Lesson One: Super Saving for Purchases

In the meantime, we all know that certain expenses are going to probably arise during the time that you are paying off your debt.  From what I can gather, Dave advocates saving for these purchases.  Let's say you know you are going to have to replace your washing machine soon.  You are not to use your emergency fund for purchases, so you must save for this expense.  This does not mean you have to go out and buy a $1000 washing machine.  Familiarize yourself with reliable brands of washing machines on Consumer Reports and look for good values on places like Craigslist.  People often sell their working washing machines when they are trading up.  You don't have to buy new... but that is another lesson for another day.  You also must not purchase these new appliances on no money down plans.  Save and pay for the purchase with cash.

There are several other savings accounts you may consider having, depending on how you pay for these items.  A lot of the annual expenses that Dave Ramsey lists in his work book, we pay for monthly or bi-monthly through paycheck deductions or combined with our mortage.

• Real Estate Taxes (we pay this through escrow with our mortgage payments) 
• Home Owners Insurance (we also pay this through escrow with our mortgage payments)
• Health insurance (taken out of my paycheck) 
• Life insurance/ Car Insurance (combined to get a discount, and taken out of my paycheck)
• Disability insurance (covered by our work)

These are the Savings Accounts we have connected with our online bank:

• Car repair/ Car replacement
• Car inspections/tags/ taxes
• Vacation (sometimes you have to travel-- family weddings, holidays.  Even if you drive and don't fly, you still have to budget for the gas, etc.)
• Gifts (Christmas, birthdays, etc-- just make sure to budget for how much you are going to spend for these gifts and don't go overboard)
• Home repairs/ Replace furniture 
• Medical bills
• Emergency Fund

John and I have several small savings accounts connected with our checking account that we funnel money into every paycheck (vacation, car repair, car tag/inspection/taxes, car replacement, gifts, medical, home repair, etc).  There is trial and error in figuring out these numbers but it's important to plan for emergencies and have your money in a place where you can access it quickly.  NOT in something like a CD that charges you fees to access it.