Infrequent expenses.

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Suggestions welcomed please :-)
Need an envelope to hold cash set aside to cover the cost of heating oil. There is no real target/goal to aim for other than I like to keep the balance at 750.00. Whether I need to put cash into the envelope is therefore dependent upon the current balance which in turn is affected by whether or not I buy any oil. I buy oil about twice a year but obviously there are variables that impact this (such as the weather). It would not therefore be a fixed term envelope, in fact it is very variable as I do not even know when I might need to purchase any oil. 
Any ideas?
Thanks

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Colin Grant

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Posted 1 year ago

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Wayne Woodbury

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Hi, Colin.  I like to do cost averaging with almost everything.  We have natural gas out here that is pumped into our homes (no tank in the yard), but the concept is the same.  I just take what I spend in a year and divide it by 12 for my monthly budget amount.  With heating oil where your purchase time is more irregular, you may want to take four or five years and figure out what the average monthly cost is.  If prices of oil go up and down regularly, you can either plan for inflation and add a little extra in or you can figure out what your average consumption is per month and multiply that by the current cost per unit of fuel.  I think the latter is too much work.

For me, I get a monthly bill for the amount of natural gas or electricity I use, but my consumption goes up in the summer for electricity (air conditioner takes a lot of power) and my natural gas goes up in the winter when I am heating my home.  I put a fixed amount away each month into those envelopes, so my natural gas envelope has a nice surplus by the end of summer, but it is mostly gone by the end of winter.

Car repairs are a little different.  A local Saturday radio show where people can call in and ask the car guys repair questions stated that the average cost to maintain a car through the life of the car is $100 a month.  If you sell your cars before they get too old, that amount would be less.  I don't put quite that much away, but I put a certain amount away per vehicle each month.  I use it for oil changes and regular maintenance, but as it builds up, I have enough for more expensive repairs.  I had to rebuild the transmission on my truck and had the money when I needed it.

Any expense is easy to deal with if you plan for it ahead of time.  Sometimes you know the expense is coming and you know how much you will need (Christmas, car registration fees), and sometimes you don't and you just have to estimate.

Hope this helps.
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Colin Grant

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Thanks Wayne. That all makes perfect sense thanks. I guess you use the ordinary monthly envelopes for that? I ask as to my mind they are not ideally suited in that they expect a monthly cycle to the expense and the green progress bar makes not a lot of sense when a monthly envelope is used to accumulate funds for a none routine expense.
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Wayne Woodbury

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I use monthly envelopes for the ones I spend out of regularly, like natural gas and electricity, but I use annual envelopes for things where I don't spend regularly, like car repairs.  Sometimes I'll use goal envelopes
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John Vander Stel

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Hi Colin,

I have a different way of handling it that makes sense year around.  I simply use an energy envelope to cover both heating and electric.  During the Summer, my electric bills are higher and during the Winter, my heating bill is higher.  It helps to cancel out the differences in my total energy expenses throughout the year, and thus makes my total average energy cost per month much more stable.

John

(Edited)
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Wayne Woodbury

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I also like to keep my budget simple.  I try to combine like categories into a single category unless there is something specific I want to be able to track.  If you don't care about that level of granularity, then it is easier to combine.  I have a lot of envelopes, and it can be cumbersome to find things, especially if you share the account with someone else, like your spouse.  If you are trying to get a handle on certain expenses, it can help to track them separately.

I use categories to help combine like expenses while still maintaining a separate envelope for things.  Not sure if any of you use that feature, but I find it very useful.  For those who don't know, categories are created by simply naming your envelopes with a keyword (such as "Utilities") followed by a colon and the name of the envelope (e.g., Utilities: Elictricity, Utilities: Heating Oil, etc.).  In the web version, Goodbudget groups all envelopes with the same category name into the same group on screen, even if they are not grouped together in your Edit Envelopes screen.  Unfortunately, groups are not supported in the Android version and I have to manually order them.  The group names still make it easier to find the envelope I am looking for.
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Colin Grant

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That won't work for me John. As my electricity is budgeted via my supplier I pay a fixed sum each month. Oil is different as paid for in full when delivered and is much more volatile price-wise. I also only have oil delivered a couple or so times a year so there is no fixed timeframe. My question to an extent is what is the best type of envelope to use? Probably the monthly expense envelope is the only answer but that does rather render the green progress bar irrelevant as it is tracking on a monthly basis :-)

(Edited)
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John Vander Stel

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I use a monthly envelope for my energy too, but I will let it build up over time if I don't use it all in a given month.  Prices tend to fluctuate for heat and electric, so it's always a moving target.  I keep an eye on it and after a while, I tend to get an easy feel for my average annual use cost, I can adjust the total budget amount for energy gradually and more intelligently over time.  I purposely choose to not have the power company determine a level payment for each month because I don't like sudden surprises like a larger bill at the end of the period in the case of when their estimate was not accurate.  I tend to better estimate my total energy bill, over time, than the power companies and I can easily make periodic adjustments to my monthly budget amount to eliminate any major surprises.  I view my budget as a working document that can be adjusted gradually over time to deal with life's unpleasant changes as they come.  It makes my life more predictable and pleasant. :-)  Everyone makes their own choices and some ways work better, in actual practice, than others for different people.  What works best for me may not work best for you.  I can only relate what works well for me, and hope that it may offer a new idea that may ultimately work better, as an alternative, for someone else.  I really enjoy your posts here, Colin.  You think a lot like me and I appreciate and value the difference in our points of view.  As you, if I can offer an alternate idea that might work better for anyone, I want to share it here.  As GoodBudget users, we are all in it together! :-)  Cheers! :-)

(Edited)