I’ve had a few people ask me questions about how I manage to save for the luxury purchases while doing the Dave Ramsey Baby Steps. In this post, I will explain to you how I go about doing it. It will be slow going, but it will be worth it in the end when you have the bag you’ve been wanting and you’ve paid for it in cash.
I have a few sinking funds that I put money into each pay period. What is a sinking fund? I’m glad you asked. Check out this video on Dave Ramsey Sinking Funds that I did a little while back to get a better understanding of what they are and how I manage them.
Now that you know what a sinking fund is, you know that they are small savings accounts for the things that come consistently each year. I have a sinking fund for birthdays (which includes the parties the children get invited to), Christmas, my car, home maintenance, school (field trips, school clothes, pictures, etc.), vacation, my friend’s wedding we’re attending next year, doctor, and my personal fund.
Each pay period I do a zero based budget plan where I tally up all of my expenses and after those are accounted for, I divide the remainder into my sinking funds. I am currently putting $100 into my vacation fund, $100 into my friend’s wedding fund, and each other category, outside of my personal category, gets $22. My personal category gets $53 per pay period.
That means that each month, I am adding $44 into the sinking funds from my check and I am adding $200 into the vacation and wedding funds, while $106 goes into my personal fund. How I beef it up a little is by doing challenges throughout the pay period. To increase how much is going into the personal sinking fund, I do “no spend challenges”. Each pay period I give myself $100 personal spending money in my cash envelope system.
The no spend challenge is to see if I can go the period without spending any money in that category. Whatever is left in the category at the end of the period goes into the sinking fund. That means that if I am successful in not spending any money in the month, I can add an extra $200 into the fund, which means I have saved $306 for the month. Truthfully, I have not been that effective in the no spend challenges, but I have saved between $50-75 extra per pay period.
I do not typically spend money from my personal play money. I think it comes from the habits I developed when I was more gazelle intense and the budget was tighter and I was giving myself $50 for the month to spend. Usually, that money went to things my children needed or wanted. Now that I can add a bit more into that account, thanks to a better paying job and paying off some debts, and I am giving the children their own allowances, I find that I don’t spend much. I also attribute it to the Mommy guilt that is usually associated with doing nice things for yourself.
How do I manage the Mommy guilt? I save for Louis Vuitton purchases.
Saving this way, I have managed to buy myself a few small pieces, including the wallet in the earlier linked video. I also do not mind purchasing the items preloved because it saves me more money and I do not like paying full price for anything. It doesn’t need to be brand new, it only needs to be new to me. So, I save up for what I want, then I search the group for the item and the best price along with the best condition. So far, so good.
You can do this too. Small steps and you’ll get there. Don’t let your journey to get the item be clouded with jealousy or envy for someone who appears not to have the same challenges as you. You never know what their situation is. They could be more financially stable than you, have a higher income, or maybe adding to their credit card balance to keep up. Your journey is unique and you should be proud of it.
Until next time, journey on!