Easy Change

One of the biggest things that has made it possible for me to be able to improve my personal financial situation is the maintaining of a freedom fund. A freedom fund is a different bucket of money that is used for clear and present expenses coming in the next 12 months. This is entirely separate money from your emergency fund. The Emergency fund is some bucket of money that is set aside as insurance against loss of income for unavoidable expenses. When something happens and the income is lost, it is difficult to adjust lifestyle immediately. In fact, when you typically lose your income, there can be difficulty adjusting because you now have larger amounts of available time and this may coincide with some residual depression/anxiety resulting in an uptick in spending. If you're anything like me, there are a series of expenses that you'd cut immediately if there was a loss in income. Then there are probably a series of expenses that you'd cut only if absolutely necessary...

Thinking about the recent holiday this weekend has given me a bit of perspective regarding gift giving. Something that I had forgotten until I was recently reminded is how very much people really fill up their emptiness with the shopping and busyiness of the holiday season. I had a conversation with family members recently to reiterate the importance of a reasonable (read small) amount of gifts. For some reason, no matter how much I stress this, there is always resistance. I find the whole ritual can be somewhat frustrating. Gift giving becomes a stressful game of chicken with often little more than wasted money and hurt feelings. Now that I have outlined the problem, what are the solutions? 1. For me, early and often discussions about the issue seem to help. Sometimes the gifts can be a way for people to try to make up for lost time and connections during the year. So to alleviate that, make more time for loved ones. 2. Avoid going nuclear. When doing the gift giving, stay consistent....

A Freedom Fund is a great supplement to the Emergency Fund. It stands to reason that there are categories of upcoming expenses that are likely to come up within a year or two and you can easily save for these expenses, a little each month, above and beyond your normal savings. This past weekend, the cat got sick and required an ER visit which totalled over 300 dollars. This was an unexpected expense -- the reality is that most people can't easily absorb it. My budget is certainly tighter now this month, but it is not undoable in any way. Fortunately, the experience has showed me it is a good idea to review the expenses to see what, if any need to be revised. The first that you might be overlooking (if you're like me) is pet expenses. These can run into thousands of dollars, so it is important to budget for this so that a pet-emergency doesn't totally ruin your finances. The second is an inflation buffer. This seems a little strange, but the reality is that our normal adjust...