Where put money budgeted for lumpy expenses

[rodi]

Like many others here I do a monthly transfer from my investment account to my checking account. It is like a paycheck. Once a quarter I make sure I have enough in the money market account, for the upcoming quarter, in my investment account, selling funds if need be.

As for lumpy expenses... I transfer a portion of what I got from my investment account from my checking to savings account... I have 3 big lumpy expenses each year, property taxes, and twice a year insurance. There's always enough in the savings for these expenses.

When I was w*rk!ng I did something similar... transferring money from checking to savings each pay period to make sure I had money for the same 3 big lumpy expenses. The only thing that changed is the source of the money coming into checking.

 

[TheWizard]

I'm in my eleventh year of retirement and first should say that some "lumpy" expenses are more predictable than others, especially property taxes and insurance payments.

At age 73, my income now consists of pension/annuity income, SS income and RMD income, all monthly. I aim to keep $10,000 in checking after all bills are paid; the excess goes to my taxable investment account at Vanguard.

This has generally been sufficient to cover variable expenses. I am planning a new car purchase this year and that will require withdrawal of some of those excess funds from my taxable account...

 

[indiajust]

I keep a year in cash, so lumps are irrelevant to me. Guardrail tolerance band means I invest or sell to maintain the cash allocation.

I don't like the management effort, suspect I am just lazy.

 

[jollystomper]

The only strategy I use for "lumpy" expenses is to withdraw what is needed from the cash account that is paying the lowest interest rate. With 3-5 years of projected expenses (beyond what my pension and DW's SS will cover) in cash, its not too difficult.

 

[mickeyd]

What's Lumpy? I guess it's like you need a new car or a new HVAC system for the house. I would eventually pay for it with cash that now sits in CRFMMF @ VG. It currently has a 5.06% yield.

 

[Koolau]

I keep a year in cash, so lumps are irrelevant to me. Guardrail tolerance band means I invest or sell to maintain the cash allocation.

I don't like the management effort, suspect I am just lazy.

You and me, indiajust, you and me!

Managing every penny for the most interest, moving stuff around to be sure I don't miss a nickel, laddering here, bucketing there - it all sounds like w*rk to me. I did that for 36 years. Now, I want to relax and hit the high points, keep my AA reasonably balanced, take my RMDs plus some, be sure there's always excess in the check book, pay off CCs at months end... and enjoy life.

YMMV