Sunday, November 19, 2006

Hotel budget decision: Pay from savings

I have already made one important decision concerning the financing of my hotel budget for my  two-week trip to New York City at the end of the year, and that is that I will pay for it all out of my savings. This will impact my rainy day fund, but at least I'll be free and clear going forward and won't have to modify my budget plan to accommodate monthly credit card payments. It just feels too soon after bankruptcy for me to be be depending on credit cards for big-ticket expenses, even if it is only for a few months.

Back in July I had actually thought forward about how to budget for expenses such as this trip and decided that rather than budget for them per se, I would simply add to my savings as rapidly as possible and these savings would double as a part of my rainy day contingency fund and saving for expected expenses such as this trip.

All of my trip expenses will be on my credit card. Some of them, such as my plane ticket that I purchased last week and any hotels that I might prepay by around December 9 will be due by around January 9. Expenses incurred after around December 9 won't actually be due until around February 9. That means that I will have roughly two months of incremental monthly savings to apply to my trip expenses, significantly reducing the amount of my rainy day contingency fund that will need to be drawn down to pay for my trip.

I estimate that paying for this trip might require three-quarters of a month's worth of my rainy day contingency fund. That would take me from 3.5 months down to 2.75 months. That is relatively thin ice, and not where I would prefer to be, but is workable considering that I continue to accumulate net worth at a good clip.

-- Jack Krupansky

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