Quote From: marcia52For those of you who have ever bought a home - do you remember the escrow account the bank setup to make sure you paid your property taxes? Well, when I was filling out the application to purchase my home, I picked up a brochure on ESCROW - it explained what it was. I had the greatest financial AHA moment of my life!
I mean, if the bank took out money every month from my house payment for the escrow account for taxes that were paid twice a year -- THEN WHY COULDN'T I DO THE SAME FOR MY HOUSE PAYMENT, WATER, SEWER, AND OTHER QUARTERLY BILLS/EXPENSES! So I went home and figured out what I would have to pay for everything. I included insurance payments -- everything! I figured out all the expenses (for the 1st year I had to estimate water & sewer) and divided everything by 26 weeks. Then I went to the bank and opened a separate savings account and then had my bank transfer monies into it.
The house payment was so much easier for me to pay because instead of 1 big payment, I was able to split it in 1/2. Before that, it seemed that 1 check I was POOR and then the next check I was better.
It was hard at first because I didn't have the ESCROW ACCOUNT BUILT UP - like the bank, I had to pay the first couple of months from my check until I got my 6 month car insurance bill and I was able to send them a check. It took me a while to get myself NOT TO TOUCH the account.
I still do have the ESCROW account and I've added other things too - like vacations and car tags and car emergencies. The latter isn't much but $10 a month for a couple of months does help me to not charge the full repair on my credit card.
marcia52, I have been reading with interest you comments on setting up a personal escrow. It makes so much sense. But as you are building the escrow, do you 'keep on paying' so to speak. In other words, divide the necessity bills by 26 (i'm paid at 26 pays per year as well), deposit that much AND pay the monthly bills? If so, isn't tight for a bit?
