Self Escrow

Between the house and 2 cars we pay a lot in taxes. Usually we can work the payments into our monthly finances, but I don't want to have to worry if we have a bad month. So I think the best thing for us to do is a bit of self escrow.

When we bought the house we had the option of having them escrow our home owners insurance. Instead of us paying once a year the mortgage company would add the total amount due per year divided by 12 to our monthly payment. We decided not to have them escrow because we'd rather have our funds grow (with interest) in our own accounts.

The flaw in our plan? We forgot to start saving. We paid for six months of car insurance this month so it seems like this is as good a time as any to start. I renamed one of our ING accounts insurance and plan to start working our self escrow amount into our January finances. I haven't decided if it will be a monthly or a biweekly thing but the money will be put aside for the three payments we have in 2009. At least mostly. Our payments are due in June, July, & December, so in July we won't have the full home insurance payment, but it will be close enough.

The formula looks like this:

Annual home owners + 6 months car insurance x 2
12

So each month we're saving money for our appliances, insurance and retirement. After that and bills everything will go towards paying off the car loan.