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Idea for Your Tax Refund

February 9th, 2010 at 10:36 am

If you haven't already discovered the freedom or escrow account for paying bills, you are missing out. A freedom account allows you to save up to pay for semiannual or annual expenses. You could even use it to save up for unexpected and expected auto repairs.

On my sidebar you can look at 'Our Escrow Account' to see the things we save up for and pay out of our freedom account. Often, it can be difficult to start this type of account because you need to fund it with a beginning amount, so that when the first bill comes in you have the money ready to pay. This is especially true, if your auto registrations are two months away and would only have a month or so of funding available.

If you want to start one, you might consider starting yours with your tax refund. Or part of your tax refund. I find it is helpful to keep these funds in a second checking account. Ours is mixed in with some other funds, but I keep track of our freedom account balance in an Excel spreadsheet.

Just something to think about. It really does wonders for your finances.

3 Responses to “Idea for Your Tax Refund”

  1. Ima saver Says:

    I have done this all my life. I keep the money in a seperate checking account and keep track of it on paper. I have sub titles for car and house insurance plus house taxes, medical, new car fund, christmas and even heat, since that is a one time a year BIG bill. (We have a 1000 gallon propane tank that we fill each year)

  2. ceejay74 Says:

    Yes. As soon as I got control of my budget, I realized that annual, semiannual and quarterly bills were going to drive me nuts if I didn't do something. So I have line items on my regular budget tracking spreadsheet, and they gradually accumulate over the time period before it's time to pay them. So technically the money's in my checking account, but since it's subtracted from my available balance in my spreadsheet, it's like it's not there--until I need it. It's so satisfying to have the money there when the bill comes, and I don't have to really think about it because it's just a regular line item that I account for every month.

  3. boomeyers Says:

    Very smart!

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