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Posts Tagged ‘Envelopes’

It’s So Easy. Or Is It?

January 19th, 2009 No comments

Ralph Kramden of the Honeymooners

This week, I was home on Friday (it was literally too cold to go to work,) so I filled the envelopes with cash for the next two weeks instead of my wife completing the task.  I was determined to show her how the envelopes should be managed and that she just wasn’t being diligent enough.

Fast forward to Saturday night, barely 24 hours later, and, just like a worn out sitcom plot, most of our envelopes are empty, even faster than usual.  I’m trying to decide if I’m Jackie Gleason or more of a Reginald VelJohnson.

To be fair, I did let her buy a new dutch oven pan, because the last time she saw it I promised she could get it next time they were on sale.  And I bought a USB hub (which I’m still trying to figure out if I really needed — it did help clean up and organize the desk.)  But now I have to, once again, reconsider the amounts budgeted in our envelopes.  I still think they are adequate, and we’re still feeling the after effects of the holidays, catching up on groceries, especially since I gave them a slight increase already for the new year, and would be depleted despite their level.  Spending always seems to increase to consume the amount of money present.

Baby Steps: The Envelope System

December 22nd, 2008 No comments

You are going to either love or hate the envelope system.  All of your spending you can possibly do with cash, you use envelopes.  The idea is that you know exactly how much money you have to spend on a category, and you know exactly how much is left.  It’s going to make you think.  Do you really need that item?  If you buy those Twinkies, will you have enough for milk left over?

Most of our envelopes we fund for two weeks (the length of our pay period,) but the groceries envelope we fund for a week at a time.  We found it just too easy to overspend the first week and then be worried the next week about having enough to purchase everything we need.

If you use my sample budget, the amount for your envelopes will not only be totaled, it will also do a breakdown of what denominations you need to fill each envelope correctly.  When my wife and I first started, we had trouble getting the right amount for each envelope, especially while tweaking the budget, so I did a bunch of simple formulas to figure out what bills went into each envelope and then totaled them in a box at the bottom of the budget.  We cut that box out and hand it to the bank teller with our cash check, which seems to please them, so it’s a double bonus!

Hundreds 1
Cash Fifties 2
for Twenties 5
Envelopes Tens 3
$336 Fives 1
Ones 1

Even if you don’t like the idea of the envelope system, give it a try.  Adjust your amounts or what you put in envelopes.  After the price of gas got up to almost $5/gallon, we quit using the gas envelope and just tracked our gas purchases via a virtual envelope, using a savings goal in Quicken.  I drive about 120 miles a day round trip, and I felt the amounts were getting unmanageable, not to mention tempting to misuse.

Baby Steps: Make A Budget

December 19th, 2008 No comments

If you don’t have a budget, you will never get out of debt.  Just winging it on how much you spend on things doesn’t work — otherwise you probably wouldn’t be in debt right now.  And you will not get your budget right the first time, or likely the second or third.  It will be frustrating, but the general consensus is that it takes close to three months to get a good, working budget.

Pencil and paper, or on the computer, either is fine.  I did our first rough draft on paper and after playing with it a bit, put it into a spreadsheet.  Google Docs is pretty good for this, as you have access to it anywhere and can share it with your spouse.

I set ours up with the following sections (borrowed from Dave Ramsey) :

  • Charity
  • Savings
  • Housing
  • Utilities
  • Food
  • Transportation
  • Medical/Health
  • Personal
  • Recreation
  • Debts

Under each of these sections you will want to have entries for specific things.  For instance, under food, I have Groceries and Eating Out.

Here is a sample copy of the budget sheet I use: Budget Sheet

Using this sheet, you get a running tab on how much you have left to budget, or have to cut.  There’s likely lines you won’t use (like domain names,) which you can rename to be something you would need.

Account for every dollar.  You are going to be wrong to start, but it’s better to not have a slush fund to pull from, except your blow money, which is what the name says; money you can just blow.  With extra money, you will be tempted to overspend your categories, and probably by more than you have left over.

Next up: The envelopes.