Do you remember when you were learning to ride a bike, and your parents would raise the training wheels little by little until you were ready to ride without them? That’s me learning to use an envelope system. We still used a credit card for a few purchases since starting, but the money we spend automatically gets set aside. I then make extra payments to that
card loan with the budgeted money designated for that purchase.
My new mantra: The credit card is not my extra money tree. The credit card is not my extra money tree. The credit card is not my extra money tree.
As a former bean counter, I created complicated spreadsheets to try to keep my finances in order. It used to take me a lot of time to transfer information from my banking accounts into the spreadsheets and then analyze them. It also didn’t do me any good when we felt like spending. I just ignored them. I don’t want to ignore this system. It feels like freedom. Cheesy, right? I know, but a huge weight has lifted from my shoulders. I am the sole person responsible for our money, and I definitely feel the burden at times.
I chucked all of those semi-useless spreadsheets but for the budget and list of bills with due dates and amounts. With the ease of the virtual envelope system, I am able to spend time doing other things that I sorely needed more time for.
The visual component is also huge bonus for me. I can physically see where every penny should go – and I do track it to the penny -. Instead of paying bills and dumping the excess funds on the credit card at the end of the month, I am required to track all of our purchases as they come in. Having the credit card and debit card purchases lumped together helps keep the purchases related. A huge bonus is credit card transactions immediately take the money out of their envelopes and drop it into the “money for credit card” envelope, including finance charges. It took me a few days to figure out why that envelope kept increasing. ::sheepish grin::
June was a perfect month to start using the software Mvelopes. There have been 3 major expenses and money is t-i-g-h-t. Before this month, the overages would have sat on the credit card. Now I am able to work them in. There is a bit of a carryover on the credit card until payday, but it’s now accounted for with the next paycheck. I am debating on when I should set aside an emergency fund to cover things like this. I would like to wait until the main credit card is paid off, but we’ll see how things progress.
I highly suggest trying Mvelopes if you don’t already have a solid system in place and are not keen on using strictly cash envelopes. It is also FREE money management software. How’s that for frugal? Click on the logo to get started! (not a sponsored link)