What is a freedom account?

iVillage Member
Registered: 09-10-2004
What is a freedom account?
3
Thu, 09-16-2004 - 1:54pm
What is a freedom account? I am new to this board and in some of the posts I've read people mention a freedom account. Is that different from emergency savings?

Thanks,

Joy

iVillage Member
Registered: 03-28-2003
Thu, 09-16-2004 - 2:36pm
Freedom accounts are a wonderful way to save, budget, and debt-proof your life. Mary Hunt's book Debt Free Living is where I learned about freedom accounts. Freedom accounts include your emergency savings and many more things. I have 13 freedom accounts: emergency, gifts, clothes, auto ins, car main/reg, house tax/ins, medical/dental/vision, house repair, vacation, hunting/golf (this is new - DH gave up smokeless tobacco so now I deposit the tobacco money into this account for his hobby spending money), house down payment, auto replacement, furniture. These savings accounts are one of the main things helping me to work on getting debt free. I know it seems like saving would take away from paying the debts but most of my freedom accounts are helping me avoid debt. I'm able to save for the things that are gonna come up (they still have Christmas every December) so I don't have to use credit.

Julie

iVillage Member
Registered: 08-13-2004
Thu, 09-16-2004 - 2:37pm
Yes! It is very different from emergency savings! Emergency savings need to cover 6 months to a year of LIVING...rent, utilities, food and gas!

The concept comes from Mary Hunt's "Debt-Proof Living" that is a recommended read around here from what I can tell. I just got a copy but haven't had a minute to sit and read it. But basically, from what I understand, the point of the freedom acount is to put money into it towards unanticipated and regular expenses that aren't monthly. IE: If you have property taxes to pay quarterly, divide the amount up and put that amount in monthly towards it so that when it's due, you're taking it out of the freedom account rather than having to suddenly come up with that money every third month. Or you know you're going to need about $200 this fall for new winter coats for the kids. Break that cost up and pay it into the freedom account every month so that when it's time, you're taking it from the freedom account rather than suddenly needing it.

The way I look at it is "Bank Of Beth Line of 'Credit' " I'm crediting my own account for the things that aren't regular monthly expenses so that I don't suddenly have to come up with it and not be able to pay a necessary cost ie: delay the phone bill because the van needed a new starter or something like that! I've budgeted x amount of money every month to go into the freedom account in case of vehicle repairs, kids' clothing needs, school field trips and other things like that.

Someone else might be able to give a better explanation..I hope I haven't confused you too much!!

iVillage Member
Registered: 09-10-2004
Fri, 09-17-2004 - 10:08am
Thank you both for the wonderful information. I guess I do already have a freedom account, I save monthly for our property taxes. We have no emergency savings though, because at this point we are barely hanging on week to week. I have some things to sell on Ebay so that I can get our budget back on track and start snowflaking.

Thanks for all the great information and overwhelming support on this board!

Joy