Happy Friday! January is slowly creeping out of here and I don't want it to leave without me having a solid plan for my finances. I've used Dave Ramsey's envelope system for a while and it takes a lot of discipline but I love the rewards. If you need more info on his system, you can google "dave ramsey envelope system" and read up on it. So here is my take on it and why I use it. I've been in education for almost 20 years and we all know educators get paid ONCE a month and it honestly isn't a lot(thankful for it). I noticed over the years that as my pay increased, so did my bills and I never "saw" my money. We went through Dave Ramsey's Financial Peace University at church and I adapted two things: 1)snowball debt repayment 2) envelope system. So let me talk to you about how I use the envelopes that I created. I created 6-7 envelopes, I have more but I wanted to focus on the cash, savings, car maintenance to start off with. So here is how I work it.
1. The savings envelope is the money I put back from my business or any extra income I get in. At the end of the month, I take what's in the savings envelope and put it my savings at the credit union. My goal is to use this money for entertainment-trips, weekend get -aways, movies, dates..etc..I do have a separate savings that I put money in when I get paid that I don't touch. Well, I try not to touch it but life happens. So lets say I get an order and I make $200 from the order, I take $120 and invest it back in my business and the $80 I put $40 in savings and $40 in cash. My goal is to actually "see" what I'm doing with the money. If I leave it on my bank card, I turn into "swiper no swiping" and it disappears fast. I didn't do this as much last year that's why I am so focused on getting it together now.
2. The cash envelope...this envelope represents what cash I have on hand and when it's gone, its gone. You can decide how much you put in your cash envelope but the goal is to set an amount that will help discipline you. When I get money from an order, I also take a portion of it and put it in my cash envelope. It can be small as $20 but the goal is to use the cash and not swipe my card. Also, let's say I budgeted $160 for my electricity bill and it was $130, then I take that difference of $30 and put it in my cash envelope. I keep my cash envelope with me, it's what I can use to splurge but I have to remember, when it's gone, it's gone until next month. I usually use the cash envelope on ME! As a mother, we are always pouring into our children and homes but sometimes you want a cute new bra and panty set and those aren't cheap especially when you're a little fluffy. Or one Saturday I'm doing my normal walk through TJ Maxx and Target and I see a cute shirt on clearance and I don't want to use my debit card..BOOM, I go in my cash envelope and use what's there. It takes discipline because I constantly ask myself, "is this worth me using my cash stash for?" I have 20 minute debates with myself most of the time. LOL At the end of the month if I still have cash in my envelope, I can move it to my savings OR just add to what I am budgeting for the new month.
3. The last envelope that I am focusing on is the car maintenance one. Whew chile!! 2019 ate me up financially with car repairs. My car is foreign so you truly need a second job for the upkeep. I would have a good savings and then BOOM, I need a $900 water pump...so this year what I am going to do is start putting money in my car maintenance envelope every month, I haven't decided on an amount but the money in the envelope will be used for oil changes, repairs, inspection stickers/tags, and those sudden repairs that spring up on you. Right now I need a high beam headlight and it's $178, had I been using my car maintenance envelope, I would have been prepared for it. But, I can start now!
I will come back for a part 2 blog to talk about the other envelopes and also how I am planning to snowball my debt using my debt tracker sheets. The envelopes will be for purchase on 2/1 and they will come in a set of 12.The link will be included when I post part 2 of this topic.
What are some budgeting tips you can share with others? I am always looking for realistic ways to see my money. Leave any comments you would like.