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The Envelope System in a Cashless Society

Last post Fri, Jun 22 2007 4:01 PM by Cinnamonhuskies. 17 replies.
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  • Wed, Jun 20 2007 5:35 AM

    • Brandy
    • Top 10 Contributor
    • Joined on Wed, Mar 28 2007
    • Saving in South Mississippi
    • Posts 25,145

    The Envelope System in a Cashless Society

    Gary has written a good article on the envelope system that addressed some of the issues I experienced with using it.

    I personally have chosen Budget Map as my solution. What are your experiences with the envelope system?

     

    The Dollar Stretcher Community Manager



  • Wed, Jun 20 2007 7:44 AM In reply to

    Re: The Envelope System in a Cashless Society

     My household lives by this method as does my seperate savings, or egg money.  I have an old shoe box with standard sized enevelopes that fit perfectly.  I cut out some pretty card stock and made section dividers.  The sections are:

    Groceries, gifts, entertainment, pets, gasoline(my car only), eating out, misc. and savings.  I have two envelopes for incidentals, like a broken window we have to repair and a new car battery we bought this week.  A small emergency fund I guess.

    I receive $250 every 2 weeks, and every envelope gets an alloted amount.  At the end of the month everything that is left over in each envelope gets moved back to the emergency fund or savings.  Savnigs is deposited on the first of every month, no matter what is in the envelope.  The emergency fund continues to grow until it hits $1k then we buy a CD.

    I do everything in cash, no debit or cc's or checks for household at all.

    By using the envelope method I manage to save between $1k and $1700 a year.  We use this for house repairs and remodeling.  : ) 

  • Wed, Jun 20 2007 8:26 AM In reply to

    • Brandy
    • Top 10 Contributor
    • Joined on Wed, Mar 28 2007
    • Saving in South Mississippi
    • Posts 25,145

    Re: The Envelope System in a Cashless Society

     How do you handle bills?

     

    The Dollar Stretcher Community Manager



  • Wed, Jun 20 2007 9:33 AM In reply to

    • rolo
    • Top 50 Contributor
      Female
    • Joined on Wed, Apr 4 2007
    • Michigan
    • Posts 1,932

    Re: The Envelope System in a Cashless Society

    Society is not cashless.  We choose to use plastic and checks over cash because??   It's easier to overspend that way!    When one has a hand full of dollars that you have to count out at the cash register it really causes one to consider if it is REALLY needed or not.

    My dh gets paid once a month and I get paid 2x monthly.  We fund all our expenses with dh's pay minus X dollars.  The X dollars plus my 2 part time paychecks are dedicated to maintaing a $1000 emergency plus agrressive debt repayment.  Once we are debt free the $ will than be dedicated to savings.

    It isn't an easy way to live but we keep other other focused on the end result--NO DEBTS. 

    We use the envelopes in this way:

    Our monthly bills:  truck payment, vehicle insurance, utilities, housing and the total needed stays in the checking account. We then pay these online.

    The rest of the $$ comes out in the form of  cash and we have envelopes we fund with the budgeted monthly amount:

    Tithe, Food, Household (salt for softener, TP, dish soap, etc.), Toiletries, Gasoline/Oil, Emergency Fund, Sinking Fund (such as moving expenses, license tabs, holiday $, or other expenses looming but not a regular bill), His n Her BLOW money

    Our sinking fund $ amount is figured based upon the cost of tabs, the X for holiday/birthday gifts, etc./ by X months.  I know some people have an envelope for each category.  We have one envelope and the total $ needed for each category written on the envelope.

    If we overspend in a category, say Food, then that is it for the month.  Or we have to borrow from another envelope which starts the domino effect.  So we just stick to the budget. 

    We also sell a variety of items not needed anymore OR sell the treasures we have gleaned from other's roadside offerings.  It is amazing what people throw away!  The $ earned from this endeavor goes into an envelope labeled SHOVEL.  When it reaches $50 we apply it to the debt we are currently agressively paying down.  (SHOVEL as in shoveling our way out of debt.)

    It is very empowering to know WE are in control of the $$ due to adhering to our written budget.

    Lorrie

    "People take different roads seeking fulfillment and happiness. Just because they're not on your road doesn't mean they've gotten lost." ~~ Dalai Lama XIV -

  • Wed, Jun 20 2007 9:55 AM In reply to

    • Brandy
    • Top 10 Contributor
    • Joined on Wed, Mar 28 2007
    • Saving in South Mississippi
    • Posts 25,145

    Re: The Envelope System in a Cashless Society

    LOL, my husband is of the variety who spends more if he has cash. Come to think of it, my daughter and Father are that way too.

     

       

    The Dollar Stretcher Community Manager



  • Wed, Jun 20 2007 10:14 AM In reply to

    • PamelaC
    • Not Ranked
    • Joined on Tue, Jun 19 2007
    • Posts 4

    Re: The Envelope System in a Cashless Society

    I pay cash for everything just about and have been for years. Not so much the envelope system but close enough. As for our checking account I pay my bills twice a month,  2nd week of the month everything gets paid with the exception of my mortgage which is paid at the end of the month. Most of my bills are set amounts so I pretty much know how much money I need in my checking every month and deposit accordingly but not to the penny. If my account amount gets large enough I transfer some to savings. I do not use this account for anything else other than monthly bills. I pay cash for groceries, gas, and any other purchases. Large purchases are seldom spur of the moment and are usually put on a credit card for the convenience. We also do not have an ATM card which drives my daughter crazy but, we never needed one for I always have a little cash stashed separate from our savings for fun and emergencies, not to mention a credit card if absolutely necessary. I guess knowing what your expenses are for the month is a big factor in doing this. I also think when people start a budget they do not do so realistically. Trying to maximize their savings they do not budget enough or forget to budget expenses that need to be figured in. This system has works for us and believe me we started this out of necessity 20 years ago. It has dug us out of debt and helped us to learn how to save.

  • Wed, Jun 20 2007 11:35 AM In reply to

    Re: The Envelope System in a Cashless Society

     Online banking, that is the half of the finances my hubby handles.  The utilities, insurances, mortgage, etc, he has taken from direct withdrawl, so he keeps me aware via a chart on the fridge, I can check it as often as I choose to see if I need to cut back or add to any area.  We have a fianancial meeting every Friday after dinner.  We reevaluate our budget every 90 days to make any changes necessary.  ; )

  • Wed, Jun 20 2007 12:28 PM In reply to

    • Brandy
    • Top 10 Contributor
    • Joined on Wed, Mar 28 2007
    • Saving in South Mississippi
    • Posts 25,145

    Re: The Envelope System in a Cashless Society

    The only face to face things I deal with financially is grocery shopping. I usually take out cash to deal with that.

     

    The Dollar Stretcher Community Manager



  • Wed, Jun 20 2007 1:11 PM In reply to

    Re: The Envelope System in a Cashless Society

     We both insist on knowing where the money is coming from and going to.  So a long time ago we decided to have a meeting once a week, keeps us on top of things ad we dont have to argue about who, what, when, where and how.  I know if I have spent a bit much in one area or if we need to reevaluate say car insurance costs.  He knows if the electric bill is starting to climb he can bring it up at the meeting and we make the necessary adjustments.

    We feel that our finances are a very important part of our relationship and make sure we are both aware of both the gains and the drains.  ; )

  • Wed, Jun 20 2007 6:00 PM In reply to

    • rolo
    • Top 50 Contributor
      Female
    • Joined on Wed, Apr 4 2007
    • Michigan
    • Posts 1,932

    Re: The Envelope System in a Cashless Society

    Brandy:

    LOL, my husband is of the variety who spends more if he has cash. Come to think of it, my daughter and Father are that way too.

     

       

    Because he is taking more cash than needed for the planned purchase probably.  How many of us have walked into the store with a $20 in our purse to buy a gallon of milk and end up spending every bit of the $20 on unplanned impulse stuff?  I used to do this all the time.

    Now, when I have to stop by and get X groceries I use my price book to estimate what I need, say $31 and so I would take $32 and a little bit of change in case a price has jumped since my last price book update.  Makes overspending impossible unless I don't get the necessities on the list.  If I always carry cash on me it is no doubt I would find all sorts "necessities" popping up each day!  lol

    Lorrie

    "People take different roads seeking fulfillment and happiness. Just because they're not on your road doesn't mean they've gotten lost." ~~ Dalai Lama XIV -

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