When last we spoke, I was discovering that saving in a slow and steady way is, like, totally boring. But I was a teeny bit mysterious about what I planned to do next. Hannah wanted to know if I was going to spend $500 on peaches (reasonable guess! But I ran out of canning jars last week, so, no.) Kate pointed out that being adult means letting money flow to multiple goals (true!) DoubleDebtSingleWoman’s congratulatory post had me remembering how lucky I’ve been to have nothing major go wrong this year that would have interfered with reaching my goal (she’s had health issues lately, sigh.)
As probably everyone has guessed, though my next project is building up my “down payments” fund. To recap, this is not necessarily money that will actually be used for a down payment. I might also use it for a car, should I need one in a hurry, or for an apartment security deposit, or whatever. It’s for Major Purchases or Emergencies That Aren’t Actually Emergencies, I dunno. “Down payments” is good shorthand.
I’ve only been putting $125 in it every month, and I haven’t had it all that long, so it’s not very big. But I decided that in the aftermath of my incredibly boring march to $5000, I wanted to do something different and flamboyant and really go for it with this fund. I want to see how much I can do in how short a time, while not being totally irresponsible about other important goals like retirement and money to travel to see family and very close friends. So, after a lot of back and forth and soul searching, here’s the arrangement I came to with myself.
(1) I’m going to snowball my former emergency fund savings payment of $500 onto my old down payment account contribution of $125, for a basic $625 contribution each month.
(2) This is the controversial part. Since I started this job, I’ve been contributing $1000 a month in pre-tax dollars to a retirement account. I’m dropping my contribution to $500 a month on a temporary basis; I didn’t want to stop contributing altogether but I also really wanted to build up my accessible cash. This isn’t actually all about my impatience, by the way. It has a lot to do with my increasing worry about having so much of my income being funneled away into inaccessible accounts at a time when I have a lot of uncertainty in my life. By next summer, my immediate future (for the next 5 years or so — after that of course it’s anyone’s guess!) should be much clearer to me, but right now it’s not, and I feel like I’d feel better with an extra-big chunk of cash on hand than with a bigger 403(b). I also suspect we are not going to see much market growth, if any, in the next year, so although I could obviously be wrong, this doesn’t seem like a horrible time to roll my contributions back.
Anyway, after tax withholding, this move will net me an additional $400 a month in my paychecks, bringing my basic down payment savings to $1025.
By the way, this change still has me contributing 12.5% to retirement, which isn’t, of course, the awesome 25% rate I had going before, but is also not utterly appalling. I did actually submit electronic paperwork to drop my 403(b) contribution to $0, but ten minutes later I thought better of it and reset it to $250/paycheck or $500/month.
(2a) …When you say ‘temporary basis’ what do you mean? Good question, and honestly I’m not completely sure; my main point is that I don’t regard this as a sufficient retirement contribution going forward. There’s probably a 1-year limit on this arrangement in my mind; next summer everything will change anyway, whether I’m moving to a new city or getting a new salary. However, if in five months I decide I’m definitely not going to buy a house this spring, I may re-up my retirement contributions then. (Or if the market crashes so bad that I have no choice but to get in on the low-buying, which hopefully won’t happen, of course.)
(3) Lastly, up until now I’ve been letting any balance left in my various budget categories roll over to the next month. For the same duration of a lowered retirement contribution, whatever that ends up being, I’m going to stop doing that, and instead transfer any extra to the down payments fund. However, that means that when I have a month that’s more expensive (eg a car repair or a medium sized medical expense like needing to buy contact lenses) I might make a smaller contribution.
To sum up, I’m going to approach this savings account less like I did the emergency fund, and more like I would being in debt again — instead of a measured march to a set amount of money in a set amount of time, I’m going to throw whatever I can at it (barring a [smaller] retirement contribution and my travel fund savings). I’m hoping that, therefore, I’ll find this a more satisfying and motivating experience than saving for the emergency fund was. With my minimum monthly $1025, I ought to be past $5000 by the new year and over $10000 by the end of May, which is about the earliest I’d be doing any house-buying. I’ll be reassessing as I go, of course, based on what happens with my job situation, but whatever happens, a giant bucket of cash doesn’t seem like a terrible outcome.