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A Slush Fund

September 20th, 2012 at 03:57 pm

We have a slush fund. Not sure where I got that term. Maybe Dave Ramsey.

For us a slush fund is stash of cash in our second account that is a bit seperate from our emergency fund. We don't touch the emergency fund, unless it is an emergency (or we can pay ourselves back in like 12 seconds)!

My husband is paid twice per month. Each paycheck is allocated to bills, investments, $900 cash for groceries, gas and miscellaneous. Left over cash gets put towards our goal...which is the truck now! It basically comes down to a zero based budget...every dollar goes somewhere.

However, I don't track every budget category known to man. It's too much work! So sometimes we do spend more than our paycheck, or more than that $900 that I allocate to variable expenses for the pay period.

Where does that extra money come from? The slush fund. I just transfer what money I need from there from time to time. Sometimes it's less than $20, sometimes it is more. The slush fund only have a few hundred dollars in it. If it gets down to zero or close to it, then I add some funds from a paycheck. Right now that would mean a little less to send into the truck loan.

We do pretty well keeping our spending within the limit we have given ourselves, but is nice to have a slush fund to dip into for those expenses that one doesn't always forsee.

Do you have a slush fund? Do you keep it in cash, another account, or right with your other funds?

4 Responses to “A Slush Fund”

  1. CB in the City Says:

    Once I get moved and my finances have settled down, I plan to have a slush fund of about $1,000 in my B of A account and an emergency fund of about $15,000 in my credit union account. My credit union account is a savings account and right now I can't get the money out unless I go there to take it out. And it's at a location that I've never visited. So it is truly for emergencies!

  2. Joan.of.the.Arch Says:

    No, we don't really separate money piles except as needed for keeping banks accounts actively earning and useful.

  3. FrugalTexan75 Says:

    I've had a slush fund before - not sure where I heard the term/idea either. I don't currently have one/use the concept. Now all my dollars are allocated to specific jobs. If I overspend in one job/category, then I can move money around from other categories if needed. So, it kind of is like a slush fund, only spread out over numerous categories/jobs. Smile

  4. Monkey Mama Says:

    I think a slush fund or just "extra money" is so key to basic personal finance. It erases the whole "beating yourself up and floundering" when you over-spend a bit and can't foresee everything. I think people often equate "perfection" with what is really a "lot of leaving room for human error." Because human error is a given. Big Grin
    I don't tend to keep my money separate (except for investing and chasing higher rates with some of it). We leave a misc. categoryin our monthly budget, save monthly for bigger misc., and there is always the savings account for when all else fails. Likewise, as others said, sometimes if we do worse in one area we saved less in another area, so it tends to even out a bit. I guess another trick to that same end is just budgeting on the high side for certain categories. I've always done that for gas because gas tends to spike, often. So I am not caught offguard when gas goes up, but the rest of the months it gives us a bit of slush.

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