Does your heart sink every time you have to make a car repair or pay a doctor's bill? Try sinking funds. Every month Jeanette and I set aside a certain amount of money into a fund to pay for "unexpected" expenses. For example, say you set aside 100 dollars a month for auto repairs. Six months later, you need work done that costs 500 dollars. Normally this would be a big hit and you'd be scrambling to come up with the money (maybe even having to put it on the credit card where you get the privilege of paying it off at 12% interest), but because you've been saving you just draw it from your sinking fund (where you've been earning 2% interest instead--14% differential). That 500 dollar bill is no big deal because you have 600 sitting in your savings account for just this sort of thing.
It might take some time to fine tune the amounts you should be setting aside. I think it's better to error on the side of setting aside too much.
It's amazing how much peace this brings.
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This is one of the three ideas that we have been trying to implement recently. Last month, our stake president advised us to determine what we would do to economize if we were to lose our employment the next day, and then to do that and take the money saved and start putting it away. We have done this, and started a sinking fund like Matt describes.
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