No. of Recommendations: 1
Hey there,

First off, let me just say that I love your username--CountdownToZero. I don't know if you are talking about paying down debt or blasting off into space, but either way it is cool.

Your questions is an excellent one. I personally adopted a savings strategy where my emergency fund would be for either a) job loss or b) major, unexpected expenses. For major, unexpected expenses I'm talking about the engine falling out of the bottom of my 1998 car, not paying the 6 month car insurance bill.

I have a checking account that I call my Freedom Account (a concept you can find out more about at or by asking nice people like me). This checking account--which earns 2.8% interest--is logically divided into sub-accounts which I maintain using an excel spreadsheet. My emergency fund is one sub-account (and it is at the 3-months expenses level right now). Other sub-accounts are gifts, vacations, rent insurance, car insurance, car get my drift. All the categories covered by the subaccounts are irregular expenses in my budget in that they don't happen every month. I have figured out what I want/need for each subaccount for the whole year, added it up, and I deposit that much money into this special checking account every payday. I've been doing this for 3 years, and will continue to do this for the forseeable future--even when I am out of debt--because it keeps me honest. There are fewer large "bumps" in my cashflow since I began doing this--for example, I am never taken by surprise when the car insurance bill for 6 months comes in b/c I already have the money put away.

Even when I'm out of debt, I'll continue using my freedom account strategy for irregular expenses because i feel it would be too easy to do something dumb like triple the amount of money I spend on vacations or gifts without realizing it. That's not to say I would never consider tripling my vacation budget, I would just want to plan for it.

Does this help? I hope so...let me know if you have questions.


Thanks for the compliment on the name. Took me a little while to find a cool one!

I like this idea of a "Freedom Account". Takes a little effort if I understand it properly as you have to set thresholds or percentages on the various amounts you are allocating to the assorted expenses. Love to hear a little more about the mechanics on how to do this just to be sure I am clear on the concept.

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