Movingonup!’s last blog post..My mom

Once I paid off several of the smaller debts and freed up some monthly cash, I was able to reallocate some money to saving for expected annual expenses. In my mind, appliance replacement/repair, legal fees, debt reduction, unexpectedly-large tax bills and the like are not emergencies: you know that most of these things are going to happen at some point, so putting some money away into savings every month is a way of planning for them.

I have never had to dip into my emergency fund (touch wood!) but my general rule of thumb is that I will only pull from that if I’ve squeezed every penny from my budget, used the all the cash in my normal savings account and I *still* need more money in order to meet some unexpected expense.

What I’m a bit puzzled for is why debt reduction is considered “saving” at all? I pay as much as I can each month towards my debts out of my normal day-to-day budget. That money never sees either savings account.