Part one is just below...
I forgot to mention.
The envelope system.
I have tried this so many times and have never made it work. Then bought this book. Now it works.
Here's the trick:
You plan for every penny coming in. Every penny gets a category. Things that you only pay for a few times a year get added up to an annual total and divided by 12 months. Every month we are adding to the vet envelope, the car licensing envelope, the clothing envelope, the vacation envelope. The list goes on...and on.
The idea being that when the time comes to pay for whatever it is, say our car licensing in March, that the money is there. It's brilliant! I always just left money in the account, sort of a cushion of unaccounted for money. But instead of letting it pile up in the account to pay for needed periodic expenses, I bought things like pants. Now there's an envelope for those pants.
I hope this makes sense. It really does work. I'm loving it.
We put the few big envelopes (car licensing, vacation, furniture, household repairs, car repairs) in a lock box elsewhere. Then I have budget folder in my desk by the computer that holds the envelopes for frequent expenses, such as groceries, spending, etc. For fun, the entertainment and restaurant envelopes are in the cookie jar. For no reason other than I wanted something to go in that cute cookie jar!
So that's what's working for us.
Does it take some extra time and a lot of extra math? YES.
Is it worth it? So far, absolutely.
I forgot to mention.
The envelope system.
I have tried this so many times and have never made it work. Then bought this book. Now it works.
Here's the trick:
You plan for every penny coming in. Every penny gets a category. Things that you only pay for a few times a year get added up to an annual total and divided by 12 months. Every month we are adding to the vet envelope, the car licensing envelope, the clothing envelope, the vacation envelope. The list goes on...and on.
The idea being that when the time comes to pay for whatever it is, say our car licensing in March, that the money is there. It's brilliant! I always just left money in the account, sort of a cushion of unaccounted for money. But instead of letting it pile up in the account to pay for needed periodic expenses, I bought things like pants. Now there's an envelope for those pants.
I hope this makes sense. It really does work. I'm loving it.
We put the few big envelopes (car licensing, vacation, furniture, household repairs, car repairs) in a lock box elsewhere. Then I have budget folder in my desk by the computer that holds the envelopes for frequent expenses, such as groceries, spending, etc. For fun, the entertainment and restaurant envelopes are in the cookie jar. For no reason other than I wanted something to go in that cute cookie jar!
So that's what's working for us.
Does it take some extra time and a lot of extra math? YES.
Is it worth it? So far, absolutely.
8 comments:
I was totally on board with the envelope plan, and then Pynchon lost $120 cash. Just out of his pocket. Just on an errand. We simply can't do cash, I guess. I was maaaaad about that. So it's debit card for everything, which leads us to have a 'cushion' that's unaccounted for and tends to get spent. Sigh.
We have a show here called 'Til Debt Do us Part' or something like that...a financial planner lady (she writes for magazines etc) comes into a family to whip their finances into shape. If they follow her plan they will get $5000 at the end towards their debt.
She uses the envelope/cash system as well. I am intrigued, but a bit nervous at the same time to try it. Hubby does all the banking etc. and last night he told we had saved so much already for the girls university...is that why we are so poor now!
What a great idea. I really think this is worth a try. I am going to try this starting with next month. Hubby gets paid once a month, so I really think this could help us. We have been depending on the "cushion" in the checking account and keep managing to spend it. Seems like we look at it as "extra" money. So I am going to steal your idea and try it out!!!
By the way, thanks for your comments on my blog. It's always nice to hear that someone cares!!!
My mom gave us books on these I think it was last year. I never had any cash to keep until I got my new job and now that I want to try the envelope system, I can't find to book! Not that I have to have the book to do it, but I would have liked to read about it a bit first.
I love that Dave Ramsey [Dave Preech, too.] but I do have a few ideas that I add to his plan. Don't be afraid to add personal strategies that work for your family. Like all your change goes in a jar for pizza or something like that.......... I also have heard him say each spouse gets to have some "mad money". It's money they can spend on whatever. One guy bought one CD every month and one woman went to a movie with her girl friends but didn't eat out with them afterwards. I think that is a fun reward system. I digress... enjoy you new found strength.
I think this is all awesome. Thinking strongly about getting the book. Just wish I had saved the receipts for a few things that I know will be coming up so that I could budget for them, too. Uuugghhh.... being irresponsible is just so much easier sometimes!! LOL! Ok, not really, but you know what I am getting at.
that's wonderful that you've found a system that works for you! Keep it up!
Good idea! I am totally addicted to my debit card, but perhaps that explains why the extra money I always think I have seems to disappear and I have nothing really to show for it...Hmmm..I am going to look into this envelope plan.
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