I have been reading an awesome book that I would like to share with you: The Complete Cheapskate: How to Get Out of Debt, Stay Out, and Break Free from Money Worries Forever! by Mary Hunt. You may remember Hunt from her famous newsletter The Cheapskate Monthly.
There are many topics in the book that I found helpful but my favorite is her idea of the Freedom Account. Basically she has taken this old concept–the emergency fund–and dissected it, creating a much more powerful tool.
I always had a problem with emergency funds,primarily, defining what is an emergency? My husband and I would set up funds and they would be depleted in a month or two because some minor (or major) crisis would come up. But “crisis” could mean “we need clothes for the funeral,” or “we don’t have money for the xyz payment this month,” or “dryers are on sale…” You get the idea.
Hunt has designed the Freedom Fund to be a mechanism that will not only let us sleep at night but also keep us from debting because of some unforeseen event.
Here is the simple process: Read the rest of this entry »
