Freedom - The Wisdom and Delight of “Free Money Accounts”
Three years ago, I was at a street fair and a vendor was selling used vinyl. I flipped through the collection and discovered a record that I loved in my childhood. I paid $10 for it, took it home and listened to it on my record player, which has a tiny speaker on it. I enjoyed the sound of the old record so much, I pulled my old stereo equipment out of storage and connected it to my turntable so I could better enjoy the sound. It sounded SO GOOD, that I felt it was a shame that I only owned about eight or nine albums!
A few weeks later, I was at a local flea market and there was a vendor there with an extensive jazz and r&b vinyl collection. As I flipped through his crates, I found several albums I was eager to own. I was a bit surprised by the prices, which ranged from $30 to $80, but I could see that the collection was in excellent condition. I purchased several albums. I visited him twice more over the next couple of months. All told, I spent several hundred dollars at this flea market to kick-start my nascent vinyl collection. In hindsight, I overpaid for many of these albums. I’ve since found better prices for the same albums.
Over the years, I’ve gotten excited and spent lots when I became interested my “obsession of the moment.” These obsessions have ranged from certain brands of clothing to vinyl to bourbon to camera equipment to Swiss watches. My tendency to experience excitement in connection with spending money is not unique and is not - in and of itself - a bad thing. But many times, this tendency has caused me to spend more than my income and that is a problem.
A few years ago, I created a tool that has eliminated the problem of overspending and it is a tool that I deeply enjoy using. The tool is called “Free Money Accounts.”
I pay myself an allowance each week (you can pay yourself weekly, biweekly or monthly). The allowance goes into a checking account that is specifically for my enjoyment. I call this the “FREE Money Checking Account.” When there are funds in the FREE Money Checking Account, I can use it for whatever I want to.
I also have a separate “FREE Money Credit Card.” I use this card only for purchases which will be paid from the FREE Money Checking Account. Whenever I use the FREE Money Credit CARD, I pay the balance off immediately. See the example below, which demonstrates the value of this system:
FREE Money Checking Account Balance = $250
FREE Money Credit Card Balance = $105
FREE Money Available = $145 ($250 minus $105)
This system has the following benefits:
The clarity - with respect to what is available for discretionary spending - makes it easier to control spending
The freedom of being able to spend on whatever you want, guilt-free
The FREE Money Credit Card provides fraud and identity-theft protection (vs. using a debit card)
This system won’t protect me from my next obsession. However, it will protect me from overspending on it. A friend recently told me that he was surprised about how conscientious about saving for an upcoming trip. He said that he imagined that the cost of the trip would be - for me - “a drop in the bucket.” If I thought about the cost of the trip from the perspective of my total wealth, I would agree with him that the trip cost was “a drop in the bucket.” But over time, I’ve seen those drops add up and if I’m not careful, I’ll start to feel the discomfort that follows overspending. In a sense, using FREE Money Accounts “shrinks the bucket.” If I was using FREE Money Accounts when I was buying vinyl every weekend, I might have noticed I was overpaying for some of those albums and I might have shopped around sooner. I still buy vinyl from time to time, but I tend to get much better pricing.
Here are a three tips to keep in mind when opening your FREE Money Accounts:
Make sure your FREE Money Checking Account is FDIC insured and has no minimum balance (you should not pay any fees for this account)
Ideally, open the FREE Money Credit Card through the same bank as the FREE Money Checking Account. Make sure your FREE Money Credit Card provides cash back on your spending. The cash rewards you earn can be deposited into our FREE Money Checking Account.
Remember that “eating out” should come from your FREE Money Accounts. Eating out should not be paid for from your “grocery” budget. Uber eats counts as “eating out.” Eating out is a common “budget-buster” and viewing it as discretionary often helps to gain perspective and eat-out at appropriate intervals.
Enjoy the freedom and control that comes with FREE Money Accounts,
wellbeingGrant