anyone do the envelope system?? - Mothering Forums

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Old 09-01-2008, 09:03 PM - Thread Starter
 
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so i used to be really really with our money...then i stopped working to stay at home...and now it is alot tighter and we pay the bills fine and have money for what we need but we have a car loan (we are trying to sell to at least just break even)and we have a decent but not insane amount of debt to pay off...so i am wondering has anyone used the cash in designated envelopes system? if so how do you figure what has to be in the bank to write checks for bills and so on...how do you get started? etc???
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Old 09-01-2008, 09:15 PM
 
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Vanessa, I do cash envelope budgeting, and cannot *believe* what a difference it's made in staying within our budget. I don't do it for everything, just Groceries, Eating Out, Entertainment, Health & Beauty (haircuts, nails,) and Miscellaneous Household (like t.p., laundry detergent.) These are categories where I found myself mindlessly swiping my debit card, and blowing my budget to pieces.

To get started, you need to know what you're actually spending on food, gas, etc. It took me a few months of tracking every penny before I was comfortable with my budget, and I'm still adjusting every month.

At the beginning of every pay period, I figure out how much all the fixed bills will be: mortgage, insurance, utilities, etc. I then add up all my Envelope categories, make sure they fit in the budget (some months the Entertainment or HABA need to be trimmed,) and withdraw that amount from the bank. I divvy the cash up into envelopes and I'm off for the next two weeks. I still track every single penny I spend from those envelopes.

So to answer your question about how I know there's enough left in the bank to pay the bills: I do a zero-based budget, where I give every dollar a job in Excel before we get paid. Then I'm sure I have enough to pay all my bills, fund my envelopes, and keep paying down our debt.

Sorry this got so long! Please feel free to p.m. me if you have more questions. I got started on all this with Mary Hunt's book, "Debt-Proof Living."

Nichole
wife to Sasha, mom to Marlena, nursed for 3.5 years, aunt to 3 adorable nephews
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Old 09-01-2008, 10:32 PM
 
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I do it too and I'll never go back to the other way again! It feels like we've gotten a raise because I'm being held accountable for my purchases. We keep an envelope for groceries and misc household items, frivolous spending, medical costs (co-pays, medicines, etc), Christmas, Birthdays, vacation fund, legal fund, car maintenance/repairs, clothes, and furniture/household. I only carry the grocery and frivolous spending envelopes on me and the rest are in a safe place at home unless I need them. I like Dave Ramsey's envelopes because I can keep track of all the money that comes in and goes out right on the envelope.

At first I was worried about losing the envelopes and not being able to replace the cash but then I started carrying small amounts on me so it is not much of an issue. And honestly, how often do you lose your purse?

Dave's envelope system provides balance sheets for non-envelope items and I use those for gas (I pay with my debt at the pump to avoid getting the kids out and going in). I also use the sheets for rent, car payment; everything that gets paid for directly from my debit card account. That way I can keep track of what is designated for what in my bank account. So I know that when I have $1,000 in the bank that $xxx is for rent and $xxx is for gas and $xxx is for the car payment. It makes me less likely to spend the money when I know where it is going.

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Old 09-02-2008, 01:56 AM
 
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Sorry this got so long! Please feel free to p.m. me if you have more questions. I got started on all this with Mary Hunt's book, "Debt-Proof Living."
That's the book I've been trying to think of all day! That's a great book. We do a little envelope system - a little of Mary Hunt's "Freedom Fund" system. It works great for us. I have cash in an envelope for my groceries and for miscellaneous household items. I have a "Freedom Fund" where I keep accounts for - automotive, medical, Christmas fund, entertainment, etc. I was just trying to keep track of all the incidentals out of the money I'd budgeted for by using the debit card, but that was always hard to keep track of. So, I've started taking out cash and only spending from that. So far, so good.
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Old 09-02-2008, 04:38 PM
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I do envelopes for our entertainment/blow money but like to use debit for the rest. I'm going to try cash only for groceries soon to see if that helps reign in the amount I spend. A lot of people on the Dave Ramsey thread use envelopes so pop on in if you have any questions.
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Old 09-02-2008, 05:49 PM
 
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The envelope system has changed my life literally. I used to use it when I was single but stopped when we got married because it was too overwhelming to have that many physical envelopes to keep track of and there are bills that come out of our acct automatically and I didn't want to be running to the bank every few days to deposit cash.

So...I found Budget for Windows. It's a virtual envelope system and I love it so much I will never go back to physical envelopes again. You literally see little envelopes on your screen that you name for each bill you have. You can set it to print out checks too if you need to. You get to try it free for 250 transactions and then you have to buy it, but it's the best $30 I've ever spent.

Since I started we went from having a few dollars in the acct by the time pay day rolled around to having at least $500 in the acct at all times. I don't have to worry about robbing Peter to pay Paul with an unexpected rise in the gas bill or a special purchase because I've budgeted for it beforehand. I can't say enough about it...you'll never regret it!
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Old 09-02-2008, 06:26 PM
 
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I LURVE THE ENVELOPE SYSTEM!

It is the ONLY way DH and I have ANY hope of actually sticking to our budget!


Plus I've read over and over that using debit cards (even when you're budgeting) causes people to spend more. For some reason our human brains have a hard time grasping the fact that plastic = cash.

ETA:

We work it like this:

Make a budget based on how much we can safely expect DH to make each month. Anything that gets paid via check or that is for long term expenses (like putting aside a little money each month in case the car needs a repair down the road) stays in our bank account. So rent, utilities, that sort of thing we don't pay in cash.

Anything we need to physically BUY at a store we use cash for (so groceries, clothes, items for the impending geeklette's arrival, etc.) as well as money for date night.

We used to use a free spreadsheet thingy we got from our university website but now we use Dave Ramsey's budget software. He highly recommends the envelope system and even has an awesome wallet thing designed specifically for it (but doesn't ship to Canada ).
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Old 09-02-2008, 07:14 PM
 
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The envelopes are AMAZING!!!!!

We did it for the month of July and by the time we were paid again, we had $300 left...

Now, I didn't do it last month because we were traveling.

This month my husband thought we should try just using our regular budgeting and it's horrible...we are good budgeters and we will be fine, but there will only be a few dollars left by the end of the month!

I will be fore sure going back to the envelopes when we get paid on the 18th.

We pay mortgage, savings, HOA, insurance, cable/internet, school loans...i think that is it...from our account.

I also transfer medical money straight to the savings so that I can use my debit card in case we need to go to the dr.

We have envelopes for:

Dog
Groceries
Gas
Clothes
Gifts
Car Repairs
Hubby envelope
Wife envelope
I think that's all of them?

And then we have a clear glass jar that we are saving for Xmas...I know, it's kind of juvenile, but it's really fun to take out the money and count
We have a cute little sign on it with our goal and what it is for!
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Old 09-02-2008, 08:12 PM
 
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Try it out, the worst that can happen is that it doesn't work for you and you can always go back to the old way!

Zen doula-mama to my spirited DS1 (2/03), my CHD (TAPVR) warrior DS2 (6/07) & a gentle baby girl (8/09)
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Old 09-02-2008, 08:22 PM
 
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Originally Posted by holidaymama View Post
This month my husband thought we should try just using our regular budgeting and it's horrible...we are good budgeters and we will be fine, but there will only be a few dollars left by the end of the month!
This was our experience, too, except we're NOT good budgeters, LOL! For July and August, our cc was giving 5% points for gas, groceries, and eating out. I was greedy and thought we'd try it. Well, we wound up going $200 over budget both months, ugh! Seeing the numbers going up on my spreadsheet clearly wasn't as helpful as seeing the cash gone from the paper envelope. It cost us WAAAAAY more than the 5% we'll get back.

So we're back to envelopes this month, and I intend to stay that way from now on.

Nichole
wife to Sasha, mom to Marlena, nursed for 3.5 years, aunt to 3 adorable nephews
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Old 09-03-2008, 01:20 AM - Thread Starter
 
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wow thanks!!! i guess that i have to try it!!!lol money at the end of the month is a wonderful and rare thing....hopefully this will help...i agree with the statement that our brains cant translate plastic = cash...thats the prob
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Old 09-03-2008, 05:40 AM
 
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I use this...sort of an envelope system on paper and actually use real envelopes for entertainment/blow money/haircuts, etc, gas, and grocery.

http://www.budgetmap.com

It's like a chequebook ledger accompanied by columns so you can see where your money is going.

Tina, RN, wife-y to J, mom to dd (10) and ds (7)
"Beware the lollipop of mediocracy...one lick and you suck forever!"
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Old 09-03-2008, 04:13 PM
 
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There's also mvelopes.com. Virtual envelope system that works with your bank online-- has totally changed the way we use our money. I have a ton of envelopes, constantly tweaking things. The best part is that it's online so DH can check our envelopes from work (and so can I) every day. Small fee but it's been quite worth it so far.
Good luck!

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Old 09-03-2008, 05:13 PM
 
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We do this system, but I can't add anything to what these brilliant ladies have said. Good luck!
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Old 09-03-2008, 05:25 PM
 
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I do it, and it helps us stay within our budget. However, I've learned that I *must* keep track of what is spent where out of each budge envelope to keep myself accountable. Its just much easier for me to take our misc. envelope through the Starbucks drive-thru because cash leaves no trail but if I have to write it down I can keep myself from doing it.

We pay some things with envelopes and some things directly from our checking account, and I manage our accounts with an old version of Microsoft Money I bought years ago. This may be overkill, but I write out our bills on a piece of paper every month as well to make sure we have everything paid correctly. I pull the cash out from our budget on the week we have the least amount of bills and fill the envelopes with their appropriate amounts.

I have envelopes for:
Date Night/Family Fun
Clothing
Car repairs (oil changes, wiper blades, lightbulbs, but not major repairs)
Gifts
Dh's work supplies
Misc.
Groceries

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Old 09-03-2008, 07:49 PM
 
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I do it, and it helps us stay within our budget. However, I've learned that I *must* keep track of what is spent where out of each budge envelope to keep myself accountable. Its just much easier for me to take our misc. envelope through the Starbucks drive-thru because cash leaves no trail but if I have to write it down I can keep myself from doing it.
Yes! I have to write everything down, too. We even have the same Starbucks vice!

Writing everything down and transferring it to the budget at month end is *invaluable.* So my budget has two columns: Plan and Actual. The Actual for last month gives me a good idea how to plan for this month.

Nichole
wife to Sasha, mom to Marlena, nursed for 3.5 years, aunt to 3 adorable nephews
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Old 09-03-2008, 07:57 PM
 
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no, but i will buy and read Mary's book and give it a try.
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Old 09-03-2008, 09:25 PM
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so i used to be really really with our money...then i stopped working to stay at home...and now it is alot tighter and we pay the bills fine and have money for what we need but we have a car loan (we are trying to sell to at least just break even)and we have a decent but not insane amount of debt to pay off...so i am wondering has anyone used the cash in designated envelopes system? if so how do you figure what has to be in the bank to write checks for bills and so on...how do you get started? etc???
Have you read the book? You don't put cash in an envelope for your BILLS (ie utilities, mortgage/rent, insurance). You do it for the variable EXPENSES (ie food, eating out, clothing, gasoline, etc)


All DH & I do is, every payday (every two weeks) decide how much we are going to spend for the next two weeks at the grocery store or on gasoline or on a date, and put that much into envelopes.
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