Envelope system of budgeting- questions

[arkienurse]

Those of you that use this method, how do you do it. Do you literally have envelopes and get your paycheck in cash and divvy it up? I use MS MOney to balance and keep up with my checking and savings account. I have thought of making it look like I have written and spent the amounts budgeted for each category and then going back and changing the info when I actually need to spend the money. I worry about having all that cash on hand, especially when some things we do infrequently, like auto repairs( nock on wood) and pers property taxes.

I would like to know more, especially from those of you that use the envelope system and also use Money or Quicken to keep up with everything.

[edwards2]

arkienurse..I heard about the envelope system from Dave Ramsey...do you know who he is? He went BK during the real estate boom because he was overextended and vowed never to be in that shape again and now he is a millionaire. He cut up all of his credit cards and is adamantly opposed to using them EVER...I disagree with that. I think you need one for emergencies. Not everyone has thousands in their checking account should something happen like being stranded and needed emergency car repairs. The envelope system seems to work for a lot of people. You should get his book Financial Peace. In the envelope system you pay yourself first and then have each of your bills in envelopes. You allow so much for food and entertainment. The strategy is that you live on less than you make. Oh and he always recommends having $1k set aside for an emergency fund. Once you have all that done you need to have 3-6 months in your account at all times just in case...wonder how many people actually have that. I read that 65% of the American public lives paycheck to paycheck. Pretty sad.

[arkienurse]

arkienurse..I heard about the envelope system from Dave Ramsey...do you know who he is? He went BK during the real estate boom because he was overextended and vowed never to be in that shape again and now he is a millionaire. He cut up all of his credit cards and is adamantly opposed to using them EVER...I disagree with that. I think you need one for emergencies. Not everyone has thousands in their checking account should something happen like being stranded and needed emergency car repairs. The envelope system seems to work for a lot of people. You should get his book Financial Peace. In the envelope system you pay yourself first and then have each of your bills in envelopes. You allow so much for food and entertainment. The strategy is that you live on less than you make. Oh and he always recommends having $1k set aside for an emergency fund. Once you have all that done you need to have 3-6 months in your account at all times just in case...wonder how many people actually have that. I read that 65% of the American public lives paycheck to paycheck. Pretty sad.

Will try to find the book online, sounds interesting. I first heard of the envelope system before we filed. I used to listen to a program on Christian radio, think it was Money Matters. The person was Larry Burkett. He spoke of an envelope system, but I never looked further into it. We were already on a downhill spiral, just didn't know how steep.
And to complicate matters, DH seems to be determined to live paycheck to paycheck. We are arguing right now, and watching the grass grow. Riding mower went out. I want to just find a cheap push mower and do what we can, borrow someone's bushhog for the very back. He wants to take savings and buy a riding mower. Dangit, I have worked hard to get that money into savings, for important things. Just so we keep the immediate yard mowed, what is the problem?

[Minnymouth]

Unless your riding mower is "ancient" it is cheaper to fix it then buy a new one.... DH wants a new "toy"!!!

If it's in need of major repairs, best to trade it in on a used on, to time to purchase another...

Its hard to "save for a rainy day" when one spouse see's money they can spend...... it's almost a battle with them at times......

Stick to your guns, keep that reserve "fund" if at all possible....

Minny

[annikasaunt]

We are breathing much easier since filing. Our 341 was 4/21 and it has been so much easier to actually SAVE money! I have almost 1/2 of my check automatically deposited into a savings account every week and I pay every bill I get as soon as I get it! My goal is to have a giant savings account, but to also have 1 card for emergencies only. And I swear to the world that it will be just one! I am aiming to get out of my mobile home in a few more years and be able to buy a nice little house. I guess if you set goals that are important you will make it happen. I don't use an envelope system, but I have it in my head that I will not let my finances get out of control again. I did it to myself the last time, no excuses!

[Minnymouth]

You GO GIRL,

GAME PLAN - THAT'S WHAT IT'S ALL ABOUT!!!



Minny

[SinkingFast]

Unless your riding mower is "ancient" it is cheaper to fix it then buy a new one.... DH wants a new "toy"!!!

If it's in need of major repairs, best to trade it in on a used on, to time to purchase another...

Its hard to "save for a rainy day" when one spouse see's money they can spend...... it's almost a battle with them at times......

Stick to your guns, keep that reserve "fund" if at all possible....

Minny

We had really odd luck with one rider mower, Minny. It was a bad design to start with and other people's mowers had died years before ours did. We got 13 years out of it when the transaxle box died. We found a local dealer who could order us a new transaxle and do the job. It was gonna run about $600 to repair the old rider. Much cheaper than buying even a cheapy mower at Wally World at the time. So we decided to go for it.

Had the mower towed in to the shop. Waited a couple weeks and called about our mower. That reminded the guy that he hadn't heard about the order they'd placed for us. So the shop gets busy calling to see where our new transaxle is. Takes about a week to get it all sorted out before we hear back from the shop what's happening with our mower. The plant that built the transaxles had burned down. To the ground. Right around the same time we'd put our mower in the shop. The guys at the shop had been calling all over the country, tracing leads from one supplier to another, "You might call So and So and see if they have one." before the shop exhausted all the possiblities. No transaxle to be had. New or used. From anywhere that they could find. The mower was dead with no hope of repair.

And of course, we didn't have the money to replace the mower. So we limped along as best we could for the next couple of mowing seasons. Then a friend who worked for a commercial mower dealer took a mower back in on trade from a Landscaping company. He thought of us, brought it by for us to look at, and we decided to buy it. It was old, banged up, and more than a bit worn, but it got the job done. And it was cheap. Just what we needed.

Arkie,............ I think it's a guy thing not wanting the neighbors to help you by mowing the pasture, as we called it. We woulda had no trouble keeping up the yard, and our neighbor offered to mow the excess with his pull behind 7' deck. But hubby wouldn't hear of it. So the rest of one season and for the next 2 summers, we mowed it all ourselves. Someone on the rider that was still running, someone push mowing, someone weed whacking, and someone running water to keep everybody hydrated. It took 8 hours every time.

[Minnymouth]

Sinkingfast,
I think I would have "kicked Hubby's butt" for not letting the neighbor bushhog the pasture.... 8 hours mowing a field does not sound like FUN......

It's a PRIDE thing with the men! At my house mowing like that - let them us a bushhog.......... and smile real pretty and say THANK YOU SO MUCH!!!

Minny

[jane taylor]

We use the envelope system, too, and it works. We don't take money from the envelopes for any reason unless it is life or death because we would end up never paying ourselves back.

We are trying to save $1,000 for an emergency and are doing pretty well. Wish we could've done this sooner, but better late than never.

[Minnymouth]

Several years ago, before all HELL broke loose at my home medically and financially I had a very good system set up that had worked for me for many, many years.....

This is how my money was managed:

1. $l,000 emergency money separate from all other accounts. Interest bearing account.

2. Enough money in interest bearing checking account to pay bills for
3 months should I become ill. (this really helped, but unfortunately, did not solve the overall problem when things started happening)

3. Bill money - Bills were paid on time - extra being paid on balances and principals.

4. Slush fund for my "mad money".

I was very careful about all funds, did it this way for many, many years.

When I came down sick, all hell broke loose, no way to solve the problem thus resulting in bankrutpcy......

I felt like it was a good "game plan" - had saved my butt many times over the years... and kept my credit score very high.....

BUT even the best "game plan" can be destroyed by tragedy and medical problems......

Well, am back on my "program" again..... it's a struggle to fill the accounts back up again, but I'm working on it!!! I call it my "safety net"........ for the future..... I may need it again....

Minny

[debtisbad]

Min,

That is me. I was always a saver. Unfortunately, a series of very bad events ruined my entire plan. I have to start over as well. People just do not understand that BK can happen to anyone. I especially love the ones who say that "if only you had planned better...." Not true. No one can plan for everything that can happen in life. An individual that I was talking to the other day said that Chrysler had sent out an email, that in the future hiring decisions would be made based on credit score. She offered to print off the email so I could read it as I did not believe her. How arrogant can a corporation be. Guess I do not ever have to worry about working for them (or buying) one of their products!

[SinkingFast]

Sinkingfast,
I think I would have "kicked Hubby's butt" for not letting the neighbor bushhog the pasture.... 8 hours mowing a field does not sound like FUN......

It's a PRIDE thing with the men! At my house mowing like that - let them us a bushhog.......... and smile real pretty and say THANK YOU SO MUCH!!!

Minny

What are ya gonna do, Minny??!!

MEN!!

You can't live with 'em, and you can't live with 'em!!

[arkienurse]

OK, an update

Well, I found a copy of Financial Peace cheap on ebay. Have just started reading it. And so far, DH is using the old mower. He did tell me that it is so old that at this point it would probably cost as much to repair as to buy a new one.

[doinbetternow]

MS Money and finances

I completely understand the earlier post about a series of unfortunate events. It seems like in the blink of an eye, my savings, retirement, and beacon credit score were GONE! I don't know what could have prevented it, but I do know that a higher level of organization would have made it a little more bearable, and maybe given me a chance to prepare a little better. Meticulous organization has also been the key to life after bk.

I have been using MS money to track finances since we filed for bk in May 05. I believe one of the most important things it's done is to end money squable between my wife and I. I can now show how small amounts here and there accumulate into a good portion of our budget, and if you catergorize and make good notes, there's no arguing with it. Of course everyone know that pennies make dollars, but a picture is worth a thousand words. I have more leverage dealing with the budget now when I can show that, sure its only$x.xx, but you spent it x times!! I've also gotten a better handle on my own spending. The reports are excellent ways to communitcate. Every couple of weeks, I print some out and we go over them. One of the first conflicts was over gas. "I have hard time believing that that much money is spent on gas!" she says. Oh, but we do and you spent about 60% of it - proof in black and white. I'd have never gotten that point accross any other way. Little leaks sink big ships.

I think one of the most important parts of our money management is that someone is in charge of it. After the bk, that was dumped entirely in my lap, but apparently only the numbers end of it. Somebody else wanted to make decisions on how to spend the money while I crunched the numbers and kept quiet. If you're going to take on the finances, then you are responsible for the successes and the failures. That method was headed for a failure. Using a program like money helped me convince her that I knew what was going on with the money, so maybe it would be wise to consult me about spending instead of using me for a calculator. Instead of being a free spirit with the money, my wife has turned into an auditor! We actually don't have a budget per say. We do know what is required to live. We know the difference between needs and wants, and challege each other to do better and find ways to save. We know what our honest means are and find ways to live under them. at this point the checking and savings accounts are growing rapidy..almost 4k in savings acount!

On a lighter note, the whole lawmower this reminds me of my dad. This was a man who made about 160k/year in the petroleum industry. He was such a tightwad that when we replaced our riding mower it was about 17 yrs old and was a hybrid of about 4 different brands. His philosophy was if you can get the engine cranked, the blades and wheels turning, there's nothing wrong. The reason we replaced it was that things had been modified to a point that we couldn't modify it anymore. We had actually cut, welded, bolted, drilled, and duct taped until there was nothing left. Oh and when he got hurt we lived over three years off of his savings. I wonder if those are related? You should have seen our vehicles.

[Minnymouth]

Yes, even the BEST PLANNED budget can fall apart when problems hit.......
It helps to plan for the future, save a little nest egg, be prepared for unexpected "times and problems"...........

But also save for fun things in life also............... that new car, that swimming pool for the back yard........ that trip to Vegas we always wanted to take................

Nothing wrong with saving for fun things.................. save for it and do no take it out of the household budget to do it........... that's the key - save for it.....................

Its amazing where you can cut corners and save money................ snack machines, pop machines, newspaper everyday, too many trips to Walmart..... going to the grocery with a full stomach instead of being hungry..........
Cut back on one pizza nite out a month..............take your lunch to work.....take leftovers to work...............

The "wants" and "must-haves" - think 24 hours about them before you go buy.... are they necessary..............???

Be realistic about what you can save and how much you really need to spend..... Don't make your budget so "tight" there's no room for "wiggle" in it.....

As your savings and nest eggs grow you will feel confident in what your doing, take a lot of pride in your accomplishments, and will even strive more to keep adding too it for the future.......

Ask yourself - do I really need a new car???? Or will a good used one serve the same purpose............??? THINK!!!!! If I buy a good used car, then I can take the extra money and buy a used camper to go with it............ family time!!!

GOALS - set them, maintain them, reach for them................THEN ENJOY THEM...........

Minny