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In the 11 years we’ve been married, my husband and I have made every poor decision we could think of when it comes to money. Really.

Max out credit cards? Check.
Buy an old house in a declining neighborhood? Check.
Take out a second mortgage on said house? Check.
Pay bills late often enough that late fees become part of the budget? Check.
Tell ourselves that we have a budget…even though we never follow it? Check.

Thankfully, God has shown us unending grace when it comes to our foolish financial behavior, and we’re finally beginning to climb out of the money pit we’ve been living in for years.

{Well, not literally. We’re still living in our money pit of a house. I’m referring to the larger, more general picture of our fiscal health. Just to clarify.}

Some of the things that have helped us turn around our finances have been results of hard work and sacrifice. Others have been sheer luck and blessing. But now that we’re on the other side of late payments and buying groceries with the MasterCard, I want to keep it that way.

That’s why I’ve implemented the cash envelope system at my house this month.

Our bills are, thankfully, no longer a big problem. But the less-than-stable expenses like groceries, gas, entertainment and the ever-popular category of other? Well, it would be safe to say – though harsh, if you ask me – to say we’ve played pretty fast and loose with those line items in the budget. It might even be accurate – though, still so critical – to say we’ve not only treated those numbers as mere suggestions but completely disregarded them on more than one occasion.

So, the cash envelope system it is, much as we love our debit cards and checkbook. And we are giving it the old college try. However, I wouldn’t say that we’ve been exactly successful so far.

[Possibly because we should – at all costs, no pun intended – avoid “the old college try.” It was in college that we began our journey into Debt and More Debt, so that’s probably not the best effort to give in this case.]

This is the first month we’ve used the cash envelope system, and when we arrived at the 15th, those envelopes were pretty much EMPTY. I’m not worried; we’ll figure it out. It may just take a few trips to the back of my pantry before it really sinks in…!

Lessons I’ve learned so far:

  • Make a plan for the OTHER (what we use mostly on eating out and entertainment) money, or it will disappear, dollar by dollar. (Or, in the case of my husband’s tendency to order the most expensive fast food item on the menu, ten dollars by ten dollars.)
  • Look at the calendar to anticipate any out-of-the-ordinary expenses, like road trips, anniversary dinners, Mother’s Day or gymnastics registration.
  • Make large, necessary purchases first and then decide which small, optional purchases can wait until next month.
  • Give yourself some wiggle room as you adjust to the new budget, but don’t make it <i>too easy</i> to transfer money out of savings!

Even though we’re just getting started – and stumbling all the way – I do believe the cash envelope system is working for us. Or, at least, it will once we make it to the 31st and get to fill them up again.

Do you use the cash envelope system to keep your spending in check? How do you budget for variable monthly expenses? And what do you do when you run out of money before you run out of month?

This post will be linked to Works for Me Wednesday at We Are THAT Family.

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