Falling Off the Wagon

March 31, 2007 at 5:39 pm (Money)

No, it’s not the wagon you’re thinking of. I’ve never really been "on" that wagon to begin with. It’s our "Financial Peace" wagon.

For the last 6 years or so we have been big proponents of Dave Ramsey and Financial Peace University. We started classes at our church and led them for several years before giving the ministry over to someone else.

In the first 9 months or so of following Dave’s advice we paid off all our credit card debt and our student loans, finished paying off one car, sold another car, and got a free car from my grandmother’s estate. When my daughter was born 4 years ago we had gotten ourselves into a position where I could quit working full time and stay home with her and Noah, then 3.  The only debt we currently have is the very little we owe on our mortgage that we hope to have paid off in a year or two. (You can read a little more about that, here.)

But in the last couple of years as hubby has gotten raises and I’ve had freelance money we have both gotten lax in our spending habits.  Most of it is my fault as I’m the one who does the budget, pays the bills, etc.  Well at the end of June I will no longer have my part-time (from home) job that I’ve had w/ the employer I was working for before Natalie was born. That, plus the fact that our church is headed into a building campaign, has forced us to take a hard look at the budget, reprioritize and for me to buckle down.

The biggest step is going back to the trusty envelope system. If you’ve never heard of it, here’s how it works. When preparing your budget, separate out the items that get paid w/ a check (or online) like your utilities, mortgage, etc. Everything else (groceries, eating out, entertainment, etc.) is a CASH category. Add up all the amounts you have budgeted for your cash categories. On payday (so we do this twice a month) go to the ATM and withdraw that amount of money. Then make an envelope for each category and put the correct amount of cash in the envelope.

Then when you’re at the grocery store you pay out of the grocery envelope. Kids want to stop at McDonald’s? Check the "eating out" envelope and see if there’s money left. My kids have heard me say, more than once, "no money in the envelope guys".

Yes, you may borrow from one envelope to pay for something else but here’s the catch. When the cash is GONE, your spending stops! You don’t fork over the debit card, you just don’t buy it. It is the only way that we have ever really done a good job at sticking to our budget.

Studies have shown that people who pay cash for things will spend 12-18% less. That’s probably at least $100 per month, maybe more. If you’ve never tried the envelope system, you can start easy. Try it for just your grocery money for the month. See if it doesn’t surprise you.

Since I’m not a huge fan of having 6 different white envelopes in my purse I went online the other day to buy a new Financial Peace University Envelope System/wallet. It has the envelopes built in along with a coin area, and space for your checkbook. And my heavens, now it comes in pretty colors (used to be just boring black). When I saw that they had it in a blue and brown design (my favorite colors) I took it as a sign from God 🙂

For this month we are also saving all our receipts and tracking our spending to make sure that we’re budgeting the right amount in the right categories.

NOTE: The only exception to the cash rule is that we use our debit card for gas so we can pay at the pump. But the amount is still budgeted, it’s just left in the checking account. Not really any way to overspend there (as long as you don’t go IN the convenience store).

If anyone is in need of financial help I would HIGHLY recommend Dave’s program. You could start with his book "Total Money Makeover". To find a FPU class in your area, click here. He also has a great call in radio show/podcast that you can find here. He is never boring, highly entertaining and speaks about finances in a very practical, easy to understand way.

P.S. Because people always ask here is our cash categories (yours may vary):

  • Groceries
  • Husbands Lunches Out
  • Medicine
  • Hair Care (mostly my cuts and color which don’t happen every month)
  • Household (cleaning supplies, stamps, organizational stuff, home improvement projects, etc.)
  • Clothing (gets more money in spring and winter when I have to get kids new clothes)
  • Babysitting (for twice monthly date nights)
  • Entertaining/Eating Out (movies, date night meals, McDonald’s stops)
  • Fun Money (hubby and I get equal amount that is ours to do with as we please – golf, scrapbooking, etc.)
  • Gifts (birthdays, etc.)


  1. Stacey said,

    I know what you mean about not staying on track! We’ve been having a really hard time with it lately, too! We’ve been meaning to sit down and rethink our budget but haven’t had time. Gotta make it a priority! Thanks for the reminder : )

  2. Cathy Gumm said,

    I still have your “Total Money Makeover” book so if you need it before I get home it is in the bookcase by the computer.

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