Savings

I am a big believer in staying out of debt. But, IMHO, it is impossible to stay out of debt without savings accounts. Why? Because stuff happens. If you've got a car, it is going to need repairs, general maintenance, and something is going to leak, squeek, fall off, or break and this means money. Same goes for houses, pets, and children. That's even when the big stuff like illness, job loss, or divorce doesn't happen. Everyone needs an emergency fund. Since I am a bit hyper about being in control of my finances, I have 4 savings accounts. The first one is my General Emergency fund--I used to keep $5,000 in it but with the jobs situation & the economy being what they are, I have increased that to $10,000. The second is my new vehicle fund--my van has 120,000+ miles on it and while it still runs perfectly, eventually it will have to be replaced and along with it, I will need a new lift for my scooter installed in the new vehicle. I want to have $25,000 in that fund to be available when needed; I am at $11,000 now. The third savings account is my HIP fund (Homeowner's Association fees, Insurance, & Property taxes). Since our house is mortgage free, we have to have the money to pay our homeowner's insurance and property taxes when they come due. These come to $11,000 per year; so I put $450 per paycheck into that fund and ouila, when I need to pay it, the money is already there. The fourth area of saving is our combined retirement accounts. I am perfectly able to work now but this is not always going to be the case so my goal is to have $1 million in retirement funds; we currently have $730,000.
If you spend everything that comes in, life becomes a series of emergencies and no sooner than you get one emergency paid off than another crops up. This is no way to enjoy life. Even a small emergency fund is better than no emergency fund at all. As Dave Ramsey says, Christmas is not an emergency, it comes every year. My point is that the more things you can be prepared for, the fewer real emergencies you will have. And this preparation can only be done by living below your means.