multiply.  And then the basement started to leak, sending us on a spending expedition (asbestos, demolition, sealing) and we decided to replace the carpet we've been meaning to for years because Dangit, just do it!  Then our neighbor had a surveyor by, we got his card and an estimate.  Chatted over the estimate with my husband because it seemed kind of high, but thorough.  "Anyway, it's just money, right?"  That feels like a slippery slope!  Meanwhile cash is building up again because we live below our means.

In your case, it sounds like you're hesitant to spend a huge chunk of money.  I know the feeling.  But if it's something that's you feel is worth it, and you've got the funds for it, and you're not jeopardizing other goals, then QUIT STALLING AND DO IT ALREADY!
Words I should live by.  Maybe I'll get that i-Miev in the spring.

sheepstache

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #25 on: October 07, 2014, 09:49:22 AM »
Okay, here's something I sort of do to mimic the normal experience of saving up for something.

Say my normal savings rate is 50%. Some of that is discretionary, fun stuff. So if I want to save up for something, I say I need to cut out things to push my rate above 50%. So any amount above 50% is considered savings for whatever rather than ER savings.

Or, because I have some unpredictable income from freelance, that money can count as special savings.

We just cash flow big one-off expenses for the most part.  If ever that weren't enough we keep a buffer in cash that's quick to access.  Actually makes talking about things like our planned (DIY!) kitchen renovation awkward with some people because they're assuming we're financing the whole darned thing.  Ummm... no.  We would never do that.

We renovated our kitchen recently and are carrying a $5000 debt to ourselves on our spreadsheet that we are paying down. I was chatting with a friend who also just renovated her kitchen and I said, "You know, I'd prefer to cook lunch for you instead of going out tomorrow. I'm still paying for the kitchen renovation."

Her: "Me too! Did you get a good interest rate?"

"Uh..." Finally, I said, "Yeah. One of those same as cash deals."

Sometimes it's just best to leave the financial details alone and have a happy lunch.

Love it.

Albert

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #26 on: October 07, 2014, 11:09:53 AM »
Seems like a non issue to me. If you have free money and are convinced that spending it on XYZ is a smart thing just do it. Only advice would be to avoid spending a lot without thinking it over for a while.

Hannah

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #27 on: October 07, 2014, 12:06:54 PM »
To avoid "fake emergencies", we never buy anything that we haven't specifically budgeted for, but once a month we can discuss using money that we already have to buy whatever we want. I can only remember one time where we broke our own rule which is when our car was totaled, and my husband needed to get to work the next week. We just went out and bought a new to us car that weekend.

Typically when we start having more than 15K of readily disposable cash, everything starts to look like a good deal to me, so I make a point of trying to keep cash reserves below that point by contributing to Roths or taxable brokerage accounts. My husband is totally on board with this approach too.

Louis the Cat

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #28 on: October 07, 2014, 12:24:46 PM »
Are you FI? If not, why are you remodeling a bathroom? And if you're not and doing it anyway, are you DIY? If yes, I think you're over-thinking it. You could perhaps wait a bit and see if you still want the thing?

Am I in the minority here?  Are remodel projects off limits to most until FI is reached?  My wife and I are installing wood floors in the next month or so (doing it ourselves).  I won't lose a minute of sleep.  While we're continuing to ramp up our savings rate I'm very comfortable with where we are and where we're going wrt FI.  We have two pets - a cat and a cavalier king charles spaniel (i.e. long fur), and I think carpet is disgusting. 

Outside of my specific situation, many mustachians seem to buy cheaper houses with DIY upgrades in mind.  I certainly wouldn't wait to start those until FI, unless FI was < 2 years or so away (Dependent on the project, of course).

This is exactly what we did. We bought a house with tons of deferred maintenance and in pretty rough shape but with newish systems so that we could get a 15 year loan in a high-ish COL area. We have then proceeded to DIY lots of repairs and upgrades including a new kitchen. A bathroom where the tile is literally falling off the walls is on the horizon. DIYing the repairs and upgrades is part of our long term financial plan and I feel no guilt. Yes, that money could have gone into retirement accounts instead but part of what I love about MMM's philosophy is that your house should be so inviting you never want to leave it so you don't go out and spend unnecessarily. I know the $8,000 or so that we put into the kitchen reno has saved us hundreds in eating out so far and will save us similarly in the future in addition to adding far more to the value of the house than it cost us to do it. This also saves us on vacation expenses because we live in an area that people are drawn to for vacations so if we keep nice guest quarters (the aforementioned bathroom), we can get friends and family to come to us instead of us having to go to them.

GardenFun

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #29 on: October 07, 2014, 12:34:46 PM »
Here's how we do it:  Each year we forecast/plan our infrequent but expected expenses.  These are things like saving up for a new (to us) minivan, car insurance, HOA dues, Christmas, saving up for vacation, new cabinets for the school room, etc.  Based on those expenses, we automatically transfer $xxx each month into our "short term savings" account.  Then, during the year, as expenses come out, we draw the money out of the short-term savings account.

We've found many times that over the course of the year, our priorities change, so we make adjustments.  For example, we had budged several hundred dollars to rebuild our deck.  But over the course of the year, that project became a lower priority, so we reallocated those funds to other things, like buying me a new suit for church, installing pantry shelves, etc.

In your case, it sounds like you're hesitant to spend a huge chunk of money.  I know the feeling.  But if it's something that's you feel is worth it, and you've got the funds for it, and you're not jeopardizing other goals, then QUIT STALLING AND DO IT ALREADY!

We do something similar.  At the beginning of the year, we create a Capital Budget which lists all our non-monthly expenditures.  There's a standard list (Vacation, car repair, home repair) and then the want list (changes each year). 

While it helps with cash flow, that is not the main issue.  It's more of a tracking list to help us stay on the FIRE path.  If you don't fear that upgrading your house is going to impact your FIRE plans, then do it.   

Iowastache - I also sense a mixed opinion of remodeling prior to FIRE.  Some are extremely focused on FIRE, others use it as a the main guide to their finances but still remodel/upgrade.  Think it depends on how much you hate your job.  ;-) 

Spork

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #30 on: October 07, 2014, 02:03:32 PM »

We categorize everything... so we definitely "save" for big ticket items even though we have the cash.  I guess it's sort of just a geeky exercise in budgeting, and a way to avoid "just buy everything we've ever wanted right now."

We use gnucash (but you could do this with excel, Quicken, Money, yadda yadda)...  Investing accounts are normally not subdivided (which in a way means they're categorized as "fire").  But savings accounts, money market accounts, etc have sub accounts.  We tag them for the larger expenses we are expecting to spend them for: auto replacement, home maintenance, gifts, etc.   


arebelspy

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #31 on: October 07, 2014, 04:22:24 PM »
You don't. 

You save as much as you can, and you spend when you want to.

If you're good at it, you'll always have the cash for what you want, and always have lots of extra savings as well.

"Saving up" for something that's not at least 5 figures, once you're an advanced Mustachian, is a little silly.
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dandarc

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #32 on: October 07, 2014, 04:47:09 PM »

We categorize everything... so we definitely "save" for big ticket items even though we have the cash.  I guess it's sort of just a geeky exercise in budgeting, and a way to avoid "just buy everything we've ever wanted right now."

We use gnucash (but you could do this with excel, Quicken, Money, yadda yadda)...  Investing accounts are normally not subdivided (which in a way means they're categorized as "fire").  But savings accounts, money market accounts, etc have sub accounts.  We tag them for the larger expenses we are expecting to spend them for: auto replacement, home maintenance, gifts, etc.
This is what we do - we're not natural-enough savers to completely cut the cord on our overly-complex budget yet.  Definitely a way to avoid the 'just buy everything we want' problem for us.  At our current income, we could probably travel so much that we'd both lose our jobs if we weren't careful, and way more than would even be fun (while keeping the jobs - being able to travel slow once we don't have to go back to jobs seems very appealing).  So we have $500 / month for travel, and we work out a few trips each year within that, and it keeps us to a reasonable amount of spending for that category.

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #33 on: October 07, 2014, 06:40:14 PM »
Timely question/topic for me.  I've got two planned small vacations coming up next year, and I thought it might be good to set aside a small portion per month towards them.  But then I really started thinking about it... One is a weekend trip, the other is potentially a week-long trip to Central America which is tax-deductible and on which most meals will be provided.  So honestly I think I can cover this straight from my "cash cushion" - sure it'll dip below the targeted amount but I've got a decent sized cushion so it won't be an issue.  I like the idea of having separate accounts because psychologically it is just "cleaner" and easier to separate for me, but I know that after a while I'll be tired of it.  And the idea is simplicity.  I've decided to just not worry about saving up for stuff - or at least the trips next year.  I'm planning a larger trip in 2016 and will probably get a Prius or something not as gas-reliant by 2020... those I'll save for.   

InsourceEverything

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #34 on: October 07, 2014, 09:41:43 PM »
Are you FI? If not, why are you remodeling a bathroom? And if you're not and doing it anyway, are you DIY? If yes, I think you're over-thinking it. You could perhaps wait a bit and see if you still want the thing?

I agree with the DIY.  If you have sufficient money, and can do it yourself, it becomes more a matter of time.    The DIY will cut the cost by what?   50% or more ?


On the larger issue, it is a problem that I haven't come to grips with.   I'm not yet FI, so I have trouble spending any money that is not required, large or small

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Re: How do you "save" for big ticket items when you already have the cash?
« Reply #35 on: October 08, 2014, 12:18:07 PM »
Are you FI? If not, why are you remodeling a bathroom? And if you're not and doing it anyway, are you DIY? If yes, I think you're over-thinking it. You could perhaps wait a bit and see if you still want the thing?

Am I in the minority here?  Are remodel projects off limits to most until FI is reached?  My wife and I are installing wood floors in the next month or so (doing it ourselves).  I won't lose a minute of sleep.  While we're continuing to ramp up our savings rate I'm very comfortable with where we are and where we're going wrt FI.  We have two pets - a cat and a cavalier king charles spaniel (i.e. long fur), and I think carpet is disgusting. 

Outside of my specific situation, many mustachians seem to buy cheaper houses with DIY upgrades in mind.  I certainly wouldn't wait to start those until FI, unless FI was < 2 years or so away (Dependent on the project, of course).

I'm just asking the questions. If the answer to the first is yes, then I don't see the need for "saving up." If the answer to the second is yes, then again I don't see the need for saving up first. If the answer to both is no, then I think they need to evaluate how badly it is needed and possibly get up the motivation to DIY - save money and learn something.

I'm not criticizing the decision to remodel, I'm going through my own thought process on something like that. In my case, as all my house is perfectly usable and looks great, I would not do a remodel, though I do fix things as needed and have not required hired labor in quite some time now (pretty much since I started reading MMM.)