All right, so next, we get into savings, or some call it the rainy day fund. Now this isn't something you necessarily have to budget for, but I 100% recommended. This section of your budget will cover the stuff that isn't necessarily planned for. For starters, health care, though the entire family may have health insurance. insurance doesn't cover those pesky deductions, or you might have co pays. So for Joe and Sally's budget, we're going to set aside $50.
Next step cars, cars are also troublesome sometimes, and in this case, the family has one older car, so they set aside $150 for car maintenance. This includes registration fees in oil changes and a possible replacement down the road. You never know In Christmas and birthdays, always jump up quicker than expected. So we set aside another $100 a month for that. And while we're at it, family vacations, family vacations are fantastic. So Joe and Sally set aside $100 for that as well.
Depending on your savings goals, you can also take the time here to dedicate money to your retirement fund, or a child's college fund. We'll set aside some here calling it a long term fund, and we'll put $100 in it. So let's add in these rainy day savings. If you go back a little, you'll remember that the remaining balance after subtracting their needs and their wants from their income was $557. And we take that do some quick math $500 for the rainy day expenses, and that gives us a remaining $57. Now normally this would be where your budget would end.
This last savings category would be where you would dump all your extra money that didn't fit into your expenses. But in some cases, you may choose to use this extra money to pay off debt. So still using Joe and Sally as an example, we have the remaining $57 left on budget. If you remember, the lowest balance of one of their carts was $500, which means what? You can now take that additional $57 and add it to the minimum payment of $25 leaving a total apply to that credit card of $82. If they're able to keep this up, or even possibly consolidate some of their spendings they'll be able to get this credit card paid off in just a few short months.
And what do you do after you pay off the $500 balance? You move on to the next credit card, slowly chipping away their smallest step first until one day they find themselves stuck. Free. Now that's budgeting at its best.