One of my favorite money books is The Complete Cheapskate by Mary Hart, especially the chapter about the Freedom Account. (I recently read another article or blog about the Freedom Account on savingadvice.com. LOVE it!!) Anyway that thing has saved my finances!

I manage one of my savings accounts (the one connected to our household checking account) as our Freedom Account by having 7 subaccounts: (1) minimum balance (emergency fund) $1500 to avoid the service fee; (2) cushion account of $500 to avoid withdrawing below the minimum that avoids the service fee; (3) car insurance account, (4) car repair account (5) home escrow account; (6) medical/dental account (in addition to this I have a Flexible Spending Account for health care through my job), and (7) a travel account.

I didn't open a separate checking account as the author advised. I should have. Maybe I will eventually, I just went with what I had. Keeping up with transfers has been...interesting. I do keep a notebook just like the author describes for each sub-account. I balance the total amount against my monthly bank statement. I don't yet have it fully funded because 'the kid' has had thousands of dollars worth of dental work done in the past 2 years (impacted wisdom teeth, 3 root canals, 3 crowns, several fillings) so I've been borrowing from other accounts to pay these expenses to avoid debt. A root canal on my dental insurance has been $700 or more. A crown, $600. (Or $595 as the dental assistant was so cheerful to point out.) I'll give you a minute to do the math to add up how much the kid's mouth is worth.
...
I've also struggled with our auto insurance which has doubled to $1360 for 6 months after adding the kid and the third automobile. (I hear the advice of many...I need to make the kid more responsible...what to do, what to do, what to do...)

Anyway, we have never had a lot of debt, our only debt is our mortgage (under $70,000). Whenever I listen to Dave Ramsey and all those people (who I'm really excited for) who yell 'we're debt free'--people who are sometimes making the same money I'm making--I can't figure out what I'm doing wrong. If they can get debt free from a MOUNTAIN of debt, why can't I save more? Same concept, right?

Turns out that unexpected and irregular bills were beating me down to the ground! My son's dental work, car repairs, IRS payments (the year I under-estimated my withholding was a PAINFUL year), escrow, leaky plumbing, airfare for a funeral. It seemed like no matter how many steps I took forward, I'd take twice that many backwards.

I started out the Freedom Account with a payday deposit that was too high for me to maintain ($200 per paycheck). I almost gave up, but decided to lower the payday deposit to $50 each paycheck. I was discouraged, but found that any amount is better than adding $0 to $0. (Who knew?)

I also deposited other income like part of my tax refunds and overtime and gift money. It's still taking a lot of patience (my son needs another crown), but my patience is improving. I increased the allotment from $50 to $70 to $90 over the past 18 months or so. It's helping a great deal and I feel more organized and in control. I've made quite a bit of progress in 18 months, but looks like I'll need another year to get a good footing, and then each of the sub-accounts will be more easily funded and ready to work...to do what I'm paying them for!

I love the nerd-iness that comes out of me in managing this account. Nerds rule!!