William, I haven’t posted about it yet, but we do set aside money each month for home repairs and car repairs. Our car repair fund has about $1000 in it, and our home repair fund (which we just started up) has $100 in it (we put $100 in each month). Those savings are completely separate from our emergency fund. So, I guess we sort of have a life happens fund! It’s just called something else.

Happily (or not?) the heat pump here at this house died a few years ago and we bought a new one, so we’re pretty sure it won’t go up again while we live here. lol

Eventually, once we reach some shorter term goals like the car savings, we’d definitely like to make some progress on paying our mortgage off early. It looks as though my husband’s income will be going up somewhat significantly in a year or two, and if that happens, we’ll be able to accomplish a lot more of our goals more quickly.

Whatever happens, we’ll just keep plugging along with our frugal living.

Have you read Michelle Singletary from the Washington Post, or the Motley Fool? Singetary offers basic – as in fundamental – advice and practical suggestoins about how to be financially sound and financially literate. The Motley Fool’s website is now overcrowded but skip it, go directly to the Personal Finance tab for a nice little – and free – tutorial in personal finance. (Skip “Mint Personal Finance,” which is just trying to sell you something.)

Each has the same recommendation for you. Now that you’ve made your emergency fund you need a “life happens” fund. The emergency fund is for bad things you can’t predict, like losing your job. The life happens fund is for bad things you know will happen but you don’t know when. Major car repairs and dead heat pumps are “life happens” events. The goal is to have both on hand, using the life happens when, well, life happens and not touching your emergency fund unless you have an actual, unpredictable emergency.

My I offer a recommendation? I don’t hear you saying “No” so… Increase your emergency fund monthly allotment to $2600 and save 4 months’ worth = $10,400. Then start your life happens fund. I’m big into having enough savings so in your shoes I’d put the excess emergency funds ($1600 if my calculations are correct) and the $423 into the life happens fund. That gives you a lovely $2000 cushion to start with. If the camera lens is something that increases your earning potential (and not just a little, mind you), then use the $423 for a lens and the $1600 for your life happens fund. OK, financial lecture over.

You’re always doing laundry because you have 4 kids and hang your drying.