FIRE Budgeting for Lumpy Expenses (and Your Down Payment)

What most FIRE folks miss about “lumpy” bills

FIRE folks are fantastic at slashing recurring costs and automating investments, but there’s one sneaky category that keeps tripping people up: the lumpy stuff. I mean the bills that don’t hit weekly or monthly, but still hit, hard. Pros don’t treat an annual insurance premium as a surprise; they smooth it across months and stash the cash somewhere that earns. If you’ve ever watched your cash balance crater in the same week your car tags, property taxes, and a cracked windshield show up, you know what I’m talking about.

Quick definition so we’re speaking the same language: “lumpy” expenses are big, irregular, but predictable-enough. Not daily coffee. We’re talking:

• Insurance premiums (home, auto, umbrella) and healthcare deductibles
• Property taxes and HOA specials
• Travel you actually intend to take (holidays aren’t a surprise)
• Car repairs and tires, appliance replacements
• Licensing/registration, professional dues

Why the fuss for FIRE? Cash timing matters, a lot, when there’s no paycheck smoothing the bumps. If you’re living off a portfolio, sequence-of-returns risk isn’t just a chart term; it’s whether you’re forced to sell a chunk of equities after a bad month to cover a six-month insurance bill. I once sold shares to pay a roof deductible in a down week, felt like buying high and selling low’s annoying cousin. Over-explaining a simple idea here, but it’s important: if a $2,400 premium is due in October, setting aside $200 each month, in a separate bucket that earns, avoids a panicked withdrawal at exactly the wrong time. That’s it. That’s the mechanic.

Rule I use: If it has a due date, it gets a monthly line item. Even if the line item is tiny. Especially then.

Now, the 2025 reality check. Housing and auto-related costs are still choppy. Mortgage rates are off their 2023 highs but they’re not “cheap”, 30-year fixed rates peaked around 7.79% in October 2023 (Freddie Mac PMMS), and quotes in 2025 have been hanging in the mid-6s to low-7s depending on credit and points. Insurance has been, well, unfun: the CPI index for motor vehicle insurance ran hot in 2023-2024, with year-over-year increases above 15% for much of 2024 (BLS data), and homeowners premiums saw broad double-digit renewals across many states in 2023-2024; Policygenius reported a 21% average year-over-year increase for home insurance in 2023. Translation: assume your 2026 renewal isn’t going down.

Down payments deserve their own soapbox. That money is not a general “investment bucket.” It has a deadline and a job. If you’re targeting a purchase later this year or in early 2026, treat that cash like a short-duration liability, not a venture bet. You want capital preservation with a bit of yield, high‑yield savings, T‑bills, short-term Treasuries or CDs, so market noise doesn’t decide whether you can close. I know the temptation to “park” it in stocks because the last three months were strong. Sweet, until the week your offer is accepted and the market is -8%.

Here’s the punchline and where my tone gets weirdly enthusiastic: smoothing works. It’s boring, but it’s the kind of boring that pays you. Allocating, say, $350/month into a labeled bucket for insurance/taxes/repairs and letting it sit in a 4-5% APY account (top online banks and short T‑bills have been hovering in that range at points over 2024-2025) means your future self doesn’t need to raid equities or sweat an unexpected ACH. Yes, there are gray areas, some repairs are genuinely unpredictable, and some renewals spike more than you modeled, but the act of pre-funding turns a blow-up into a shrug.

In this section, you’ll see exactly how to: identify your lumpy categories, spread them over 12 months, park them in the right vehicles, and carve out down payment cash so it can’t accidentally become “growth” money. Not perfect symmetry, not perfect forecasts, just a clean system that respects 2025’s messier bills and the realities of living off assets.

Map the next 24 months like a CFO, not a blogger

Here’s how I actually do this on my own sheet, yes, the same sloppy workbook I’ve been using since 2011. Build a dated cash calendar for the next two years so you can see collisions before they happen. Think: that county property tax bill that hits in January the same quarter you planned to wire earnest money. I know, it sounds tedious. It is. It also saves your hide.

1. List every known lump: for each item, record (a) amount, (b) due date, (c) recurrence (annual, semiannual, one-off), and (d) a “what’s the worst that breaks?” category, roof, transmission, dental crown, HVAC board, laptop logic board. Be honest. BLS data showed motor vehicle insurance was running roughly +18-20% year over year at points in 2024, and homeowners premiums kept climbing in catastrophe-prone states. 2025 budgets are twitchy because of that stuff.
2. Add a fudge factor: tack on 10-20% to repairs/medical. PwC’s Health Research Institute pegged 2025 medical cost trend around ~8%. Add the buffer now; you’ll be early, not short. If you never use it, great, roll it forward or reinvest.
3. Translate lumps into a monthly sink: use a simple formula: monthly = (target, current set‑aside) / months to due date. If your property tax is $6,000 due Jan 31, 2026, and it’s Oct 2025 with $1,000 already saved, that’s ($6,000-$1,000) / 16 ≈ $313/mo. If insurance is $2,400 due May 2026 and you have $0 saved, 7 months out is about $343/mo. Yes, I might be oversimplifying with straight-line math; you can layer seasonality later.
4. Use a single calendar view: one tab that shows net cash by month. Rows are months (Nov 2025 → Oct 2027), columns include: inflows (pay, portfolio draws), baseline spend, each sinking category, and the month’s net. Color the red zones. Aim to spot red 3-6 months ahead. That’s your decision window to trim spend, shift a travel plan, or temporarily pause extra principal payments.
5. Park the buckets somewhere that pays: top online savings and short T‑Bills were around 4-5% APY across parts of 2024-2025, so the carry isn’t nothing. Keep near-term (0-12 months) in cash/T‑Bills, and label each bucket so you don’t “accidentally” buy semiconductor ETFs with your roof money. I’ve done it. Once. Never again.

Two more things that sound obvious, but save grief:

• Quarterly reviews: plan to re-forecast in January, April, July, October. Insurance renewals and property tax assessments are moving targets this year; I’ve seen mid-cycle adjustments hit out of nowhere. If a renewal quote spikes 12%, bump the remaining monthly sinks immediately.
• Down payment isolation: treat earnest money and down payment like a separate project. Give it its own line on the calendar and its own account. If you want to get fancier, hold the next-6-months tranche in a 4-week T‑Bill ladder and the 6-18 month tranche in 13-26 week bills. If that’s overkill… yeah, maybe. But it keeps you from raiding it when a shiny IPO tempts you.

Rule of thumb I use: if I can’t point to a dated line item that covers a lump 90 days out, I’m underreserved. Red cells mean call it now, not later.

It’s messy. Some numbers will be wrong, some months will be weirdly expensive. But once it’s on a calendar with monthly sinks and a little cushion, the surprises stop being crises and start being line items.

Sinking funds that actually work in 2025

Where you park the cash matters more than people think. You want three things: safety first, liquidity second, and a little yield so you’re not lighting money on fire. This isn’t your “shoot-the-moon” account. It’s the account that keeps you from overdrafting when the property tax bill lands the same week as the car insurance renewal. Been there; it’s not fun.

Primary parking: high‑yield savings + money market funds. As of October 2025, solid high‑yield savings accounts are still printing mid‑single‑digit APYs. Call it roughly the mid‑4s to low‑5s, give or take. Don’t settle for 1-point-something at a legacy bank because inertia. Shop. If you keep the money at a brokerage, look at a government or Treasury money market fund instead of the default sweep. Many Treasury/gov MMFs are running 7‑day SEC yields in the ~4.5%-5.1% range right now (it moves with the front end of the curve). You get daily liquidity, and with a Treasury MMF you typically avoid state income tax on the interest. That after‑tax detail matters more than it sounds.

T‑Bill ladder for dated expenses. If you have known due dates, tuition in February, insurance in April, use a short ladder of 4-26 week Treasury bills. Buy 4, 8, 13, and 26 week bills to line up with the calendar, and set them to auto‑roll so maturities spill into the week you need the cash. Bills settle in cash; no price drama if you hold to maturity; and you get U.S. government backing. Yields in this pocket have been hovering near the front‑end policy rate all year, so you stay competitive while avoiding surprises. I like bills for anything 1-6 months out; beyond that, I still keep it short because plans change.

Taxable account nuances

• Treasury MMFs: Often state-tax free, still very liquid, and operationally simple in a brokerage.
• High‑tax states: Consider short‑duration municipal funds for money you can earmark for a few months (not days). Check the after‑tax yield. Quick math: tax‑equivalent yield = muni yield ÷ (1 − tax rate). For someone at a 37% federal bracket plus 10% state, a 3.3% state‑specific muni fund can feel like ~5.7% taxable. That’s not nothing. Just remember: NAVs can wiggle a bit, keep the duration short.

Label the buckets so you don’t raid them. Use separate nicknamed accounts or sub‑accounts: “Property Tax,” “Insurance,” “Travel,” “HOA.” I literally keep mine color‑coded because past‑me cannot be trusted near an unlabelled pile of cash during holiday sales. If your bank won’t do sub‑accounts, open a second HYSA and nickname it. Friction helps.

Coverage and safety checks

• FDIC/NCUA: $250,000 per depositor, per institution, per ownership category. Don’t leave six figures uninsured because you didn’t click “open joint.”
• SIPC at brokerages: $500,000 total coverage per account (including up to $250,000 for cash). SIPC protects against broker failure, not market losses. Money funds are securities, treat them.
• Operational note: Some banks throttle outbound transfers. Test the “time to cash” before you rely on it for a property tax due next Thursday.

Personal rule: the next 90 days of dated bills sit in cash‑like (HYSA or Treasury MMF). Months 4-6 can live in a T‑Bill ladder. Past that, I still keep it short because life loves curveballs.

One last practical bit. During Q4 (holiday creep is real), I keep a small “buffer” sub‑account, two weeks of living costs, inside the same HYSA. It saves me from tapping the car insurance bucket when gifts run hot. Over‑engineered? Maybe. But it works, and it’s repeatable.

Down payment war chest: build a glidepath, not a hope

Treat your down payment like what it really is: a time‑bounded liability with a hard deadline. You’re not running a small endowment here; you’re trying to be ready on closing day without sweating a 3% drawdown the week your offer is accepted. I’ve seen way too many smart folks chase a little extra upside and then scramble, been there once myself, not proud of it.

Here’s a simple, boring-on-purpose, time‑based mix I use with clients and, frankly, in my own house budget:

• 36+ months out: allow a modest equity sleeve (say 20-40%), the rest in T‑bills and money market. The equity piece exists to fight inflation creep over multiple years, not to “beat the market.”
• 12-36 months: get heavier in bills/cash (70-90% short Treasuries and cash‑like). Keep equities to a small sleeve, 10-20%, and start scheduling exits.
• <12 months: stop kidding yourself, volatility is the enemy. Go cash and T‑bills only. If you need the money inside a year, your expected-return debate is secondary to funding certainty.

Automate the de‑risking. Don’t negotiate with yourself each quarter. Set a calendar rule like: every quarter, shift 10-20% of the risk sleeve (equities and longer bonds) toward cash/T‑bills. Example: at 30 months out with a 30% equity sleeve, move 7.5% of the total portfolio per quarter over four quarters. If markets rip higher during that period, great, you’re selling into strength. If they wobble, you’re still exiting on schedule. No hero trades, just a glidepath.

Cap the upside dreams. The goal is not outperformance; the goal is closing. For context, one‑year stock returns are negative about a quarter of the time in long U.S. history (multiple S&P 500 studies show roughly 24-26% of rolling 12‑month periods end down). That’s fine for retirement money with decades ahead; it’s a problem for a condo you want next summer. Also, short‑term pain isn’t theoretical: the S&P 500’s peak‑to‑trough in 2008-2009 was roughly -57%. You won’t likely see that in a single year again, but the point stands: the tails exist right when you don’t want them.

Current yield reality check (Q4 2025): cash isn’t “dead money” right now. High‑yield savings accounts are still printing mid‑4%s at many large online banks, and front‑end Treasuries are in that general zip code. That creates a nice floor while you de‑risk. Rates move, sure, but the carry today makes the conservative path feel a lot less painful.

Taxes matter, real dollars. If you’ve got positions with losses from earlier this year or last year, harvest them to offset gains. Long‑term capital gains rates still exist, including a 0% bracket that, for 2025, ends around the mid‑$40k taxable‑income range for singles and mid‑$90k for married filing jointly. Brackets shift with inflation adjustments, so check the current IRS 2025 thresholds before selling. Also remember the 30‑day wash‑sale rule if you’re loss harvesting, don’t repurchase “substantially identical” securities inside the window.

Keep the plumbing clean. Hold earnest money and closing costs in a separate sub‑account from the down payment. I’ve watched people get tight at funding because appraisal fees, prepaid taxes, and insurance escrows were sitting in the same pot as the down payment and markets dipped 2% that week. Don’t do that to yourself. Label the buckets. Fund them. Leave them alone.

And yes, this is more knobs and dials than “just buy an index fund.” Money for a house is different. It has a date stamp. My quick checklist:

1. Set the closing window (roughly when you’ll buy).
2. Pick the starting mix based on the window above.
3. Automate a quarterly de‑risk rule (10-20% of the sleeve moves to cash each quarter).
4. Turn off performance FOMO; the benchmark is your closing date.
5. Confirm tax brackets and harvest losses where it makes sense.
6. Isolate earnest money and closing costs so nothing breaks at the finish line.

Personal rule: once I’m inside 12 months, every dollar of the down payment sits in T‑bills or a Treasury money fund. Boring wins. I can live with regret; I can’t live with a busted closing.

Taxes, penalties, and the sneaky “don’t do that” list

There’s what sounds clever on Reddit, and then there’s what actually clears with the IRS and keeps your plan intact. And yeah, there’s gray area. I keep a mental “don’t do that” list because when markets wobble like they have this fall and mortgage quotes are still elevated versus pre‑2022, people get tempted to yank from the wrong bucket. Quick tour, plain English.

• IRA first‑time homebuyer exception. This is a real, longstanding rule. You can take up to $10,000 lifetime from IRAs without the 10% early distribution penalty if you’re a first‑time homebuyer (that means you haven’t owned in the last two years). Two gotchas: you still owe ordinary income tax on any pre‑tax dollars, and it’s per person. A couple could potentially do $10k each. It’s helpful to bridge a small gap, but don’t call it “free money.”
• Roth IRA sequencing. This one trips folks up because the jargon is annoying. The “basis” (your contributions) can be withdrawn tax‑ and penalty‑free anytime. Earnings are different: they follow the five‑year rule and age 59½ rules. I almost said distribution ordering rules; sorry, simpler: you can take back what you put in first, but the growth has strings attached if you’re early.
• 401(k) loans. I’ve seen these blow up careers and closings. If you leave your employer, that loan can be due fast; fail to repay and it’s treated as a taxable distribution, potentially with a 10% penalty if you’re under 59½. And the payments come out of after‑tax cash flow while your pretax contributions may need to pause. Use sparingly, read the repayment schedule twice, and know what happens if HR hands you a cardboard box.
• Gifts from family. The annual exclusion was $18,000 per donor per recipient in 2024. That means grandma and grandpa could each gift you $18k, and do the same to your partner, without filing a gift tax return. Verify the 2025 limit before you structure family help, no need to create paperwork accidentally. Coordination beats confusion here.
• HSA: not your house fund. Health Savings Accounts are incredible, but the money is for health expenses. Use it for a house before age 65 and it’s a 20% penalty plus income tax on the non‑qualified amount. Budget medical lumps separately. In my house we literally tag this in our “fire‑budgeting‑for‑lumpy‑expenses‑and‑down‑payment” spreadsheet so it doesn’t get raided.
• ACA premium credits. Under current law, the enhanced credits run through 2025. A surprise income spike from selling stock or a big Roth conversion can shrink your credit and lead to a give‑back at tax time. If you’re on the exchange, plan the timing of capital gains and option exercises. Sometimes waiting until January saves real dollars.

And a few quick “don’t do that” reminders from the trenches:

• Don’t co‑mingle down payment cash with trading money. One bad week and you’re explaining a 2-3% drawdown to a seller who doesn’t care about your Sharpe ratio. Seen it. Not fun.
• Don’t forget state taxes. IRA distributions can poke your state bracket and mess with credits or deductions. Small moves can have big ripple effects.
• Don’t ignore settlement timing. Mutual fund sales settle T+1; stocks T+2. That’s “trade date plus” jargon, practically, sell a day or two earlier so cash is ready for the wire.

Bottom line: you’ve got legitimate levers, the $10k IRA exception, Roth basis, clean family gifts. But the penalties are real, and the opportunity cost is too when markets are jumpy and T‑bills are paying decent yields this year. If you’re unsure, map the tax line items, then pause 24 hours. I’ve saved clients (and myself) from expensive “clever” moves with that one habit.

Guardrails so a bad month doesn’t nuke your FIRE

This is where you add bumpers to your plan. Because when lump expenses and a home purchase sit in the same 3-6 month window, one ugly tape in equities can snowplow your withdrawal math. I’ve seen this exact movie with clients. I’ve been a little too cute myself, too.

Start with cash buffers. A common FIRE setup is 12 months of core spend in cash-like stuff (treasuries, HYSAs, laddered T‑bills). While you’re house‑hunting, stack the next 6-12 months of known lumps on top of that. So if your baseline spend is $6k/month and you’ve got $25k in planned healthcare/deductibles and a $15k car replacement sniffing around, that’s $72k + $40k = $112k earmarked. Yes, it feels fat. That’s the point. And quick context: the S&P 500 has had a median intra‑year drawdown around ~14% since 1980 (J.P. Morgan Guide to the Markets, 2023). Bad months happen when you least want them.

Use guardrail withdrawals, not fixed COLA. The Guyton‑Klinger decision rules (published 2006) are still practical: you set an initial withdrawal, then adjust only when you hit bands. Example, reduce spending by 10% if your current withdrawal rate rises 20% above the initial rate after a drawdown (“capital preservation” rule), and raise by 10% when it falls 20% below after strong returns (“prosperity” rule). You also skip inflation raises in down years. It’s mechanical on purpose. Keeps emotions from steering the wheel into a ditch.

Pre‑decide your levers. Write it down. If markets are down 15-20% from recent highs when you’re inside 90 days of closing, you’ll: (1) pause Roth conversions, (2) push closing 30-60 days if your rate lock allows, (3) trim travel by 25-50% for two quarters, (4) take part‑time income for one quarter if needed. I know that reads a bit rigid. Reality is messy. But the pre‑decision removes the “should we?” debate when you’re stressed.

Insurance deductibles are a planned lump. Treat the deductible like it will happen this year. Put the cash in its own bucket, labeled. Don’t blend it into grocery money. When a roof claim or fender-bender hits, you pay the $1k-$5k without touching equities. Tiny thing, big peace of mind.

Model a true worst‑case. On paper, no Excel art. Combine a 20% equity drawdown with paying 10% over ask on the house, plus closing costs. If your $1.0m portfolio becomes $800k exactly when the $550k target house costs $605k, do you still have: (a) 12 months core spend, (b) the extra 6-12 months of lumps, and (c) room to stay inside your guardrail withdrawal after the cut? If “maybe” is your answer, the plan is telling you to dial it back. Negotiate harder. Smaller house. Or wait a quarter. I know, not fun.

Where to park the buffers right now? Short T‑bills and HYSAs still pay decent yields this year, and settlement/liquidity are clean. Keep the home funds in a separate account. I repeat myself on that, because I’ve watched people reach for an extra 50 bps and regret it. One more practical note: check your rate‑lock terms before you rely on the “delay closing” lever, some lenders only give 30-60 days without fees. I’m blanking whether Fannie’s current standard lock is 60 or 90 by default with most retail shops, it changes, but your Loan Estimate has the answer.

Quick checklist: 12 months core + 6-12 months lumps in cash; Guyton‑Klinger guardrails active; written levers for a 15-20% drawdown; deductible cash in its own bucket; worst‑case model passes with margin.

Do this, and a bad month becomes an inconvenience, not a derailment. Boring wins here. Every time.

Your 90‑minute money drill for this week

Time to make it real. Block 90 minutes, shut Slack, and grab a notepad. You’ll finish with dated buckets, auto‑moves, and a down payment path you can stick to even if mortgages hang around ~7% this quarter. If it feels a little boring, good, that’s risk management doing its job.

1. List every “lumpy” expense through December 2027 (plus the down payment). Due dates and best‑guess amounts. Think: insurance premiums, property taxes, tuition, car replacement, braces, big trips, weddings you’re probably flying to, and the down payment target. Put an amount and a month/year next to each. Yes, estimate. Rounding is fine, add a 5-10% fudge factor.
2. Create separate sinking funds with nicknames and auto‑transfers. One fund per lumpy item if you want to be tidy, or a few grouped buckets (“Insurance/Taxes,” “Auto/Travel”). Turn on weekly or biweekly transfers so the math happens while you’re sleeping. Keep the home fund in its own account. FDIC/NCUA coverage is $250k per depositor, per bank (still the rule in 2025), so spread if needed.
3. Match T‑bill maturities to due dates. Use 4-26 week bills in a ladder so cash hits right before each bill is due. As of October 2025, front‑end bills are yielding around 5% annualized, give or take. Treasuries settle T+1, so don’t cut it too close. In brokers, disable auto‑roll for buckets needed in the next 60 days.
4. Pick your down payment glidepath. Example: 18 months out = 70% cash/bills, 30% diversified; 12 months = 85/15; 6 months = 95/5. Set a quarterly calendar reminder to derisk on a schedule, not a headline. If your target home window is Q3 2026, the derisk dates are Jan/Apr/Jul/Oct, just keep stepping down, even if the S&P’s green that week.
5. Audit taxes for 2025. Map any asset sales you might use for the down payment. Check the 2025 IRS brackets and the long‑term capital gains bands (the 0%/15%/20% thresholds adjust for inflation every year; confirm your filing status numbers). Remember: Roth IRA contributions are withdrawable anytime; traditional IRA has a $10,000 lifetime penalty‑free exception for a first‑time home purchase (still taxable as income). Wash‑sale window is 30 days. If you harvested losses last year, mind your replacement dates.
6. Set guardrails. Minimum cash floor = 12 months core spend + 6-12 months of mapped lumps (what we outlined earlier this year). Pre‑decide cuts if markets slide 15-20%: pause contributions above the 401(k) match, downgrade travel, defer the car, move nonessential projects to 2026. Write the triggers and the actions. No ad‑hoc tinkering mid‑drawdown, future‑you will thank you.

Small but useful stats: 3‑month bills are ~5% right now, HYSA rates are in the mid‑4s at many online banks, and mortgage purchase rates have hovered around 7% this fall. None of that is permanent, treat it as today’s starting point.

Challenge: before Sunday night, share the written plan with your spouse/partner, or email it to future‑you, and commit to one tweak you’ll execute this week. Could be “open a separate ‘Home‑2026’ account and fund $1,000,” or “turn on a weekly $150 auto‑transfer.” Doesn’t have to be heroic. Momentum beats perfection. And if you catch a small mistake on the amounts later… fix it and move on. Intellectual humility over ego, always.

Frequently Asked Questions

Q: How do I set up a simple lumpy-expense system without overthinking it?

A: Make a 12‑month list of non-monthly bills, total them, divide by 12, and auto-transfer that amount to a separate “sinking fund” (HYSA). Label sub-buckets if your bank allows. Pay the bill from that account only. Review totals each October for next year’s changes. Done. No heroics.

Q: What’s the difference between an emergency fund and a sinking fund for lumpy bills?

A: Think of the emergency fund as the airbag; the sinking fund is the seatbelt. Emergency fund = true surprises (job loss, medical shock, roof cave-in). It’s bigger, boring, and untouched unless life actually punches you. Sinking fund = predictable but irregular costs (insurance premiums, property taxes, tires). You know they’re coming; you just don’t know the exact week. For FIRE folks, I like 6-12 months of baseline spending in the emergency fund, then a separate sinking fund sized to one full year of your lumpy bills. Automate monthly contributions into the sinking fund and pay those bills from it. That way, you’re not forced to sell equities at a bad time. Quick sanity check: if it has a due date, it belongs in the sinking bucket, not the emergency one.

Q: Is it better to keep my lumpy-expense money in a HYSA, T‑bills, or I Bonds right now?

A: Depends on timing, taxes, and hassle. HYSA: daily liquidity, variable APY, fully taxable interest. Great for bills due within 0-6 months. T‑bills (4-26 weeks): state tax‑free interest, can ladder maturities to your due dates; slight bid/ask and settlement quirks but easy at most brokers. Good for 3-12 months out. I Bonds: rate resets every May/Nov, interest is federal‑taxed when redeemed, state tax‑free, but funds are locked 12 months and you lose 3 months’ interest if redeemed before 5 years. They’re terrible for a premium due in 6 months, fine for next year’s tuition. My rule: under 6 months = HYSA; 6-12 months = short T‑bill ladder; 12+ months and you won’t need it = consider I Bonds if the composite rate is attractive.

Q: Should I worry about sequence risk if a big insurance premium or property tax hits during a market drop? How do I plan the cash?

A: Yes, timing can bite. If you must sell stocks after a down month to pay a $2,400 premium, you’ve turned volatility into a withdrawal problem. Fix it with a calendar and buckets.

Here’s a simple setup:

1. Map the year: list all lumpy items with due dates and amounts. Example: $2,400 insurance in Oct, $6,000 property tax in Feb/Aug, $1,200 tires in May = $9,600 total.
2. Automate funding: $800/mo to a sinking fund.
3. Match instruments to timing: bills &lt;6 months use HYSA; 6-12 months use a rolling T‑bill ladder (e.g., buy 13‑week bills monthly so one matures before each due date). Reinvest leftovers.
4. Keep a buffer: 3-6 months of lumpy bills (not total spending) in cash/HYSA. In this example, $3-5k.
5. Withdrawal rule: if equities are down (pick your trigger, say −10% from high), pull living expenses from cash/T‑bills only and refill during up months.

Down payment wrinkle: if you’re buying later this year, treat it as a lumpy expense with zero risk tolerance. Park it in HYSA/T‑bills, no equities, because principal certainty beats a surprise rally/slide. And yes, rates peaked around 7.79% in Oct 2023 per Freddie Mac; today they’re off those highs but still not “cheap,” so cash planning matters more than ever.

@article{fire-budgeting-for-lumpy-expenses-and-your-down-payment,
    title   = {FIRE Budgeting for Lumpy Expenses (and Your Down Payment)},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/fire-budgeting-lumpy-expenses-down-payment/}
}