And the envelope, please

I woke up this morning thinking about envelopes. What an exciting topic to start your morning!

Actually, this had to do with our "Financial Peace" class at church. What I've read and heard over and over by Larry Burkett, Howard Dayton, Dave Ramsey and some wise people in our class is that using the envelope system in managing your money really works! Why did I take so long to learn this?

Basically what you do is divide up your expenses in various categories and then put money in different envelopes and spend the money out of that envelope for only that category. One for food, one for eating out, another for miscellaneous, one for gas money, and so on.

Susan and I are finally starting to adopt this system. Well, sort of. At each pay period, when we deposit our checks, we'll take out a certain amount of cash and put it in marked envelopes for each of us. Right now the only envelope in my pocket is for Miscellaneous. I already blew the money in my Eating Out envelope -- and so no spending on that category until April 15, when I get paid again.

But we're still stumbling over one "minor" detail -- the checkbook. While we've cut up our credit cards, I realized this morning that a checkbook can almost be like a credit card. You don't see the cash leaving your hand. And it's a lot easier to let things get out of hand, and to overspend, when you use the checkbook excessively.

So, when Susan woke up I told her that I want to limit our spending with our checkbook to a minimum -- paying bills, our tithe checks-- and not much else. We each budgeted some money to buy clothes this month. It would be so easy to overspend on these items if we used the checkbook. And so, I'm proposing that we put the cash in envelopes and spend only that amount at Penney's, Dillards, or where ever. If we feel the urge to spend a little more on clothing this month, then I want us to take that extra amount out of another envelope (Ouch, you mean I'll then have less to spend in eating out? Yep. We'll need to stay home and eat bean soup).

I really think this system will help curb what Bruce Ammons calls the "Miscellaneous Monster." Susan and I are going to try this. And see what happens.

Anyone out there use the envelope system? Would love to hear how it works for you.

Jim