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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.
How funny! I was actually going to blog about this exact thing today but blogged about gas prices instead and moved this post to later in the week!
The problem I have found with the envelopes is that, say you’re in the grocery store (with your grocery envelope, of course) but you see a really great unadvertised clearance special on kids’ clothes, for like a buck for a shirt and $2 for a pair of jeans. They’ll need the clothes next fall, so do you buy it out of the grocery envelope and flip flop the money around when you get home? Sometimes I think it’s easier to have just one big envelope for groceries/incidentals/etc., as long as you know how much needs to be saved for groceries. That way, when you’re out, you don’t feel so much like a deer caught in the headlights figuring out what to do! ;)
I say if you know you have money in the appropriate envelope at home, spend it at the grocery store and then adjust when you get home!
i use a cash envelope when i travel for sure
at home i never have any money lol
but when i do….yes i use it!
We’ve used envelopes for our eating out money for quite a few years now, because that’s our biggest budget buster. We get paid once a month, and for years we would put the month’s budget in an envelope. It was usually gone before the third week of the month, and we were left hunting for couch-change so we could buy tacos.
Finally, I started dividing the same amount of money into four or five envelopes at the beginning of the month, depending on how many weekends there were before next payday. Somehow, that made all the difference in the world. It felt like we tripled our money. We’re more realistic about those first weeks, and we feel like we’re rich in the last weeks when we pull out an envelope with the same amount of cash we had in the first few weeks. I know it’s totally a mental-obviously-we-have-no-self-control issue, but it’s been life-changing when it comes to our budgeting.
You know, now that you say it, that sounds so obvious. But obviously I didn’t think of it. :) I will definitely be doing it next month!
I ALWAYS forget to budget for birthdays, anniversaries, etc, and usually end up charging that extra stuff “just to be safe.” It’s really, really annoying! I may start trying the envelope system, as I know several people who use it and it works for them–and now I know one more! :)
The only way we’ve managed to be prepared for that extra stuff is by banking Mark’s extra paychecks (he gets paid weekly, so four months have 5 paychecks). Good luck if you try the envelope system – you’ll have to let me know how it goes!
It’s really encouraging that we know several couples starting the cash envelope system this year. It has really been beneficial for us so far. I agree with what Nony said – splitting the money up instead of getting one large lump sum at the beginning has really worked for us. We were talking last night about how much we used to spend on going out to eat, even though it didn’t seem like we did that often. It adds up fast! I also like how we are only 19 days into this, and I already think it’s working :). However, Josh hasn’t asked for a loan yet this week, so he must be getting the hang of it too!
Yep, I think we’re going to have to try that next month. (And good news about Josh not needing a loan anymore!)
We’ve sort of started the same thing- except our envelopes exist on the computer because we have a great credit card and cash is annoying.
What I’ve found that I like, is that we have a seperate Christmas/birthdays/large recreation expenses envelope that lasts all year. I don’t have to worry about planning for those things in my misc. category and can pay things like dance class in one shot and save a few bucks (or that’s the theory next year when that envelope has filled up! A little goes in each month.) The same with car insurance, city taxes and all those other larger once a year expenses. That way my misc. is really just clothing and toothbrushes and eating out and stuff. How is it that “stuff” is so needed and expensive??!!
We’ve also found that popcorn makes budgeting dates more fun!
Happy budgeting! I hope it keeps going well for you!
“Budgeting dates” – love it!
We too use the envelop system (which we began after similar budgeting challenges as well!). The hardest envelop for us to stick with is the gas envelop. I’m pretty steady with the grocery budget, but the darn gas envelop never seems to be enough. No matter how much we increase it to. I’d like to say it has something to do with gas prices, but in actuality I have a sweet hubby who hates to stay home. Couple that with a home in the country that is 20 minutes from town and even a quick trip to the store for some ice cream can use up $5 in gas. We’ve ‘chatted’ about this ‘challenge’ and while it is on his mind more…it is a hard habit to break. So in answer to your question…what happens when the envelop runs out…I’m afraid DH defers to a credit card :-( if my grocery envelop is depleted!
We also train our kids on the envelop system with their allowance. Hoping it will make a difference in their adult life. And when the one that drives wants to go to town just for fun…we require $5 from his envelop for gas! :-)
Interesting about the gas. I can see how it would be hard with older kids and living outside of town. I love that you’re training your kids to use the system, too!
We went to envelopes on January 1st too. We are doing okay. Most of my envelopes still have something in them. With the exception of the “Kids Activities” envelope, that one is empty. Part of that is because we’re putting part of it each month toward her summer camps.
It has definitely been a challenge. But, freeing at the same time. When there is no more money, we don’t spend any more money. This is a problem with the clothes I want to buy for Blissdom. I’m having to refrain. :)
Let’s compare envelope categories at Blissdom.
Our room will definitely be the party room, I can tell already. I mean, it doesn’t get much crazier than talking about budget strategy! (But, of course, I can’t wait!)
I’ve always felt like the cash system is not for me. I feel like the money in the bank (accessed with my debit card) is *real* money while cash is like this funny money stuff that’s just asking to be spent on something like cupcakes from the cafe or whatever. From what I understand, for other people, it’s reversed. Cash is concrete while the bank money and the card are the funny stuff.
Having cash HAS felt a little weird, and I have to keep reminding myself that there’s no more in the checking account, so I completely understand what you mean!