Envelope system

**Russ** · 07-20-2008, 01:11 PM

The envelope system.

Probably not going to happen here. We are not going to have that much cash in the house. Yes, I realize it is the best way and will help us achieve our goal faster, but it is probably not going to happen.

I need another way. So let me hear your suggestions.

thanks
Russ

**PrairieRose** · 07-20-2008, 01:16 PM

Russ, we didn't use the envelope system either. In fact we went absolutely against DR and we use our rewards Visa to pay for most of our bills and purchases (we got LOTS of rewards tickets this way but pay off our credit card monthly). What worked the best for us was to use cash for the discretionary spending (like eating out, blow money).....Just as long you are aware of where your money is going (like a computer program to track it) and stay within the budgeted amount....the envelope system just helps with the 'when it's gone it's gone' part of the program.

Just a little self control is all that's truly needed, that and accountability.

**Greebo** · 07-20-2008, 03:08 PM

Originally Posted by rcannon

The envelope system.

Probably not going to happen here. We are not going to have that much cash in the house. Yes, I realize it is the best way and will help us achieve our goal faster, but it is probably not going to happen.

I need another way. So let me hear your suggestions.

thanks
Russ

We actually use an envelope-less envelope system. We have a white board, and we have several funds we list on the whiteboard, with a goal, a monthly contribution, and a current balance.

When money comes in, we add money to the balance based on the monthly contribution.

When we take money out, we decrease the current balance.

After the last pay of the month, we calculate our debt snowball by taking what our bank balance will be at months end (that is, current balance less any payments remaining to be made), minus what our fund balances total, and the amount left is our snowball.

So lets say our grocery fund is $150, our gas fund is $50, our bank balance is $350, and we have one payment outstanding of $50.

$150 + 50 = $200 in funds.
$350 - 50 = $300 projected bank balance.
$300 - $200 = snowball.

**AmyBoz** · 07-20-2008, 03:24 PM

Russ, We do things similarly to Lisa (PraireRose). We charge everything on our Amex and get cash back at the end of the year. We itemize everything on Quicken and the credit card statement helps us remember what we spent on what. We never carry a balance and pay it off each month. I'm not a fan of the envelope system.

**dcompton** · 07-20-2008, 04:13 PM

I also do what PrairieRose and AmyBoz do. I have a really good cash back rewards card that I pay off monthly. At the moment I'm keeping a spreadsheet of what I spend by categories, but I only do this from time to time as a checkup, not a budget tool. That works best for me because I become compulsive about numbers. If category A was $5 over and category B was $5 under it would make me nuts because it wasn't "accurate" even though it balanced out.

I get $20-25 a month cash for my allowance money, and everything else goes on the card. That way I don't have to juggle lots of budget categories. I just budget x for ordinary expenses (no bills) and only have to watch the CC balance.

I agree with you - I definitely don't like cash around the house, or even being carried around in a purse that in a well earned "senior moment" I could put down and walk away from.

**Russ** · 07-20-2008, 07:22 PM

Ok I feel better. thanks all for the input.

**IntlMom** · 07-20-2008, 08:48 PM

no envelope system here either......our modified version is much like the others

**LexTysMommy** · 07-20-2008, 08:52 PM

No envelope system. I too charge most of what i spend ( store, out to eat, gas) to a credit card I get reward on then pay off monthly. works for me.

**prftstrngr** · 07-20-2008, 09:58 PM

Im way too far in debt to be giving advice....but I wanted to say...we tried the envelope system a number of years ago. I didnt like it at all as I was always afraid the money would go missing or something would happen(yes I worry too much). I hated having the money in the house. Im not diligent enough to pay my credit card and pay it off every month either! We did recently get an accounting program for the computer and we are in the process of budgeting and getting everything set up on that. So far I am liking it. I can see when everything is due and when the money has to be in the account,etc. Most everything we set up on auto debit as that is free for us at our bank.

**MomToTwoBoys** · 07-21-2008, 12:31 AM

Hmm, this sounds like something I might do with my Mastercard. I get Air Miles reward miles on my card if I spend $40 dollars, so that's 1 AM per $40. The problem that I have is that DH's online banking keeps rejecting the account number I input to pay my Mastercard with. If I can get it working, I might just put all the expenses on the Mastercard and then pay it off every two weeks or so. It's not like we rack up more than $3400 per month anyways.

My question is this - how do you avoid paying interest charges on your balance?

**blitzen** · 07-21-2008, 12:36 AM

Don't feel bad--I can't even wrap my pea brain around the envelope system. When we deposit our checks, I keep out grocery and spending money. Everything else gets paid by check and is accounted for on my primitive budget sheet (excel? What's that?!). I have a sheet for each week, what expenses we have and how much we should make that week. And then I just pay the bills/transfer money to savings. It's been working out pretty well for us!

**Palooka** · 07-21-2008, 02:48 AM

The envelope system would never work for us. We are happy savvy debit/credit card geeks, new age people. lol Does anyone pay cash anymore?? lol

Funny story that happened today(don't know if it goes in this thread, but it made me think of it)

Seriously we were at Walmart supercenter just getting stuff and standing in line..This couple had like a big wad of cash that I saw. They only needed 11 cents and had to break a hundred dollar bill for it..I never carry cash and knew I didn't have any change in my purse because my dh takes it out for the pop machine at work, or I would have just given it to them..lol

They held up that line for like 15 minutes. I seriously wanted to dig out of my purse the change just to get the line a rolling and I was sick of waiting. lol I felt sooo bad for the cashier as she called for change and I think the guy was a little bit of a jerk to her...

Then when we went through line...she said she really felt bad because she was bad at math and she was sorry we had to wait... I said don't worry with a smile...here is my debit card that I swipped. lol.

I like the fact of seeing what I pay verses cash.. I love my debit bank card or Discover card. I love how it breaks down online exactly what I spend. Way more easier to budget. IMHO.

**Bournecrazy** · 07-21-2008, 11:16 AM

Originally Posted by blitzen

Don't feel bad--I can't even wrap my pea brain around the envelope system. When we deposit our checks, I keep out grocery and spending money. Everything else gets paid by check and is accounted for on my primitive budget sheet (excel? What's that?!). I have a sheet for each week, what expenses we have and how much we should make that week. And then I just pay the bills/transfer money to savings. It's been working out pretty well for us!

i did the same but i hvent used it for a while, i mainly used it last year but since i found FV i havent needed it i think its because i have been doing my budgets on paper and ive only got 3 debits a month to pay, i know the totals what my pay will likely to be, but i might start it up again as im running out of notepads

**MTS04** · 07-21-2008, 12:01 PM

I can understand about not liking the envelope system.

We did use it, but not for everything. Just the things that needed curbing as far as expenditures went. Those things were: food (eating out), blow money and household items. With just those three envelopes, it taught us (mainly DH) that when it is gone, it's gone.

**Samigirl** · 07-21-2008, 12:57 PM

I use my own virtual envelope system using Quicken. On pay day, after the bills are paid, I'll create "envelopes" for the rest of the money. In the register, where the check number goes, I put "ENV". I leave the "payee" section blank, then under "category" I'll mark it either "Gasoline", "Groceries", "Birthday present", etc... Whatever I will need money for in the next two weeks will be put into a category, and given an allotted amount. Then, whenever I actually buy groceries, gas, etc., I enter it into Quicken, and deduct that money spent from my "envelope". When my envelope gets to zero...I know it's time to stop spending. (I bank online, so I check my account daily and tweak Quicken accordingly.) I don't like having all that cash on hand either, so the traditional envelope system doesn't really work for us. This is a good compromise. (By the way, I'm sure there's a better way to do a budget in Quicken, but I've been too lazy to figure it out...LOL. This is easy, and it works for me.)