I posted recently about moving our emergency fund into a liquid CD account, and mentioned that we only put most of our money market into that account. We left a little more than the minimum required to avoid a monthly fee in the money market, and I found myself asking why I had left the account open. And then it hit me: I could now use the money market to park money for infrequent bills like our numerous insurance payments, property taxes, etc.
I’d read about the idea many times before. The concept is simple. You take all of your non-monthly bills, add them up, then divide by 12. That’s amount of money you should be putting aside each month to pay for these bills.
I had tried to do this without a separate account, and just keeping the money in the accounts we pay bills out of. But it never worked – inevitably, I’d eventually need to tap our emergency savings to cover a large bill like the twice-a-year property taxes. But I didn’t want to open yet another account just for this purpose. Well, now I don’t have to open another account, I’m just re-purposing an account I already have. I’m very excited!