Tuesday, March 15, 2011

Finance Challenge Day 2

Day two's challenge was to set up an envelope system. Toni over at A Bowl Full of Lemons has five envelopes. I do practice the concept and believe in the principal behind this, but don't feel the need to be so stringent. I have one "envelope" and it's the grocery money. $80 cash per week. Recently, I do occasionally spend some of it on latte's, LOL, but once it's gone, it's gone, so I try to make sure I've got my meals planned out and have the ingredients on hand. Here are my thoughts on the other ones Toni talks about:
1) Gas: I get gas at Costco and you can't use cash. Also, I honestly I can't cut anything from this. I work from home, and I don't make special trips anywhere (for example, I don't just run to the mall. If I don't have a good 2-3 other stops I need to make by there, I won't go). I don't even pay attention much to price increases because I have to go where I have to go, no sense in getting upset about it.
2) Entertainment/Clothing: I do have amounts budgeted for these. Clothing is a revolving fund. I budget so much a month for it, and if it doesn't get spent, it rolls over to the next month. I keep track of that on a spreadsheet and typically shop online for deals so a cash envelope isn't really relevant. Entertainment... I'm good about sticking to a budget here. I would like for my husband to as well, but I'm 99% sure that if he had cash, he would spend that and then pull out his card, because he's likely a little inebriated. He's never agreed to go to cash for that. But the card he carries has a pretty low limit so he can't get into too much trouble with it. And for all of our cards, we pay off the entire balance every month because we're careful not to spend money we don't have. I might bring up the subject of going to cash for this again, since we have so many events going on this year, it makes sense to be a little more strict the rest of the time.
3) School: my oldest is almost 4, so it's not quite an issue yet.

Reading Dave Ramsey's book a few years ago was really my first introduction to the idea that not everyone has to or even does live paycheck to paycheck or that you can live life without debt. It's just not how I grew up and so I just went along with the assumptions of the status quo. For example- I kind of thought I would always have a car note. It never occurred to me to buy a car I can afford and then have a fund for it's eventual replacement where I put the money that would have been going toward a car note. And I also always thought "you have to spend money to make money." Which might be true but, I was subconsciously adding a few words to that saying in my head; "You have to spend money {you don't have} to make money," and that's definitely not true. I spent a lot of money (wracked up debt) on clothing/hair/makeup/photos/gas in my late teens under the guise of needing to in order to get my modeling career started. And I actually would have been okay, if once I'd started making money, I'd paid all that stuff off instead of going on trips and buying even more stuff. But hey, there's another saying, "Youth is wasted on the young." :D

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