It all started when I bought the house.
Actually, no. If I’m honest, it started before that – back when I was working in real estate, I was occasionally called upon to create an amortization schedule for a non-bank mortgage. Fortunately, my word processing program at the time (Microsoft Works!) had a spreadsheet program included – how amazing it was that I could input a few figures and poof! I was able to break down monthly payments for the next 30 years!
Once I bought the house, I thought it would be useful (and fun!) to keep track of my own payments, so I created an amortization schedule. Because I could.
Then I opened a separate savings account, and I created my own personal “escrow account.” I am paid bi-weekly, so I thought it would be a good idea to transfer half of my monthly house payment to the savings account every pay period. Of course, I “round up” the amount I transfer – I looked at it as a painless mini-savings plan. And then, every so often, the extra funds went to make additional principal payments. After all, at the beginning of a mortgage term, the principal is only a tiny fraction of the payment – an extra few hundred dollars a year translated to shortening the term of the loan by a few months.
I eventually got the bright idea to start stashing my car payment in the same account.
But the real genius (if I do say so myself!) was when I added other other larger expenses – things that come up annually. So I divided the annual cost of homeowner’s insurance, car insurance, and the like, by 12. That, along with the mortgage and car payments, became the amount I transfer monthly, and half of that is transferred each pay period.
Of course, now there are a few more things to account for, so I created a spreadsheet to keep track of it all, to be sure there is actually enough to cover the payments when they come due, without having to resort to borrowing from the mortgage payment – that’s just asking for trouble!
And since I have the spreadsheet all set up and everything, it was a simple matter to add some more expenses – it’s just more data – to track.
Amortized over a year, my annual subscription to Cook’s Illustrated website only costs $6.25 a month.
A few hundred dollars for the annual vet’s visit for a giant breed dog is really about $35 a month.
Once I paid my car off, I just created a separate “sub-account” – right there in my spreadsheet! – for car repairs and replacement. The money is still transferred to that account, but now it stays there until it’s needed.
I’ve calculated (well, the spreadsheet has calculated) what I have to transfer to this savings account every pay period to cover each of these commitments.
Thanks to the magic of my spreadsheet, the bills practically pay themselves!
Just don’t ask me about my checkbook register spreadsheet. Or my credit card spreadsheet. Or my dog food spreadsheet. Or my canning spreadsheet. Or my Italian sausage spreadsheet. Or my weight loss spreadsheet.