Hi everyone
I'm a new Mustachian but will save a formal case study for another day. I am going through my budget strategising a plan of attack for 2014 (a few weeks late I know). One thing that is tripping me up is this:
-I pay my car insurance monthly, but have the option of paying it in one lump sum each year
-I pay my property taxes monthly, but have the option of paying it in one lump sum each year
-I put money in a separate savings account each month for eventual car repairs
-I do the same (in separate accounts) for: vet bills for my dog, travel with my wife, and one or two other things
This is money (let's call it $1,000) that I either pay monthly (instead of annually) out of convenience or set aside to ensure that I don't go into debt when my dog gets sick or my wife and I need to get out of town for a few days.
Here's what I'm confused about:
My wife and I invest $4,000 each month. Should we stop the aforementioned payments/transfers and invest $5,000 each month instead? Will it help a lot in the long run to have this extra $1,000 working for me in investments rather than sitting in savings accounts waiting to be spent? Or is that a dangerous game to play? Here's an illustration to help:
Jan- invest $5,000
Feb- uh-oh, property taxes are due ($1,400). Invest $3,600
Mar- invest $5,000
Apr- invest $5,000
May- ooops, dog is sick ($300). Invest $4,700
Jun- car insurance is due ($1,200). Invest only $3,800
So... am I better off isolating as much money as possible each month, deducting what I need, then investing the rest? Or should I continue paying things monthly and building up little piles of money in savings accounts? Why?
Thanks very much!!