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angierae
03-31-2011, 11:01 AM
Tomorrow I'm starting the Envelope system to try to get my "bleeding money" problem under control. I spend so much money without realizing it!

I went through my budget and set $ amounts for everything, and then went through every payday this month and set when I'll be withdrawing money.

The envelopes I'm going to be carrying are:

Gasoline
Car repairs (if nothing else, I need new tires before next winter, and this will be a good way to save for them)
Med/Dental copays
Groceries
Eating out
Clothes
Entertainment
Gifts
Hobbies
Charity/Fundraisers

Other things are budgeted for but will be staying in my checking account. My goal was to not use my debit card at all - everything else that's being paid out of the checking account are either bills, my daughter's school lunches (I write a check) or savings/vacation goals.

The budget is fairly tight for April and May because I had to dip into savings for car repairs (which is what fueled this whole change) but we'll see how it goes once that's repaid.

Has anyone else had success with this? I know some people just keep it all in their checking and keep the envelopes per an excel chart or whatever, but everytime I try to do that I find I'm not keeping up with stuff and then I just start spending. It's very easy to see when there's no more cash in an envelope, for me. :)

MomiTo2SwtGuys
03-31-2011, 11:17 AM
I worked with a lady who did this even with everything. Even her monthly bills. She would deposit it when she was writing the check for the bills. She managed to have great success with this.

Disneybabe84
03-31-2011, 11:19 AM
My mother does this, and she has been doing it for years. She loves it and it works extremely well for her. From what I've seen, it works! :thumbsup2

Praying Colonel
03-31-2011, 11:28 AM
It works, but be patient. You may find the first few times you do it that you're off on one or more. Just hang in there and keep tweaking, you'll get it.

piperdown
03-31-2011, 11:42 AM
We are seriously considering this, primarily for groceries and eating out/entertainment. Our 2nd car will be paid off this month, and then no more car payments!!!

All our major expenses are set up for auto payment, but the everyday debit card expenditures are bleeding us. I know given our income and bills, that we should be able to save.

I think the envelope system will make us give more consideration for what we purchase.

ZellyB
03-31-2011, 11:46 AM
We started this about 8 months ago. We don't do as detailed a division of items as you do though. We have 4 broad categories and still have certain bills that are paid from our checking account.

But, the principle is the same and it has been a really successful strategy for us. It took some getting used to, but now that we are well established in the process we love it!

Oh, and I bought one of those mini expandable files and tabbed each section and keep all the money in that instead of using multiple envelopes. But, that's just me because I'm a sucker for office products and I spent the money before we started our budget. :)

SandrA9810
03-31-2011, 01:23 PM
It worked wonders to have two checking accounts. Paychecks were directly deposited into "2". This was the account that the bill pays would come out of the day after payday. "1" was the debit card. All bill pays were set up at the beginning of each month (checking online statements to make sure everything was paid on time). So when each pay day came along, the difference could be deposited into "1" to use for gas and food. The paychecks could also be split into multiple accounts, either set amount or percentage, so a set amount was put in place to go into the savings account for rent.

If you are going to be using cash for bills, you can always pick up money orders at the grocery store, they're usually 50-75 cents each ($400-$500 limit). This way the money is put up front, and you're not waiting for a check to clear.

My aunt is extremely great at balancing a checkbook and keeping tabs on it all, but it just goes right over my head. I would just call the bank to see how much was in the account, but I could never keep track of money potentially withdrawing.
And with two accounts, I knew the bills would be paid and covered, and once "1" was used up, that was it.

goNDmay9
03-31-2011, 01:34 PM
my mother LOVES the envelope method. I dont think she uses that many envelopes though - but it WORKS!!!!!

DH and I use the two checking account method. All the "bill" money goes to A - and then a set amt goes to B for Food and Fun and a set amt to savings

If i splurge on filet mignon, crab legs and wine - there is not much left for movies / eating out. and vice versa. this is also where i try to save extra money for vacays etc.

dont forget to have an envelope for emergencies too. this is where a lot of people get off track. all is going well - and then you need new brakes or a hot water heater! so you charge it or pull it from somewhere else.

also - be patient on the amounts. it will take a few times before you get the numbers right so dont give up if it does not work out right away!


happy enveloping!!!

ps: the acordian files work well for this too as the pp said.

angierae
03-31-2011, 01:41 PM
It worked wonders to have two checking accounts. Paychecks were directly deposited into "2". This was the account that the bill pays would come out of the day after payday. "1" was the debit card. All bill pays were set up at the beginning of each month (checking online statements to make sure everything was paid on time). So when each pay day came along, the difference could be deposited into "1" to use for gas and food. The paychecks could also be split into multiple accounts, either set amount or percentage, so a set amount was put in place to go into the savings account for rent.



All of our bills are paid out of my husband's checking account* - I write him a check every payday for my half, and the second check of the month we balance out grocery money or whatever else we bought that was a 'shared' expense. We've been doing it for 5 years so we've got that down pat.

So my bills are getting paid, which is good - but I just tend to blow through the rest of my money and since we're saving heavily for Disney I want to make sure my regular every savings goals are being met, too.

*(DH and I do not have combined finances. It's what works for us.)

angierae
03-31-2011, 01:42 PM
dont forget to have an envelope for emergencies too. this is where a lot of people get off track. all is going well - and then you need new brakes or a hot water heater! so you charge it or pull it from somewhere else.



There's money going into an envelope for car repairs, and automatic transfers to savings happening for long and short-term savings. So that's taken care of, too. Thanks for the reminder, though!

chris31997
03-31-2011, 01:45 PM
We do this and love it:yay:. We are debt free. When going to the store and only having $30 to spend on food that is all you got. Better make sure that is all you spend. It will help you with "bleeding" money. Make a list every time you go to the store and if it is not on the list it does not get bought;).

Anyway, we have our master envelopes at home, and than carry a little bit of the cash with us in differant envelopes. That way the urge to spend does not overtake us;)

Speed Weasel
03-31-2011, 01:52 PM
The one challenge that I always have is with gas. HATE paying with cash because it means walking in to the store, explaining what you want to do (fill up not just put $20 in), leaving more money than is really required, then having to come back and stand in line again, get the change (sheesh, I'm tired just typing it).

Now, to offer a solution (instead of just whining)...
If QuikTrips are in your area (they are ussually competitively priced), you can get a Cash Card that will authorize the pump for a cash transaction. I think that the card just has all of your personal info on it so that they can do a skip trace if you drive off. But it gets the pump turned on and eliminates several steps.
Purchase a gift card with the cash and that can be used like a credit card at the pump. Some stores even give you a few cents off per gallon.

Good Luck!

TNKBELL
03-31-2011, 02:10 PM
The one challenge that I always have is with gas. HATE paying with cash because it means walking in to the store, explaining what you want to do (fill up not just put $20 in), leaving more money than is really required, then having to come back and stand in line again, get the change (sheesh, I'm tired just typing it).

Now, to offer a solution (instead of just whining)...
If QuikTrips are in your area (they are ussually competitively priced), you can get a Cash Card that will authorize the pump for a cash transaction. I think that the card just has all of your personal info on it so that they can do a skip trace if you drive off. But it gets the pump turned on and eliminates several steps.
Purchase a gift card with the cash and that can be used like a credit card at the pump. Some stores even give you a few cents off per gallon.

Good Luck!



We use an interest bearing debit card for our gas purchases.;)

Kitikat
03-31-2011, 02:41 PM
I use envelopes for my purchase. I do groceries, walgreen's and gas for my truck.Plus my savings. I've cut our grocery budget from $250 biweekly to $100 and the other $150 goes into the savings. I also get $75 for gas. What isn't used i'm saving for our trip to Disney to pay for gas.
Side note...we have 1 gas station that offers gas $.04 cheaper if paid in cash. It usually comes out better then the other places in town.

hanutedmansionmomma
03-31-2011, 04:17 PM
I use envelopes for my purchase. I do groceries, walgreen's and gas for my truck.Plus my savings. I've cut our grocery budget from $250 biweekly to $100 and the other $150 goes into the savings. I also get $75 for gas. What isn't used i'm saving for our trip to Disney to pay for gas.
Side note...we have 1 gas station that offers gas $.04 cheaper if paid in cash. It usually comes out better then the other places in town.

So you used to spend $500/mo on groceries and now only $200?:worship: How in the world do you do that??? Please share!

I cut back and went from $1000/mo to 600-700, and I thought I was doing pretty well...

vsimeone
03-31-2011, 04:33 PM
All of our bills are paid out of my husband's checking account* - I write him a check every payday for my half, and the second check of the month we balance out grocery money or whatever else we bought that was a 'shared' expense. We've been doing it for 5 years so we've got that down pat.

So my bills are getting paid, which is good - but I just tend to blow through the rest of my money and since we're saving heavily for Disney I want to make sure my regular every savings goals are being met, too.

*(DH and I do not have combined finances. It's what works for us.)

We do something similar but we've been doing it for 25 years!!!

We do not combine finances (except for a joint savings account) and DH earns about twice as much as I do. I am responsible for X number of bills each month as well as groceries and then my own stuff (like dry cleaning, haircuts etc). We both deposit into the joint account

Obviously, if something comes up and either one of us run short, we get help from the other and any "extra" money either of us earns goes into the joint account.

The envelope system sounds like it works for a lot of people but we've survived pretty well dividing up responsibilities!

Best wishes to you!

Kitikat
03-31-2011, 05:03 PM
So you used to spend $500/mo on groceries and now only $200?:worship: How in the world do you do that??? Please share!

I cut back and went from $1000/mo to 600-700, and I thought I was doing pretty well...

I shop on wednesday when Farm Fresh double coupons up to $1.I only buy what's on sale and what I have cpns for. Also I won't buy cereal for over $1 a box.
We stock pile things like chicken (only buy bone in breast..it's cheaper) and when save a lot has ground turkey for $1 a lb. We don't eat any other meat.

We also buy from the Dollar tree. soy milk and Mrs. freshly snacks. sometimes frozen veggies and sliced cheeses.
I also only spend $20 biweekly on walgreen's.
We don't eat out unless it's a special occasion and have a cpn.lol
Some weeks are difficult but then the next will be easier.
I'm doing my walgreen's today as there is a 15% friends & family coupon.

SandrA9810
04-01-2011, 02:53 AM
The one challenge that I always have is with gas. HATE paying with cash because it means walking in to the store, explaining what you want to do (fill up not just put $20 in), leaving more money than is really required, then having to come back and stand in line again, get the change (sheesh, I'm tired just typing it).

Now, to offer a solution (instead of just whining)...
If QuikTrips are in your area (they are ussually competitively priced), you can get a Cash Card that will authorize the pump for a cash transaction. I think that the card just has all of your personal info on it so that they can do a skip trace if you drive off. But it gets the pump turned on and eliminates several steps.
Purchase a gift card with the cash and that can be used like a credit card at the pump. Some stores even give you a few cents off per gallon.

Good Luck!


I was burned so many times by paying at the pump.
Ex: I would have $25 in the account and put $15 in the tank, paying at the pump. It would only authorize for $1, so the bank would only hold $1 in pending. Allowing $24 to be available.
Then I'd go to the store and spend $10.50. The total amount would be placed pending. Well when the gas purchase finally went through, it would go through as overdraft because of that 50 cents, then charge a $30 fee.

More than once I wouldn't realize it and it would snowball, even after adding money to the account.

After that, it was strictly prepaying inside. Although at the Race Trac gas stations, if you prepay inside using debit, they will give you cash change. So if I planned on $40 to fill the tank, and it only took $37, I would save the change in my change bucket.

A few extra steps and a couple extra minutes were well worth saving $30 on overdraft fees.

TammyNC
04-01-2011, 06:16 AM
We use the envelope system and have been for about a year now. It helps keep mindless spending in check because when the envelope is empty it is empty. For us, it really makes us think about what we are buying and has cut out our impulse purchases.

shellcruiser
04-01-2011, 07:27 AM
My DH has led several "personal finance" classes. The envelope / cash system is the base plan for either of two (highly published) programs he has used. We find that the envelope system is great at "stopping the bleed". I find that I think about purchases much more if I'm using actual cash versus plastic. We are debt free with what many would consider a strong income, but we have developed some very frugal habits. Since the OPs main question is does it work I have to say YES! As for the discussion on filling the gas tank (which takes more $ each week), I do agree with using a debit card there. The gas station is not where we spend more than we HAVE to. The "typical" account "bleed" is often from unplanned expenses and/or impulse shopping. Just make sure you post your gas expenditures on your checking account- keep receipts so you have a good idea of what you are spending every month.

suzieQ36
04-01-2011, 08:24 AM
We started the envelope system 2 years ago and it has change the way we spend and save drastically. It is definitely something you tweak over time. How we work it is - I get out a certain amount of cash every week. We have 5 envelopes: clothing, car repairs, household (small fix it stuff), date night & gifts. The rest of the cash for that week is used for groceries/other/entertainment & eating out. I pay all of my bills out of checking on the same day and then transfer money to savings. We leave some money in checking for emergency and for gas (like to pay at the pump w/ debit card).
Sometimes we think of something else we need to buy and we start an envelope to save for it.
Good luck to you and let us know how it goes!!! We may learn from something you do!

angierae
04-01-2011, 08:54 AM
Thanks for the advice, everyone. I'm looking forward to starting this new adventure.

As for gas, one of the reasons I'm switching to cash for gas is that it's 10-12 cents a gallon cheaper if you pay cash around here. I don't buy gas all that often (work is only 7 miles from home) but I figure at 1.00 or so a fill-up, that adds up eventually, and it's a "convienence tax", to me.

I'll probably just run in and give them a $20 and take what that gives me, but I go through gas slowly enough that only getting 1/2 to 3/4 of a tank at a time won't be a huge deal. (I drive a little Cobalt, it's not very thirsty.)

I'll let everyone know how it goes :)

scndbaswmn
04-01-2011, 09:44 AM
I tried this many years ago and it didn't last a week. I so like the convenience of the debit card, but that's what gets me into trouble too! I would like to start it again though, and really try to stick to it. A friend of mine used to do this and it really worked for her (not sure if she still does).

tinkermom23
04-01-2011, 10:47 AM
We've been using the envelope system for over a year. Be prepared to tweek it to your needs! It almost never works out perfectly the first time.

I only have 2 envelopes, one for Entertainment & Eating out and another for Groceries & Stuff. I found having so many separate envelopes were frustrating. When I shop at Target, I don't want to pay for clothes, groceries, and paper products out of separate envelopes. So I combine and it works for us.

We fill the van with gas on payday and I almost never need more gas before next payday so DH keep the gas envelope in his wallet.

I have also bought Scrip Cards at a friends school for the grocery store and for the gas station. It has worked but is one more step that I don't always want to mess with.

Mickey1Fan
04-01-2011, 12:47 PM
I do not use envelopes but I use Gail Vaz-Oxlades budget. I use my daytimer and write down my spending for each day and on Thursday evening (payday is every second Friday) I summarize each category on an excel spreadsheet to make sure I am on track.

http://gailvazoxlade.com/resources.html

angierae
04-01-2011, 12:54 PM
I do not use envelopes but I use Gail Vaz-Oxlades budget. I use my daytimer and write down my spending for each day and on Thursday evening (payday is every second Friday) I summarize each category on an excel spreadsheet to make sure I am on track.

http://gailvazoxlade.com/resources.html

Her budget calculator is exactly where I started. (And then for the next couple of months a few numbers are at 80% while I rebuild what I had to take out of savings for some car repairs.) It was a great resource!

Mickey1Fan
04-01-2011, 03:00 PM
angierae, as you already know Gail has great resources. I've been using her interactive budget for about a year and I like it a lot. I like the recommended amounts that should be spent in each area and trying to get within them.

Every four weeks I plan my budget and from the sites worksheet I create the excel spreadsheet for keepiong track.

Gail Vaz Oxlade is my hero :worship:

Taja
04-01-2011, 03:36 PM
I've developed a very precise budget in Excel designed for--me! :) It has very specific categories (groceries broken into food & beverage, paper goods, cleaning supplies, laundry supplies, etc.--no pets or there would be a category for them!). Vehicle is broken into fuel, repairs & maintenance and license/registration/auto club. You get the idea.

I don't use a debit card. I've had the same negative experience as a few others on this site--although I admit the fault was my own one time! I neglected to register a fairly large purchase! :eek: The other times either the bank or the sales system had issues and double-charged by debit card. Bye-bye debit card!

I use the envelope system for a few categories: fuel, services (i.e., hairdresser, postage, shipping, etc.), groceries and dining (which is broken into TS and QS--just like at WDW!). Money is removed from the envelope, receipt is inserted. Most other things are paid by check, so I have a good record.

I set myself up as a company in QuickBooks and enter all receipts and checks into it with appropriate category distributions. It takes a little time, but I know where I'm spending my money and if I can--or want to--cut back in some areas. A spreadsheet works equally well. At the end of the month, I compare my budget to my actual and see what is or isn't working and modify after two or three months when necessary.

I probably will need to adjust the fuel budget before too long. I calculated it at $3.75 per gallon when it was under $3 per gallon. *sigh*

apnep
04-01-2011, 03:43 PM
Don't laugh, I'm almost embarrassed to ask, but do all of you who use this envelope system just use regular plain ol' envelopes? It's a dumb question, I know, but I'm not above or below lookin' stupid. :)

Thanks,

angierae
04-01-2011, 03:55 PM
Don't laugh, I'm almost embarrassed to ask, but do all of you who use this envelope system just use regular plain ol' envelopes? It's a dumb question, I know, but I'm not above or below lookin' stupid. :)

Thanks,

I think I'm going to use one of those accordian files for coupons.

Taja
04-01-2011, 06:24 PM
Don't laugh, I'm almost embarrassed to ask, but do all of you who use this envelope system just use regular plain ol' envelopes? It's a dumb question, I know, but I'm not above or below lookin' stupid. :)

Thanks,

*LOL* -- more at myself than at you!

I use the small envelopes that are a bit larger than personal checks. They fit in my purse.

But you can use anything that works for you. If you have leftover envelopes--or want to make some fancy ones--go for it! It's better if they're all the same size, but I've been known to recycle window envelopes from junk mail! :rolleyes:

The accordian file idea is good, too. I just like to be able to transport the entire envelop that I need to the place I am going. I write checks for fixed expenses and occasional wardrobe purchases (usually from catalogs).

I have a seroius weakness for fabric, so the envelope system limits what I can spend at one time. I'm pretty good with everything else, so when I have a bit extra, I'll allow some to trickle into my fabric stash envelope, and deposit the rest into savings.

Mickey1Fan
04-01-2011, 06:41 PM
I tried the envelopes but instead I just note the categories each time I spend money and add it to my excel every Thursday. I wrote about Gail Vaz Oxlade and her method is jars rather than envelopes. Take the money from the jar when you are going for specific items. You can actually see what is left in each jar.

It works well for teaching children how to budget too.

When my son was 12 or 13 and he worked as an umpire. Before he would buy anything he figured out how many games he had to umpire and that would help him decide if it was worth it. For example, a $40 video game would be four games. He is now married and a home owner and still uses this method. $/hour earned vs cost of the item.

goNDmay9
04-01-2011, 06:42 PM
There's money going into an envelope for car repairs, and automatic transfers to savings happening for long and short-term savings. So that's taken care of, too. Thanks for the reminder, though!

AWESOME!!! you are all set. please keep us updated on the progress. how exciting!!

angierae
04-08-2011, 01:20 PM
I just wanted to update after my first week!

I have stayed within my budget! All the "envelopes" that are supposed to still have money in them (car repair savings, etc) still have them, and the extra money in my checking account is STILL THERE. ;)

I spent money faster than I'd wanted to, and not on things that I really wanted to save for. That trip into 7-11 was great and all, but now I'm struggling to come up with the money for the book I'd wanted to buy this month. I really need to think twice about where flexible things like "entertainment" are going.

But I just withdrew my cash for this week and although planning grocery trips down to the penny is time consuming, I'm actually finding it's kind of fun to find the best deals and stuff.

Mickey1Fan
04-08-2011, 02:32 PM
angierae - way to go :cool1:

I like working out my budget and finding what I really need and then the best price. I also think about extra things for a couple of days and if I still want it and it fits in the budget they I will purchase it.

I hope you continue to have success and fun in this new journey.

Taja
04-08-2011, 05:16 PM
I just wanted to update after my first week!

I have stayed within my budget! All the "envelopes" that are supposed to still have money in them (car repair savings, etc) still have them, and the extra money in my checking account is STILL THERE. ;)

I spent money faster than I'd wanted to, and not on things that I really wanted to save for. That trip into 7-11 was great and all, but now I'm struggling to come up with the money for the book I'd wanted to buy this month. I really need to think twice about where flexible things like "entertainment" are going.

But I just withdrew my cash for this week and although planning grocery trips down to the penny is time consuming, I'm actually finding it's kind of fun to find the best deals and stuff.

Good for you!

It takes a few weeks to figure out exactly what categories you need and how broad or specific they can be.

And it can be challenging. Sometimes I really want to buy something, but do the cost/enjoyment analysis and decide against it! *LOL*

It's really nice at the end of the month--or what ever period you decided to use--to deposit the extra funds into savings or tuck them into another category that is not essential. :)

budafam
04-08-2011, 09:44 PM
We have to do this. DH's pay just got switched from once a week to every 2 weeks and it's now direct deposit so it's a lot harder to keep track of what's getting paid and what's not.

Our money is very tight since I lost my job a few months back. I make money here and there doing Craigslist & other jobs but it's not enough to where we feel comfortable yet.

I've been finding with the price of gas going up that we tend to go into our savings a bit more than I'd like. It's very hard to stick to it especially when DH likes to have a little extra spending money for himself as well (and just doesn't understand the bill situation) :confused3