I've got some down time today, so I thought I'd take the time to post a blog about our new budget/spending plan. I've mentioned a couple times that on July 1st David and I will start an envelope system (I'll call it an ES). We'll essentially be following Dave Ramsey's plan (http://www.daveramsey.com/). It's something I've been hearing and reading a lot about lately and I have a couple friends who have recommended it. Our budget works when we stick to it, but lately that just hasn't been happening. And while things are much better on the financial front then they were a year ago, we could be saving more and repaying more. So we'll use our regular budget that I've been posting on here, but we'll do it with cash instead. We've sat down and come up with a couple guidelines for our ES.
1. Categories: These will be the envelopes. I should add that all bills will still be paid with the debit card or web bill pay.
- Bear (Pet)
- Entertainment/Dining Out
- Spending Money
- Travel Savings
- Auto Maintenance
2. The Plan
- On the night before payday we will sit down and write a budget for the next pay period (2 weeks). Each budget will be different depending on the activities and needs during that time.
- On payday, I will go to the ATM and withdraw all the cash we will need for that period.
- Gas will not be pulled out in cash, but will be put on a Walmart gift card. (This is dependant upon the price. Walmart is almost always much cheaper after the 3 cent discount, but if it's not, then we'll get it somewhere else). Gas will be purchased on the first day of the pay period.
3. The Rules
- If one category goes "negative" we can withdraw from another category, but NO going back to the ATM.
- At the end of the period, all remaining funds will be pooled and re-budgeted into the next month.
- Re-budgeted money will take the place of the money from the following pay period. Thus leaving more money for savings/debt repayment.
- There will always be some money on the debit card for "in case". But at the end of the period all money on the debit card will go to savings/debt repayment.
- Any additional income, or found money will NOT be budgeted into the plan, but go straight to savings/debt repayment.
So that's the plan for now. Of course, as we go along we might need to change and tweak some things, but for the first 2 weeks at least this is the general idea. I will be using regular 'ole envelopes and I have them in a zipper pouch in my "money binder". We will each keep our spending money on us, and take the envelope we will need with us when we leave the house. I won't keep all the money on me all the time.
Feel free to share your thoughts and ideas, too. I'd love to hear them!