I have told you some of the things I have done that I am ashamed of and I will tell you many more but today I am going to share something I am extremely proud of. As of today we (my family) are Debt Free!!!!!! except our house. Wahoooooo!!!
This is why I love Dave Ramsey. I could not have done this without his class and my wonderful teacher that guided the class. We paid off our car in 2 years with Daves' debt snowball plan, which is pure genius. I will share that with you next week. Today I would like to hash out the envelope system. Dave gives credit to all of the grandparents for this system because that is how they managed money back in the day. You were paid in cash and you divided it up into your envelopes to make sure your bills were covered. I love this. I told you last week that we started out with our Christmas envelope and we now have about 9 envelopes. These are my categories, they work for us, you feel them out and see what works best for your family.
Christmas, vacation, restaurants, groceries, mad money, entertainment, clothes, school, tuition, hair cuts, and prescriptions. Most of these are self explanatory, mad money is money that I set aside just for me. My hubby has his mad money too. It is just for us to spend with no guilt on what ever we wish. The entertainment envelope covers movies, putt putt, bowling, and football games. School money pays for school fees, supplies, lunch money, and field trips. I put money in each of these every pay period according to what I have budgeted. Just because it is summer does not mean I stop funding the school envelope, this is when I am saving for back to school supplies. When an envelope is empty there is no more of that till next pay period, which for us is every two weeks. It was hard for the kids to grasp that, when it came to eating out. That was our big vacuum, when it came to spending. Once I put a cap on what we would spend it was amazing how much we could save. That is not to say we did not have our weak points, because we did. Your budget is a living thing and it grows and changes just like your family does, that is why you need to look at it periodically to evaluate how it is changing. The categories I picked for my envelopes fit our family, they may not fit yours. You should evaluate what you want to pay cash for. Some have a gas envelope to pay for their gas in their cars. I do not like having to go in and pay for gas that to me is more trouble than it is worth.
This is why I love Dave Ramsey. I could not have done this without his class and my wonderful teacher that guided the class. We paid off our car in 2 years with Daves' debt snowball plan, which is pure genius. I will share that with you next week. Today I would like to hash out the envelope system. Dave gives credit to all of the grandparents for this system because that is how they managed money back in the day. You were paid in cash and you divided it up into your envelopes to make sure your bills were covered. I love this. I told you last week that we started out with our Christmas envelope and we now have about 9 envelopes. These are my categories, they work for us, you feel them out and see what works best for your family.
Christmas, vacation, restaurants, groceries, mad money, entertainment, clothes, school, tuition, hair cuts, and prescriptions. Most of these are self explanatory, mad money is money that I set aside just for me. My hubby has his mad money too. It is just for us to spend with no guilt on what ever we wish. The entertainment envelope covers movies, putt putt, bowling, and football games. School money pays for school fees, supplies, lunch money, and field trips. I put money in each of these every pay period according to what I have budgeted. Just because it is summer does not mean I stop funding the school envelope, this is when I am saving for back to school supplies. When an envelope is empty there is no more of that till next pay period, which for us is every two weeks. It was hard for the kids to grasp that, when it came to eating out. That was our big vacuum, when it came to spending. Once I put a cap on what we would spend it was amazing how much we could save. That is not to say we did not have our weak points, because we did. Your budget is a living thing and it grows and changes just like your family does, that is why you need to look at it periodically to evaluate how it is changing. The categories I picked for my envelopes fit our family, they may not fit yours. You should evaluate what you want to pay cash for. Some have a gas envelope to pay for their gas in their cars. I do not like having to go in and pay for gas that to me is more trouble than it is worth.
Dave says that when you pay with cash you feel that pang of the money leaving your hand. When you swipe that debit card there is no feeling attached to it. This is true, if you don't believe me pay for a meal at a nice restaurant with cash, you will feel it. You can set your amounts that you put in your envelopes yourself. Just be sure you are honest with yourself when you are setting up your budget, do not fudge on how much you spend in certain areas because that will just create a problem in the end. Remember I have made most of the mistakes I warn you about. If you are married you should set all this up with your spouse too, the system will never work if you do not work together. I ask my hubby periodically if he is ok with our budget and normally he says he is fine but sometimes he points things out that I had not thought of and there is where we revisit our budget and tweak it. He pointed out this year that we needed to re-evaluated our entertainment money during football season. Both boys play football and going to games and concessions were expensive so the next pay period we upped our entertainment money amount to cover these things. I love this system, it is ours and we can change it to suit our needs and so can you. I would suggest that you pick one thing and try it out before you dive head first into all the envelopes we have. I would love to know what envelopes you will have. Good Luck and we will talk about Daves' debt snowball next week.
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