Prepare for Irregular Expenses with a Freedom Account

In addition to your traditional checking, savings, and emergency accounts, financial weblog Get Rich Slowly suggests setting up another money bucket for irregular or unexpected expenses. Sock away money in a "Freedom Account" for expenses like clothes, vacations, and car maintenance. Setting this money apart from your regular monthly bills ensures you keep a tighter rein on what you spend on irregular expenses, and it also helps you set savings goals for larger purchases. Whether or not you're already doing something along these lines, let's hear how you track and manage your irregular expenses in the comments.


    This may be slightly off topic, but I personally have a rule which I call the "Nevada Gaming Commissions rule" - from an idea I developed off Oceans 11. It basically says that I must have enough money invested in a stable account (a high-interest online bank account in my case)to cover the credit limit of my credit card. For example, if the sum of my credit limit (for all my credit cards) is $5000, I must have $5000 in that account at all times. No excuses. If my credit limit get's bumped to $10,000, then I start putting money into this account until this amount is reached. Meaning, no buying of unnecessary items until I get that amount save. After that, I'm free to purchase whatever I want.
    The logic behind this is, *if* there is an emergency and I need to max out my credit card, I can rest assured knowing that I will not have any issues in paying it all off tomorrow. In a worst case scenario, I can max out my credit card AND use some of the available funds if necessary (just make sure you have enough to pay off the minimum in your next bill). But that is really the worst worst case scenario.

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