One thing that can derail people digging themselves out of debt are the random unexpected setbacks life likes to throw at us to keep us on our toes. The accidental parking ticket, the bike that breaks down, the illness that requires pricey pills. Any of these can be enough to upset even the most carefully orchestrated budgeting and debt payment schedule, unless, you are smart like Ramit Sethi, and set up a “stupid mistakes” sub-savings account. Here’s how it works.

He writes on the I Will Teach You To Be Rich blog:

A lot of what seems unpredictable is extremely predictable — over the long term. What seems like surprise expenses is actually not a surprise if you analyze your spending for the past 5 years. Which of course nobody does.

Ramit saves $100/month and uses it for traffic tickets, late fees/penalties, or rebuying things that he loses. If it has anything left in it at the end of the year, he takes it out and puts 80% into his main savings, and uses the other 20% to reward himself for not messing up.

A few banks will let you create different accounts under your one account so you can create different savings buckets with different goals. ING Direct is one, SmartyPig is another.

Automation: Add a “Stupid Mistakes” sub-savings account [I Will Teach You To Be Rich]

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