Cash is The Way to Go, People. (Now I just need to convince myself of that.)

by jolyn on January 14, 2010

in Military Living,On Budgeting

I’m slowly coming out of my denial that moving to a cash system is the step we need to take to really get a grip on a budget that we control. Particularly in light of our most recent tenants vacating that thorn in our side our rental home, it is vital that every dollar we spend is purposeful and intentional. It’s very easy to whip out that debit card and figure out later what category any over spending will come from (for us, that means our debt-repayment category). With cash, when it’s gone, it’s gone.

All I can say is, Baby Steps, people.

I’m starting out small — just four envelopes: Food; Clothing; Gifts; and yes, Booze.

(I’m just trying to be realistic.)

And no, those colorful envelopes you see (way) above are not mine — the blah, hand-labeled ones are. I don’t need anything fancy. (Not to mention that a little color might make them too attractive for little hands.) If pretty envelopes would help motivate you, though, then by all means, knock yourself out. Kelleigh Ratzlaff Designs offers a fabulous, free tutorial on how to make some gorgeous envelopes, if you’re crafty like that  — and yes, they’re specifically for cash. Paying with cash is a whole movement out there, people!

Anyway…

Next Month I Will Have an Entertainment Envelope It’s already clear that I should have budgeted some cash for entertainment. That is one category that we haven’t been using in awhile — any entertainment spending has just come from our separate “blow money”.

But with The Hubs now gone, I can already see that I need to designate some cash for the kids and me to go and have some fun. Nothing extravagant, mind you. But we can’t just sit around the house and twiddle our thumbs (or pull out my hair) the whole time he’s away.

…And Some Blow Money For Me I also didn’t budget any blow money for me this month. I have no idea why. I really think I just forgot: my mind was all muddled and focused on trying to figure out how much to send with The Hubs. We ultimately decided on $200 for him — yes, I hope that lasts him well past January. But mainly, I really wanted to feel like he had enough while he was traveling and initially getting settled on the other end. And he’s on board with trying to make the transition to cash and not using the debit card for every little cup of coffee.

Some Quirk$ of a Deployment We’re also not clear on how many meals he may eventually be paying for out of pocket while he’s deployed. Yes, they feed those guys over there. But his job will likely involve some travel; however, his orders didn’t include a per diem. He brought that up with Finance before he left, but wasn’t able to get it resolved. Ultimately, anything he has to pay for out-of-pocket that’s job-related should be reimbursed. But in the meantime it’s, uh, out-of-pocket.

If I worried about every little muddled affair the military threw at us, I’d be cuckoo by now. Sometimes you just gotta go with the flow.

It’s not a complete accident that I’m starting this cash system while The Hubs is deployed. I’m hoping that by the time he gets back, I’ll have my cash-paying groove down and it’ll be that much easier to help him get on the envelope bandwagon: planning ahead for purchases before you leave the house; remembering to put the change back in the appropriate envelope when you get home; etc.

Any advice out there?

Because it’s really not that easy, truly, for someone who’s used to just reaching for a debit card. I’m a perfect walking example of that.

I’ve been keeping track of every little purchase that was not on the initial budget for January. I’m thinking of posting a tally tomorrow of what’s “come up” so far this month, which ultimately will change what we’ll be able to pay down on the debt snowball. The whoop$ are not insignificant.

But the idea is that, maybe six months from now, I can look back and see how far we’ve come on creating and sticking to a household budget. At least, that’s the idea. Wish us luck.

Oh, and don’t forget: Baby Steps, people.

{ 4 trackbacks }

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July 21, 2010 at 12:06 am

{ 10 comments… read them below or add one }

Jan March 7, 2010 at 1:50 am

I’m switching over to cash envelopes this week, it’s going to be a challenge but I’m sure it will make me more aware of how much I’m spending. (Have been reading your archives, great blog!)

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jolyn Reply:

Good luck! It’s still a work in progress for me. (Mainly remembering to take the cash with me that day!)

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jolyn January 20, 2010 at 8:44 pm

It’s not horrible, and of course we’re not the only ones! I started this blog to help motivate us, and I hoped that others would come along and share their journeys as well. I don’t think anyone can have a perfect financial system overnight, but yet we’re all so reluctant to talk about it with each other and admit our mistakes and weaknesses. Thanks for reading along!

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Jaime Reply:

I’ve spent the last few days going back and reading all your archives. I think you are amazing and motivating! I don’t think anyone is perfect in their finances, and sometimes even if you think you are, the curveballs life throws at you can make you realize you can still be better. Thanks for writing, it feels good to share!

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jolyn Reply:

Why Jaime, you just made my day! :)

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Jaime January 20, 2010 at 8:34 pm

Hubby and I just switched to all cash on the 1st. It’s going better than I expected, but it’s hard. We pay the major bills automatically online (like electric, cable etc.) then withdraw and budget the cash that’s left. We have grocery and non-grocery but I’m starting to think we need at least one more.
I just found your blog after seeing your post on Erin’s and I have to say I’m loving it. This sounds horrible, but I love knowing I’m not the only one dealing with debt, or trying to make cheap meals or good budgets. Thanks!

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Jenn January 19, 2010 at 10:33 pm

Once you get firmly in the habit of cutting spending to the bare minimum are you planning to continue with the cash system, or is that a wait and see situation? I understand using cash only if you are easily tempted to spend extra because you’re swiping a card rather than counting out the bills, but once you’ve retrained yourselves it would be a shame to miss out on the benefits many credit cards offer.
Years ago (before debit cards) we use cash most of the time and only used our CC to buy large items (TV, airline tickets, etc). We never properly tracked where the cash went so when debit cards were invented we started using them for everything so we’d have a record in the form of our bank statement. Fast forward to the present and we use virtually NO cash. Other than parking meters or vending machines, I’d really have to stop and think where I’d be forced to use cash. We now put absolutely everything we can on credit and rack up the miles. By the end of February we’ll have the 4th ticket to Europe covered for our family holiday this summer. Every WEEK I review all the charges from the VISA website and update my spreadsheet by replacing the planned amounts with the actuals. Then I pay off the credit card. Yes weekly. I know I only have to pay monthly but I prefer to balance things up weekly. Once I’ve done that I assess the bank account and determine how much I can skim off and redirect to retirement savings, an extra mortgage payment, or the vacation fund. I skim off the “excess” every week before I get used to seeing it there piling up and start thinking of ways to spend it. It’s sort of like doing the pay yourself first thing lots of people do, but I do it after everything else clears because usually we come in under the planned amounts on at least a few discretionary items and I can take more than I would have it I had it transferring out automatically.
Just wondering if you are viewing the cash/envelope system as a permanent arrangement or a temporary way of getting things under control and instilling new spending habits.

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jolyn Reply:

Jenn,
I so appreciate your comments. Short answer: wait and see, because that’s generally how I roll.

Longer answer…
I see this more as being about mindful spending than strictly about cutting spending to the bare minimum. Yes, that’s the immediate goal with debt eradication and emergency fund building; but ultimately I am wondering how cash spending will help us (my husband and I) create and communicate about a budget and stick to it vs. reacting to tranx that were “too good to pass up” or “whoops I just forgot but we needed it anyway” and such and such.

That’s a bit vague and off the cuff, but time will tell after The Hubs returns (he’s deployed right now) and how it all works out. Cash is just a necessary, tangible way for some people to follow through on a budget, and we might be some of those people. Time will tell. I’ve heard lots of testimonies from people who went to cash, slipped back, looked at the numbers and ended up going back to cash.

That being said, we do have a CC that gives us points, etc. We used to use it just for gas and when we traveled/moved (which has been often) but after reading Dave Ramsey, we stopped using it even at the pump. Truth be told, other tranx would “slip” through on it and surprise me come time to reconcile. I do foresee a time when we might use a CC for set monthly tranx that you are paying anyway. e.g., we still put our Compassion International contribution on the card, but we’ll see…

The goal is to withdraw cash once (or twice) a month for variable spending. I categorize that withdrawal on mint.com based on what use the cash is intended for. So we will be tracking our cash spending that way. No random stops at the atm.

Oh my gosh, enjoy your European trip this summer! What fun! Where are you going? I’ll go check your site…:)

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Our Lives January 15, 2010 at 12:30 am

I started the cash system three months ago. And Dave Ramsey is right. It is a behavioral change. The first month was awful and of course I had to use the card toward the end of the month. The second month was better. The third month has been a bit challenging since I have forgotten some extra expenses on the children’s extras activities. But I have become more and more mindful of where the money are going. I have full report on where all the money goes with the zero balance budget sheet I created. I am currently using four envelopes – Food, Gasoline, Non-food and Baby. I am planning on adding gift/celebration and clothing in a couple of months.
I like reading your blog about your debt free journey. Thank you for sharing.

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jolyn Reply:

“Non-food” -hmmm. I kind of like that. No nickel and diming every envelope and robbing Peter to pay Paul.
Thanks for following along. I love hearing your stories, too!

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Christina January 14, 2010 at 8:38 pm

You can do it! We used a cash system the first 18 months we were married and it worked out well. Then we began using our cash back credit card- we never paid interest and got money back at the end of the year but have realized that we were buying way more than we should. So this month we’ve gone back to the cash system… it’s a bit challenging but we’re determined to make it work. My advice is to just keep trying- things will always come up- but onward and upward right?

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jolyn January 14, 2010 at 6:19 pm

Stacey,
The envelopes are beautiful. If I were crafty, I’d use them myself;-) I don’t know if I’ll ever use cash at the pump… I don’t drive around needlessly, so I don’t view gas as being discretionary. I will continue to just budget for that based on gas price and use the debit card, even after I’ve moved everything else to cash! At least, that’s what I’m saying now;-)

A friend of mine used to use a Kroger’s cash card, but she said even that didn’t feel the same as using cash, so she stopped. But I guess you were talking about using the card at the pump? That w/be a good option to avoid debit/credit altogether.

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Stacey January 14, 2010 at 5:56 pm

These envelopes are beautiful! Thanks for sharing them. Switching from using a debit card all the time is a hard thing!! Purchases have to be well thought out ahead of time, and ultimately saves money in the long run. The one thing I truly miss is pay at the pump!! I wish more stores took Sam’s club giftcards like Murphy’s! It tells you what amount is on the card, and “technically” you’re using cash.

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jolyn Reply:

Stacey,
The envelopes are beautiful. If I were crafty, I’d use them myself;-) I don’t know if I’ll ever use cash at the pump… I don’t drive around needlessly, so I don’t view gas as being discretionary. I will continue to just budget for that based on gas price and use the debit card, even after I’ve moved everything else to cash! At least, that’s what I’m saying now;-)

A friend of mine used to use a Kroger’s cash card, but she said even that didn’t feel the same as using cash, so she stopped. But I guess you were talking about using the card at the pump? That w/be a good option to avoid debit/credit altogether.

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Tam January 14, 2010 at 4:24 pm

3.4 pay increase…plus Bah increase…so what are your plans for that? I was thinking about trying to put that in a savings but then I am torn to use it to pay down more debt. I am fickle about it right now.

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jolyn Reply:

Tam,
What is the interest rate on your debt? Because if you put the raise toward that it’s likely better than any interest you would earn in short-term savings. Getting rid of debt is almost always the way to go! You can do it!

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Kelleigh @ Kelleigh Ratzlaff Designs January 14, 2010 at 3:38 pm

Oh, you can do it!! REALLY! If I can do it . . . the lady who was in denial about credit cards being bad . . . then you can certainly do it. It’s a good thing you are starting small this month, because then you will see what categories you need to add for next month. And, don’t be afraid to rob from your envelopes to cover another category. It’s not the BEST practice, but its not the end of the world. I STILL evaluate my envelopes every month. I’m a work in progress!

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jolyn Reply:

Kelleigh, you’re like, our biggest cheerleader!

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