In 2011, I need to allocate $2,000 per month toward future expenses. I will deposit this into my ING Orange Savings account and allocate it as I incur the expenses.
So I'm sure you are wondering what expenses I am including:
- $521: First, something new I am doing is setting aside 10% of my monthly gross rental income (currently $521 per month when all properties are occupied) for expenses associated with my rental properties. This would include new carpet or HVAC replacement - two major costs I incurred recently and wish I had planned for - and other large expenses such as new appliances and repairs.
- $417: Second, I am setting aside $417 per month ($5,000 per year) to fund my Roth IRA.
- $910: Third, $910 will be deposited each month to cover those pesky expenses I dread: property insurance (for 8 houses), car insurance, fire dues, car tag and pest/termite control (again, 8 properties).
- $152: Last, to make it a nice round number, I will add a $152 monthly cushion just to be safe. My initial thoughts are that I will use this to fund a Health Savings Account. I currently have COBRA under my old employer's plan but am about to switch to a high deductible plan.