Barefoot Buckets - Role of Mojo and Fire Extinguisher

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  abb on 28/02/2019 - 09:27

  Haven't read the book but I would pay them from the 'living expenses' account (whatever gimmicky name he calls that), and if that gets exhausted then Fire Extinguisher, and if that's exhausted then Mojo.

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  HighAndDry on 28/02/2019 - 09:35

  +1

  Where I'm getting stuck is where to allocate money for lower level emergencies (such as unexpected repairs on car/house, dental bills, etc)

  I agree with abb: These shouldn't be any kind of emergency - they should be budgeted-for items as part of your living expenses. The timing might be unexpected, but the fact that they'll occur isn't and shouldn't be.

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    Seraphin7 on 28/02/2019 - 10:21

    Correct. Relating it to property only, I've always considered that the total cost of maintaining a property averages about 1% of the property's value each year.

    Some of that money is spent on "week-to-week" maintenance such as gardening, cleaning, running repairs, etc.

    The balance of the money then effectively accumulates to pay for periodic maintenance/improvement such as painting, roof/guttering repairs, fencing repairs, major appliance replacement, etc.

    If you were to following the Barefoot model (at least as I understand it) you would have a pot of money that you would be allocating this 1% of property value to every year. Overtime, it will build up as you spend it on the "week-to-week" activities, but would then be your bank to cover the more major periodic items.

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  fossilfuel on 28/02/2019 - 11:01

  +1

  I agree with the posters above. Repairs and dental bills should first come from daily expenses (60% of take home pay), then fire extinguisher if there's not enough and mojo finally in extreme cases. Mojo should be your last resort if you're cash strapped and have no funds left. You shouldn't dig into your splurge and smile accounts as that money can help you and your family destress. You can ask Scott on his website for more clarification but should be very similar to the responses here. https://barefootinvestor.com

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  XabiFernando on 28/02/2019 - 22:09

  I don't disagree with any of the above and am completely on board with saving money progressively to be able to cover low-level emergencies as they arise.

  Barefoot splits his blow bucket (60%) as follows:
  Mortgage - 30%
  Food - 5-10%
  Travel - 5-10%
  Utilities & Telecomms - 5-10%
  Insurances - 5%

  Where I'm getting confused is that of the events I've described above, none of them fit into the above categories. Only possible exception would be car repairs under travel.

  I suppose I'm just trying to reconcile my spend a bit. When I include my "emergency funds" in my blow bucket, I come out to around 80-85%, which is higher than where I'd like to be. But if they were to count to fire extinguisher then that "gap" to 60% comes down a bit.

  I'm almost certainly over complicating this! Just would love to settle on a "starting point" and work out ways to get leaner from there.

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  Dpkmax on 03/03/2019 - 12:44

  Barefoots strategy is basically a reference guide only . You need to customize it depending on your situation/ financial condition.
  Pm me for any questions on Barefoots strategy ( note that advise offered will be only for educational purpose).