Oh my! DH & the Dave Ramsey envelope system!

[Jenn4615]

I love the story about your Grandmother!! That is awesome!!

 

[goodfood4ursoul]

We started using the envelope system a few months ago, and it is a real help.
My husband has a very small weekly salary, (defrays his travel costs)
but due to the nature of his business, he gets paid larger sums on money
once a month or every six weeks depending on his projects and billable time.

I get paid regularly, but not a lot more than he does.
In our rural area, people just don't get paid much
but I do have some really awesome benefits, which is priceless.

So the envelope system has been a big help in meeting the monthly expenses even though his income is not regular.

We have envelopes for:
mortgage
electric
cell phone/internet
credit card
semi-annual property tax
heating oil
groceries
life insurance/disability
car insurance
school lunches (& DS manages his lunch money himself)
saving for new tractor tires
home maintenance
driveway maintenance (1/2 miles long)
Christmas
Disney trip
Daughter's wedding
School supplies
Emergency fund


We do use cash. We do not spend what we don't have.
Since we started using this system, we have paid off one credit card,
paid off our son's braces, saved for our December property taxes,
saved for half our oil for the year,
we're waiting on the next project check to buy his tractor tires,
and best of all we paid for our entire October 2010 Disney trip
Meals, tickets, and points rental, even gratuity,
all saved for and now we can go without any worries

We know what is coming in and exactly where it is going.
And we are able to make progress on saving for things that once seemed impossible to save for.
I think that is the BEST part of the envelope system

 

[bumbershoot]

Okay, so after reading all these posts I have some questions.
How do you determine what to put in each envelope?

I am thinking of "possibly" trying this out, and wondering how you determine how much money to put in the envelopes.
I am thinking of doing groceries, pets, miscellaneous. What do you do at the end of each month with the money that is left over (if there is any leftover?)

When you have car expenses, etc., (like $700 plus bill) do you try to plan in advance with a "car" envelope, or does that come out of your main bill paying account?

Have you kept receipts for the last several months? if so, see what you've been spending. We did that, and started just a bit lower than what we'd been spending on groceries. I brought it down 2 or 3 times after that, and last and this month brought it back up a bit (last year I ended up NOT spending that extra plus $30 besides!). With restaurant money, we just set an amount.

We've had cash envelopes for our family fun money, hubby's and my "blow" money to play with (not much, I assure you), and...well the rest is in the bank all separated out in my notebooks (checkbook registers do nothing for me). I have a gas column, insurance column (I used to pay monthly, but then I spent 5 months saving up a full premium while paying the monthly payments, and now I'm saving it up ahead of time then just pay the full premium), and I just "assign" the other funds in my bank accounts.

When money is left over, I do just what I would do if it were cash...I put it towards the snowball. With cash, I counted the change and deposited it to go towards the debt payment, and it's no different now.


The key thing is that along with the budget (which is what the envelopes help with), you're also saving up a "baby emergency fund", so that if something unexpected happens, you have some money to put towards that. Some people will have that AND make "sinking funds", where they are putting money to go towards specific things, like maintenance on cars, etc etc. That's actually what our insurance fund is...oh, and power, too. Instead of just taking that from what would otherwise be snowball, I've assigned it to the Insurance fund or Power fund, and the snowball remains the same and intact.

See if you can get a copy of Dave Ramsey's Total Money Makeover.

Definitely. Get it from the library if you can!

And check out llnoe.com for lots of discussion and the guidelines!

 

[DawnM]

How do you pay a lot of those things with cash? Mortgage, electric, insurance, etc....

Our mortgage isn't local at all so we have to write a check. Our insurance is about 45 miles each way and our electric company is about 25 miles each way. It would cost more to drive over there than to just send a check or pay online.

Dawn

We started using the envelope system a few months ago, and it is a real help.
My husband has a very small weekly salary, (defrays his travel costs)
but due to the nature of his business, he gets paid larger sums on money
once a month or every six weeks depending on his projects and billable time.

I get paid regularly, but not a lot more than he does.
In our rural area, people just don't get paid much
but I do have some really awesome benefits, which is priceless.

So the envelope system has been a big help in meeting the monthly expenses even though his income is not regular.

We have envelopes for:
mortgage
electric
cell phone/internet
credit card
semi-annual property tax
heating oil
groceries
life insurance/disability
car insurance
school lunches (& DS manages his lunch money himself)
saving for new tractor tires
home maintenance
driveway maintenance (1/2 miles long)
Christmas
Disney trip
Daughter's wedding
School supplies
Emergency fund


We do use cash. We do not spend what we don't have.
Since we started using this system, we have paid off one credit card,
paid off our son's braces, saved for our December property taxes,
saved for half our oil for the year,
we're waiting on the next project check to buy his tractor tires,
and best of all we paid for our entire October 2010 Disney trip
Meals, tickets, and points rental, even gratuity,
all saved for and now we can go without any worries

We know what is coming in and exactly where it is going.
And we are able to make progress on saving for things that once seemed impossible to save for.
I think that is the BEST part of the envelope system

 

[wdwmom0f3]

I love the story about your Grandmother!! That is awesome!!

Thank you Jenn! She was an angel. I still have her little money holder, but it's locked in my safe deposit box. It's priceless to me.

 

[Jenn4615]

Thank you Jenn! She was an angel. I still have her little money holder, but it's locked in my safe deposit box. It's priceless to me.

I have an Angel Grandma like that to me too... I have a few of her things that are priceless to me!!

 

[tlbwriter]

One last question for the budget gurus here - do you & your spouse only have 1 joint checking/savings account, or do you have seperate accounts? We still have seperate accounts & I feel like that makes it difficult to keep track of our money.

I'm not a budget guru, but we have two joint accounts. One is the household account for bills, groceries, etc. The other is "walking around money." Our debit card is tied to this account and it's just for small purchases. I carry the checkbook for the household account, and DH owns the checkbook for the small account, but I don't think he's written a check in months.

 

[bettymae1121]

For those that like the idea of the envelope system but don't like the idea of using actual cash for everything, you could use play money instead. As you spend you take the play money out of the appropriate envelope and when the "money" is gone, you stop spending. This way you can still use a CC, debit, check, or e-bill pay but still have the the physical envelopes to remind you about how much you have left in each catagory.

As for DH and I (well, just me since I handle all the finances!) I don't have an evelope system, but I do track our budget in Excel and our spending in Quicken. It's not often we go over budget, when we do it's almost always due to unforseen expenses rather than just overspending on "wants". It took a while to get that disapline though! But I like our system, we charge every single purchase for the airline miles (what we can't charge we use online bill pay through our bank) and pay it off at the end of the month. But because I track our purchases as we go (I download new transactions into Quicken 1st thing each morning) I always know -to the penny- what the bill will be and we already have the money waiting in checking, ready to pay it off.

 

[AmberHeartsDisney]

If the money in the envelope is running out you should really work on your budget a little better. Sounds like your needing "more" then your allowing your self.

 

[goodfood4ursoul]

How do you pay a lot of those things with cash? Mortgage, electric, insurance, etc....

Our mortgage isn't local at all so we have to write a check. Our insurance is about 45 miles each way and our electric company is about 25 miles each way. It would cost more to drive over there than to just send a check or pay online.

Dawn

Just because we save the cash doesn't mean we pay cash to our mortgage company.
Sometimes we have to save ahead a couple of months for some expenses since our income is not regular like clockwork.
We still have a checking account,
and we do put our cash in the bank for those purposes once we have it and it is time to pay that bill.
But for most of our envelopes like "life insurance" and "auto insurance" that are not monthly bills, we place the cash in the envelope until we need to pay the bill.

My experience is that with the great ease of using debit cards,
it is far too easy to overspend and not save for those once in a while bills.
So we save our cash in those envelopes,
then deposit the cash in checking to pay those bills.

Again, for us this works- perhaps it may not work for you.