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Discussion Starter · #1 ·
I have been reading several threads today and I thought to myself, "We all need to have a freedom account (or sinking fund). It is almost as important as an emergency fund."

For those that do not know what a freedom fund is, it is a fund where you put a set amount of money in every month to take care of known expenses or irregular expenses. My fund is for car repairs, doctors bills, annual life insurance fee, extra-curricular activities for my daughters and our quarterly water and sewer bills. I figured out how much this will cost me each year (guestimate with car repairs and doctor's bills), then divide by 12. I have a savings account attached to our checking account so moving the money in and out of both accounts is easy.

This is a good thing to add into your budget after you finish an emergency fund. It is hard to do for many and it can slow the snowball down, but it is a very liberating thing. Even if you only put in $25 a month, it will help when the car needs a brake job and you won't have to rob your emergency fund.
 

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I agree. Those sinking funds are reall life-savers. I had a Christmas fund and gift fund and it helped me so much throughout the year. Going to do the same this coming year.
 

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This sounds like what I do when I cash out money from work. I refrain from calling in sick, or taking time off, and then I can submit a special request for the money...
 

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I am a firm believer in the Freedom Account. Mine covers: homeschool curriculum, vehicle maintenance & anticipated repairs (my brakes need doing in the next couple of months), home repairs, household furnishings (like my blender, which recently died), clothing, and medical/dental co-pays.

I would recommend setting up Freedom Account before establishing an Emergency Fund. Otherwise, you will be constantly dipping into the EF, when really a FA is needed.

I reserve my EF for bigger emergencies, primarily loss of income, but also it could be used for a $500 or $1000 deductible on the auto or homeowners insurance.
 

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My dh and I have 2 checking accounts. One is for our business and the other is for household. His checks go into the business and my checks go for household. We use the household account for the freedom account too. We try to live on half of what I make...sometimes we don't make it but the money is there for car maintance, doctor bills, and so on. We also have an EF fund and a saving account...We just decide each month what goes where. It is easier for us now that all the kids are gone to save money. I wish I would have started this when I was a lot younger....
 

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My freedom account is my secret account : only I hold the key !!!
Hubby doesn't know about this one...does anyone else do this????
I have too, What he doesn't know ...won't hurt him. He doesn't keep track of the books..I do!!! Hubby tries..but he just doesn't understand what it takes. I feel sneeky...but It's for our own good.
 

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Discussion Starter · #7 ·
Suzysaver, that sounds like a different topic! Maybe we should start a thread on do you save money and not let your spouse know? I know, in the days before women worked during marriage, they were encouraged to have a nest egg just in case something went wrong. Now, it is different.

Nwmissourigal, I am glad to hear you say it is a lot easier to save when the kids are gone. I need to step up the retirement savings when they leave.
 

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My freedom account is my secret account : only I hold the key !!!
Hubby doesn't know about this one...does anyone else do this????
I have too, What he doesn't know ...won't hurt him. He doesn't keep track of the books..I do!!! Hubby tries..but he just doesn't understand what it takes. I feel sneeky...but It's for our own good.
All of our accounts Dh knows about, freedom account, emergency fund, chequing,savings etc....the only thing is I also do the financing in our home and he doesn't know when I take money out to transfer or how much at a time. He doesn't even ask or check lol but about once a month I ask him to look online with me so he can see our balances and he is happy with that. He has online banking as well and every now and again I will ask him to pay the bills as if anything happened to me I don't want to leave him without knowing what/how/when about the finances.

I guess with the loss of so many family members over the past 4 years and seeing how the gov't works here in Canada anyhow, I don't want him to go through what some widows/widowers can go through. For example, when someone dies here in Canada, as soon as the death certificate is issued the Gov't automatically Freezes that persons accounts........if there is no will for that persons estate etc it could take up to a year before things get straightened around.

With the freedom account I am trying to get back with that up and running, after Christmas I will start adding more to it. I am in the habit of paying for things as they come in and that isn't always a good thing lol....
 

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We have had one for a few years and love it. it provides more security than the EF for me. This account is why I could pay for over $1000 in car repairs without worrying. I had it in my freedom account. I tried to explain it to people here, but it didn't go over very well. Now I am in the process of rebuilding the car repair account, since I wiped it out. It was a relief to have it all covered at the time though. I would recommend that everyone does this.
 

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I'll probably start this when everything is paid off, should be 3 years. Until then I keep about $100 buffer in the checking to catch the little stuff. The emergency fund rarely gets touched, as we have a really good snowball going and most things that pop up get sent to us as a bill. I just include it in the next budget.

But, when I'm not keeping up the intensity or keeping that focus on paying everything off and there are no payments, I will be setting up sinking funds/freedom accounts for odds and ends. It was just bugging me too much having the money sitting around while I was focusing on paying stuff off. Plus all the extra headache of figuring how much went to what, and I spent what our of what account... ugh, aggravation.

I do feel this is VITAL for those whose income cannot absorb irregular expenses. I mean, if the snowball was only $300 a month a car repair would be devastating. Or property taxes or Christmas. A freedom account is great, in that respect!! :)
 

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I have a savings account and am starting an ef. I think the freedom fund idea is great and would really help when those infrequent expenses pop up. It seems like every month I have something come up that I should have planned for. I just don't know if I can afford to do both kinds of funds and start paying off my debt.

For those of you who have mulitple types of accounts, savings, ef etc... how do you keep track of these? Do you have separate accounts set up or do you keep separate totals within an account? My bank gives us one free checking account then I would have to pay a small fee to have an additional one.
 

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I just keep track of it on paper. I have one sheet that shows my balances in each category of Freedom Account, and the total off to the right. When I look at my bank balance, I mentally subtract the amount of the Freedom Account.
 

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Discussion Starter · #13 ·
I only have two accounts: one is the EF and one is the freedom. What would your savings account be for? I also know other people who have one account in ING and they have the ability to create subaccounts online. One big account but book keeping is allowed to be done by subaccounts.
 

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I love our ING account. We have our emergency fund in there and a Freedom sub-account. When I sign in it shows both accounts on one page with the total amount of $ in each. I can just click on my Emergency fund account and it will show the history of deposits/debits and up in the corner it will show how much interest our money has earned total since opening up our account, and the same for our Freedom account.

Our emergency fund total interest is not combined with our Freedom account total interest.
 
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