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t/j - Your Money or Your Life by Vicki Robin

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GabyBaby posted 4/7/2014 14:30 PM

I didn't want to t/j the post in the Book club, but I wanted to offer a suggestion for folks that are trying (like me) to get their finances under some semblence of control.

My husband lost his job two years ago.
Thankfully, he's working again, but money has been (and will be) tight for a while and we're still playing "catch up".

I've always budgeted our income, but we almost always went overbudget on needless things with careless spending. After another frustrating month of coming up short on cash, we sat down and revamped how we spend/track money.

First, we designated various areas (categories) of spending:
-Periodic Payments
-Long term savings
-Pocket Money (includes weekly gas allowance)
-Petty Cash

We then opened up a savings accounts for each of the categories EXCEPT food, pocket money, and petty cash.

After we got everything setup, we sat down and look at the MINIMUM paycheck we each typically get, when payments are due, and budgeted every single penny to one of those accounts.
Then we setup automatic transfers (we have direct deposit) to go into the respective accounts to cover bills in those categories.
When a set of bills are due, I simply transfer the amount needed back to our checking account and pay the bill.

For groceries and personal spending (which includes our gas money for the week), we take out cash from each paycheck. Grocery/food money goes into an envelope (that we pop into a locked box). We no longer do "quick trips" to the store for random things. We plan meals ahead of time and pay cash. When that money is gone, it is gone.
No more swiping the debit card, etc.
As for the personal money, same thing! When it is gone, it is gone! If we spends our gas money instead of putting it in the tank, we better get a bus schedule or lace up the sneakers!

Using cash instead of debit cards for everything gives a great visual on how much you actually spend and how much you have left. Anything we have left at the end of the month from the grocery fund goes into the Petty Cash envelope.

We've been doing this for about a year now and I cannot tell you how much this has helped pair down the needless/whimsical spending.

Rebreather posted 4/7/2014 14:35 PM

We did the Dave Ramsey Total Money Makeover about 5 years ago and we still use the cash envelopes. I have found it is the best method for us to stop excessive spending. We have actually slid back into some bad habits and now I literally leave my debit card at home. Want it? Better freaking plan for it!!

Great strategy, Gaby!

norabird posted 4/7/2014 14:51 PM

I love this t/j! Obviously I'm thinking about this a lot lately--it seems that the hardest part is getting the energy to create a system in the first place, but once the system has been established it's much easier to stay on it. So, now I just have to figure out how the heck to get myself to invest that start-up energy and do it right

GabyBaby posted 4/7/2014 14:56 PM

Yes...the debit card. There were some weeks that I wanted to strangle DH!
I handle our household finances and while he's pretty good about letting me know about his spending, there are always one or two things that get forgotten, so of course I then have to scramble to cover it or bounce a check.

Switching to cash has pretty much eliminated that.
DH still has his debit card, but he almost never uses it now (and when he does, he'll text me to find out if the cash is available).

I find I have a lot less (new) gray hair now.

GabyBaby posted 4/7/2014 14:58 PM

Norabird - it is SO worth it! Just do it!
You will not regret it!

I use an excel spreadsheet to keep track of the budget and bills paid. For the cash envelopes, there's a log in each envelope to record deposits and withdrawals (and the balance).

The setup is the hard part, but it only took us one evening to get everything outlined. We did do a few tweaks over a few months after starting (increase gas budget, decrease food items, etc), but the main problem (overspending on random crap) stopped almost immediately.

nowiknow23 posted 4/7/2014 19:35 PM

I use a homegrown spreadsheet for my budget. Track my various accounts (checking, savings, debt, and retirement) through Mint.

I have all my fixed bills on autopay with an account set up JUST for those bill payments. This includes utilities that are set up on budget plans so they don't vary. Payroll deduction to that account cover the autopays, and additional payroll deductions go to savings and to the checking account I use for groceries, gas, and other variable expenses. Anything left in the variable expense account at the next payday gets swept into savings.

Of course, being laid off could potentially throw a wrench into all this. Hopefully I'll be employed again before my severance runs out and it all blows up.

Dreamboat posted 4/7/2014 21:22 PM

I actually try not to use cash at all because then I cannot track it. I put grocery, gas, and any eating out on my Amex that I have to pay off each month. And I track it every month too. I almost never use my debit card (only is someone does not take Amex) and never use any other credit card. For some reason in Feb the grocery expense and fastfood/lunch expense way much higher than average. I know this because I have tracked my spending for so long. So now I am trying to figure out why it was higher and can correct it.

When I have cash, *poof*, it is gone and I don't know where it went.

But I admit that my method only works because I have enough flexibility to have months with higher expenses. If I lost my job or had another financial crisis I don't think my method would work. Also, it is just me (and DD) so I have total control over the spending in our household. Yeah, now that I think about it this would never work if I was still M to my deadbeat X

FaithFool posted 4/7/2014 21:40 PM

I'm on Amex too ^^^ and a very comprehensive spreadsheet. Well actually three interconnected spreadsheets. I'm a bit of an Excel freak that way.

If Gail Van Oxslade were ever to stop by my place, I'd be able to present her with a detailed accounting of every penny.

There is a separate page for cash transactions and I track most of them too.

My Amex points are racking up to the point where I'm good for two business-class trips to the UK. That's the bonus.

GabyBaby posted 4/7/2014 21:55 PM

I'm glad the Amex card route works for you, but it wouldn't fly in our household.
I'm also trying to steer us away from using credit cards.

When I have cash, *poof*, it is gone and I don't know where it went.

I'm the opposite! I tend to hold onto cash because I hate to break a bill.

FaithFool posted 4/7/2014 22:37 PM

I think it works for me because I loathe shopping...

I do love restaurants and happy hours though, so I have to keep an eye on that tab.

But I don't own a car or pets, which is a huge money saver, so I choose to stimulate the local restaurant economy instead.

[This message edited by FaithFool at 10:38 PM, April 7th (Monday)]

Sad in AZ posted 4/7/2014 23:22 PM

You have to be very careful nowadays in picking the bank you use. I chose one because it was right next door to my apartment and had free checking. However, they charge you $5.00 for a savings account! Who ever heard about that??

I'm shopping for another bank.

GabyBaby posted 4/7/2014 23:35 PM

I'm shopping for another bank.

"Free" checking at a lot of the larger banks isn't really free unless you have direct deposit.
The credit unions and a few smaller banks in my area still offer TRULY free checking/savings accounts.

Definitely shop around!

Whalers11 posted 4/8/2014 06:13 AM

I also use my Amex card almost exclusively. It requires payment in full each month and I log in daily to keep an eye on my spending. I use this for gas, groceries, certain auto-payments, entertainment expenses...everything that can go on it, does.

In addition, I have a very detailed Excel spreadsheet that outlines paydays, what bills will be paid our of each, etc. I pretty much over budget for the Amex (I think the last month I went over my budget was like a year ago when I had to stay in a hotel unexpectedly...)

This works for me because I can pull a report from Amex that shows what merchants/categories my spending goes to, so I can easily see where I can cut expenses if I need to...

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