Money-savin’ Mama: Be prepared for inevitable expenses

Here’s my monthly Money-Savin’ Mama coulmn, from today’s SheSays section of The Forum

For my family, 2011 was the year of unexpected expenses.

The clothes dryer broke in January. The water heater started leaking in November. Our
rickety picket fence fell down in a spring windstorm. The dog needed surgery this fall. And my 8-year-old car was totaled in an icy rearend crash last month.

Thankfully, none of these expenses broke the bank, largely because we’d prepared for the
unexpected. In reality, new appliances, household repairs, pet costs and vehicle expenses are not a matter of if but when. If you want to avoid going into debt, you need to be ready for “when,” whenever it may come.

Here’s a trick I learned from financial counselors at the Village Family Service Center in Fargo. Add up all your periodic expenses for the year, things like insurance premiums,
annual veterinary visits, gifts and travel. Factor in money for car and home repairs (I once read it’s a good idea to set aside 1 percent of your home’s value each year for maintenance). Now divide that figure by 12, and set aside that amount each month to pay for these potential budget busters.

Consider it a “spending account” instead of a savings account, but don’t touch that money
unless it truly is for one of these expenses. One way to keep the money separate is an online savings account. My husband and I have used an online bank for years to divert dollars for these inevitable outlays.

These accounts can earn you a higher interest rate than brick-andmortar banks offer (though these days, we’re talking tenths of a percent). Some well-known online banks include ING, Emigrant Direct and Ally Bank.

What I like about our online accounts is they keep this money out of sight and out of mind.
It takes an extra day to access your funds, making it less tempting to raid. Automatic transfers from our checking make contributing to the account routine and painless.

My favorite part, though, is that I’m able to name the accounts. It may sound silly, but
those names provide a sense of peace.

There’s the “car fund” for vehicle repairs, insurance, registration and our next car. (We’ll be replenishing it after purchasing my new-to-me Chevy Impala last month.) The
“escrow account” covers homeowner’s insurance and taxes. “Periodic expenses” is
where I put $60 every two weeks for future vet bills, gifts and other incidentals.

A friend recently told me that when she and her husband face an unexpected expense, like
when their well-worn car broke down a few weeks ago, it’s painful to pull the money from their general savings. Having money designated for specific purposes makes it less stressful to spend because that’s what the money is there for. We don’t need to tap our emergency fund, so fewer things feel like emergencies.

We’re hoping to face fewer surprise expenses in 2012. But if, or rather when, they come up, we’ll be prepared.

Be prepared. Who knew those Boy Scouts were so financially savvy?

Sherri Richards is a thrifty mom of two. She blogs at www.topmom.areavoices.com and can be reached at srichards@forumcomm.com.

Combining coupons to score cute kid clothes

Check out my stylin’ little man:

All preppy in his button-down shirt

I bought this 6-month outfit brand new for Owen to wear in our recent family photos. It looks extra adorable with a white long-sleeved t-shirt layered underneath.

What I really love about it, though, is its price. I paid $1.06.

It’s a Carter’s brand outfit, with a retail price tag of $22. But last week it was on sale for $10.99 at JC Penney.

I don’t normally shop for new kids’ clothes at department stores (except the 75-80 percent off clearance rack), but I had recently gotten a coupon in the mail from JCP: $10 of a purchase of $10 or more.

Combined with the sale, that brought the final price down to 99 cents, plus tax.

Couponers tell me the best way to get a good deal is to combine a coupon with a sale price. My $1.06 brand-new outfit tells me this is a good tactic outside the grocery store, too!

What brand-new steals have you snagged by combining sales, coupons or other discounts?

‘Is that the best you can do?’

Money-Savin’ Mama has been reading up on saving and building wealth. I checked out a book from the library last week, “Five Lessons a Millionaire Taught Me for Women” by Richard Paul Evans.

It was a quick read. I finished it over the weekend. As I read Evans’ anecdotes, something seemed familiar about them. I finally figured it out. A few years back, my husband read Evans’ book — the original “Five Lessons” book, not the edition geared to women — and had read some of these same stories aloud to me.

I was glad to have the refresher, though. While much of Evans’ advice is standard in the personal finance world (know what you earn and what you spend, pay yourself first, delayed gratification, giving back), there was one tactic he recommends that I had forgotten.

“Is that the best you can do?”

Evans stresses how important it is to “win in the margins” — basically you need to earn more or spend less to hasten your wealth building. Smart wealth-builders do both, he writes. The book offers ideas for augmenting income and encourages responsible, rational spending.

Among these ideas, Evans suggests trying to pay as little as possible, especially on big-ticket items, simply by asking “Is that the best you can do?” He calls these “the Seven Golden Words.” The book has several stories of people who’ve saved hundreds and thousands of dollars by using that phrase — on a bedroom set, on patent leather pumps, on medical bills.

That last one got me thinking. I gave birth to a baby boy in August, and our hospital and clinic bills have added up to a lot more than we were expecting. (I was on my own insurance policy and Owen was on my husband’s, meaning we had to meet two deductibles.) We’d used up the last of our flex dollars — pre-tax money you can set aside for medical expenses – paying for mine and Owen’s hospital stays. Then we got what we *hope* is the last clinic bill, for about $300.

Today, I called the billing department, explained our situation, and then asked, “Is there anything you can do to lower the bill?” The gal on the other end said, without hesitation, that they could give us a 5 percent discount for paying the bill in full. I said that was something, and paid the bill. I was happy to accept the $15 in savings.

I admit I didn’t use Evans’ exact phrasing, nor did I challenge to see if that really was their “best” offer. Maybe I could have done better.

But I could have done worse.

I’d call that a lesson learned.

Have you tried this savings tactic?  When and how did it work?