As most of you already know, I am a big fan of Dave Ramsey. He is a money guru who helps people through the steps of tackling debt. Whether it is small debt or an astronomical amount, there have been success stories of those that have followed Dave's program.
Before we came across the program, my husband and I were able to pay off about $20,000 in medical debt from giving birth to our son (wahoo!). Fast forward 2 years later, and we still have about $40,000 in debt to tackle. In January of this year I read Total Money Makeover which empowered me to do something about the mound of debt we are in. After reading the book, I felt encouraged to change my frame of mind in how I deal with money. And from that my hubby and I decided to take action.
The Envelope System:
The biggest budgeting help has been the Envelope System. We started this in January. Right now we have individual envelopes for Groceries, Entertainment, and for Dale's Lunch Money. On pay day, I head to the bank to pull out the exact increment we have set for each envelope. Once the cash is gone, it's gone. You can not pull out anymore money for these expenses until the following week. If you find that there is left-over money in the envelope at the end of the week, you can combine that next time or eventually put the "extra" towards debt.
Also, I still use Auto-Pay for major bills, and only use the debit card for gas (since I hate going inside to pay). I also have to mention credit cards are a no-no. Continuing to use credit cards is not going to get you out of debt...if anything, it can rack up more interest/cost. Envelope System is ALL about CASH! We are reverting back to the days when plastic was not invented.
This system has worked great for us. It really drives in the fact to be intentional with our money. In the past, it was so easy to just pull out the debit/credit card and swipe whenever we wanted. This helps us stay within our budget, and to work on our Snowball at the same time (another Ramsey term which I will share in a future post).
I do have to say that this month has been tough on me in the envelope department. I fell off the bandwagon and had the thoughts of "I don't care"...not a good frame of mind to be in. That's when I started using my debit card for purchases again and was not necessarily staying within budget. This week I am going to sit down and re-evaluate and get back to the envelope system. We may need to create another envelope dedicated to date nights and car maintenance. That's where we have found a lot of money seeping from our budget lately so I want to get on top of that.
*The Envelope System only helps if you are willing to put the effort into it and STICK to it!*
*Additional Info: What Dave Ramsey says about it