I'm just about to FIRE. I have my budget, withdraw plan, etc. all in order. But this morning I started wondering, some of the items in my budget are irregular - meaning they won't occur every month, but are included in my expenses because they will occur now and then and I don't want a surprise.
For example, medical, which is one of the larger ones. I budgeted $1000/month. My premium will be less than half that, but the 1000 is to include deductible and copays as well. So what I started wondering is, if I don't have any major medical incidents right away, that's going to pile up in my checking/savings, earning negligible interest. I'm wondering what people who've been FIREd for a while are doing about this type of occasional expense? Ideas I've had are:
- Don't pull it out of my investments with my regular expenses, leave it invested until I need it.
- Put it into a short term bond fund or Ally savings to get slightly more interest.
- Set a limit for how much I'll let sit in checking/savings, after I get to the limit, then stop pulling it out of my investments with my other expenses.
Anyway, I'd like to hear how other FIREd folks have dealt with this.