it does appear you might be "cooking the books" a bit. Stating $7.5k/yr ($625/mo) car maintenance and replacement allowance.
OK, there's a bit of a story behind that. I'll make it as short as possible.
1999 - Graduated university, started my first job, bought a brand new Volkswagen Jetta. Payments were $656/month for 5 years (do the math - that's
$39,360 for a Jetta! Ugh, so young and foolish). Planned to keep it until it falls apart.
2004 - Car is rear-ended and totaled, with 3 payments still owing (
click here for photos of the crash). Insurance paid out $13,000. Used the money to buy a used 2001 Passat. Over the course of the next year, the Passat cost us $4,000 in repairs.
2005 - Sick of the neverending repair bills, we traded in the Passat ($6,000 trade-in value) towards a brand-new Mazda 3, and bought the longest extended warranty possible (7 years or 160,000 km). Once again, take a look at the math. We bought a Passat for $13,000, invested $4,000 in repairs, for a total investment of $17,000. A year later, it was worth just $6,000. Holy depreciation, Batman! My opinion of car ownership has taken a savage beating.
2008 - Mazda is paid off, and I don't want to get too used to having that $600/month back in our budget, so I'm setting it aside in a separate account as though we still had a car payment. This will reduce the pain when we inevitably have to replace another vehicle unpredictably.
We bought a relatively bare-bones Mazda 3, and with the trade-in, our monthly payments were $600 (for 3 years this time, instead of 5, as with the Jetta). So with the 5 years of $656 Jetta payments, the year of unpredictable Passat expenses, and 3 more years of $600 Mazda payments, I've pretty much just resigned myself to the fact that one way or another, it costs $600/month to own a car. But at least the Jetta/Mazda bills were predictable. That year with the Passat was horrible for our budget.
If we end up with more money in the "car fund" than we need, then that's certainly better than not having enough. The excess will go towards retirement savings, vacation (we still have never gone on a honeymoon), or towards the mortgage.
Since you still have a '95 Honda, we can probably assume you will keep your vehicles about 15 years (or longer);
That's certainly the plan, but as I've learned, you can't control what other idiots on the road will do. Who knows how long that Jetta would've lasted us if it hadn't been totaled. But we were forced to replace it, and the next car (Passat) cost us $11,000 in repairs and depreciation in just 1 year.
EDIT: I forgot to mention the Honda. My wife and I carpooled initially, but after the layoffs at JDS and Nortel, we needed separate vehicles. I bought a '95 Honda (in 2002) for $6,000 cash. It's cost me almost nothing in repairs, and sips fuel. Great little car.
I would also question $12k/yr ($1k/mo) for discrecinary expenses. I suspect about 50% of this is going into savings.
Haha! I wish I could say it was!
No, unfortunately it turns out I like spending money. My wife and I have tried a $300/month spending allowance, and I couldn't stick to it. I'm finding I'm able to manage with $500/month though. I enjoy beer on the weekends, woodworking, and some other hobbies. My wife, on the other hand, makes her own wine and is content to spend the whole weekend reading books in peace and quiet. She has trouble spending her whole $500, while I'm in self-deprivation mode by the 4th week of the month!
The benefit of this money, however, is it insulates my spending habits from the rest of the budget. The rest of our budget is pretty much on auto-pilot, and as long as I stick to my $500/month "allowance," our finances remain perfectly on track.
Please do not take this the wrong way. I do think you are doing is great, but I think there is about $35k/yr you are calling expenses while they should be listed as savings (24k listed as savings; 2/3 of the $7.5 auto account; 50% of the discrecinary account).
Fair enough, I suppose, although my experience with cars in the past decade has conditioned me to err on the side of overestimating rather than underestimating. And you needn't worry about hurting my feelings, this is a finance/retirement forum, I welcome comments on my plan.
I won't say a word! 
