Easing the pain of unexpected expenses

Gah, I don’t know how it’s already been almost a week since I published even just a spending diary!

Now that I’m back to attempting a social life — and now that I have to cook most of my evening meals — it feels like all of my time/attention/energy has gone to adulting or seeing friends/more-than-friends-but-not-boyfriends.

It doesn’t help that the busy season at work has started, so I spend most of my workday actually working, rather than having time to work on a blog post or run errands.

Anyway, the big news is that I’m unexpectedly replacing my HVAC unit.

Good timing?

During my semi-annual tune-up, the guy (who turned out to be the owner) said that a medium-size repair was needed. And that, while my unit could last for another couple of years, it was officially entering the age range of “probably going to die soon.”

Meanwhile, a new law was passed this year that increase the minimum SEER rating for all new units, and it’s having some big effects:

• HVAC companies have to do redesigns, and they’re going to pass on the cost to the consumer. Prices are going to jump. A lot. We’re talking up to 20%.

• HVAC companies are desperately trying to offload the units they still have that they won’t be allowed to sell next year, and thus are selling at discounted prices.

Before anyone asks, yes I did a couple quick searches to verify the information.

A calculated risk

Because of all this, I decided it made sense to replace my current HVAC unit.

Obviously, this is a gamble on my part. Maybe it would’ve lasted a few years — or even several. But it’s not likely. And since HVAC unit prices are usually in the five-digit range, a even a 10% to 15% bump is going to be noticeable.

Also, I’ve been dissatisfied with the airflow to the back rooms (especially my bedroom) for a long, long time. Apparently, the unit was installed with something called a twist elbow, which can cause issues. And the blower was starting to wear out as well.

So the new unit will have a regular elbow — and they’re going to add a vent from the unit directly into my bedroom.

That plus the unit ($7,200) plus labor and tax came out to $8,200. Which is not ideal, obviously, but this is why God invented saving accounts — and sinking funds!

I love my sinking funds

A few years ago, a technician warned me that most HVAC units have a 12- to 15-year lifespan. Mine was at 9. So started an HVAC subaccount in Ally and started putting in $145* a month.

All those savings added up, so I had $3,665 already tucked away for this purpose. Not exactly $8,200 — but certainly better than none at all.

This means that only — “only” — $4,500 is coming out of savings. Which still leaves me a healthy cushion in that account.

* Weird amount, I know. Best I recall, I calculated based on the current one lasting the full 15 years, then divided $9,000 into monthly amounts.

Why you should love sinking funds

Squirreling away money for a specific goal is a long and hallowed tradition.

Most personal finance bloggers/freelance writers have, at some point in their careers, written at least one article about holiday spending that included “Put away a little money each month in preparation.”

Think of it as DIY layaway — for gifts, vacations, yearly insurance premiums or other goals.

But one of the best parts of having subaccounts for specific goals? Unexpected expenses won’t cause your main savings account to nosedive. And that’s huge.

In the past, whenever I’ve had to take a notable amount of money out of savings, I’d always have some low-level anxiety/dread. Especially when Tim was still around and it felt like we were stuck in an endless loop of “two steps forward, one step back.” It was emotionally draining.

Subaccounts let me avoid some of that stress/anxiety. Not only do I have the money ready (or most of it, at least), but I also have already mentally earmarked it for that specific goal. So it doesn’t feel like I’m losing ground in my efforts to save.

Too much of a good thing

Admittedly, I go overboard. I blame the aforementioned low-level anxiety.

But whatever the reason, I have 10 subaccounts. Well, 11 if you include the account I use to pool money for my quarterly tax payments.

The biggest subaccount right now is my car fund. Each month, I make a car payment — but to myself. I’ve been doing it for more than five years.

The obvious benefit is that I’ll have a very large down payment — or perhaps the full cost — for a new car. But as a bonus, my budget already has a line item for a car payment. So if I do have to take out a car loan, my budget doesn’t have to increase.

So that’s my pet project. But as mentioned, there are plenty of others:

• General savings
• Emergency fund
• Washer/dryer fund
• Vacation fund
• Pet expense fund
• Money for yearly car insurance premium
• Money for property taxes/home insurance premium
• Money for my annual Mint Mobile payment
• Money for my annual termite protection premium
• HVAC (which I’ll start fresh next month, I suppose)

You don’t have to be as ridiculous as I am, but if you have the means, I highly suggest embracing sinking funds (if you haven’t already).

They provide so much peace of mind. Even with my anxiety levels, hearing the $8,200 total made me wince, but not remotely panic. And that, my friends, is priceless.

Anyone else want to share their sinking fund tales? Or report some recent unexpected expenses?