Financial Overhaul

A few months or so ago I was in the waiting room at my podiatrist’s office reading the obligatory magazine article while I waited. I’m not much of a magazine reader, but since I wasn’t currently working on a book and had already finished the Reader’s Digest for the month, it was either magazine or TV. Given that choice, I’ll always choose magazine. (Of course I suppose I could have laid down for a nap… maybe next time…)

At any rate, I thumbed through the magazine and found a few articles of interest to me. One of those was about "living debt-free and loving it" and I must say I’m always interested in what people mean when they say "debt-free" so I turned to the article and started reading. A lot of talk about paying off debts – student loans, car payments, credit cards, etc. I typically tune that stuff out because, aside from our mortgage, we have no debts. And then there was this bit about some book from Dave Ramsey and how he talks about having money envelopes, and living on your cash, and staying within your means. This is where I suddenly sat up straighter and started reading more carefully. You see, in my house there’s an issue with credit card debt. Not so much that we carry a balance on our cards as that we use the cards to pay for whatever, whenever, and then when the paycheck comes I steal from the grocery budget and savings and gas money to pay for all the stuff we put on the cards. So there’s never a balance month-to-month, but we also managed to almost never have money to put in savings. This frustrated me to no end, and try as I might, I hadn’t come up with a solution for it yet. And so I read, and absorbed as much as I could before getting called back to my exam room.

Time out while I had the nurse look at my feet, answered a bunch of questions, and then it was back to the article while I waited for the doctor to arrive "shortly" – a phrase I dread and never believe, but for once in my life was actually glad to hear and secretly hoping he’d take a while so I could finish reading the debt-free article. (I’m happy to report he did take long enough that I managed to read the entire article and have time to think about how it might work for my situation and then take a small nap before he came back to the room! I must make a point to look up "shortly" and correct my current definition.)

The meat of the article (and actually now that I think about it, this was just one of the "reader comments" and not actually part of the article itself) that interested me went something along these lines: Organize your finances such that you pay your bills and then you pay your debts, snow-balling your efforts to pay them down so that as you pay off one, you take the money you had been applying to it and apply it to the next one and so on until they’re all gone. And then, if you have money left after this, you take it out as CASH (yikes – this was the biggest change for me) and put it into envelopes, marked as the different types of spending you need. You split your money across your envelopes, however you see fit, and then when you want to buy something you go to your envelope and if there’s money in there, good for you and you can use up to that amount. If not, too bad so sad, and you wait until the money is there. Put away (or cut up if that makes this easier) your credit card and stop using it completely. Go totally cash-based.

So I got to thinking, and put together a plan that I talked over with my husband. We have since implemented the plan and, while it has taken a little getting used to, it has helped us to feel more secure in our finances and use the grocery money for groceries instead of paying off the credit card purchases for the month.

All in all, I’m quite pleased with how it has turned out. There’s an envelope for pretty much everything, and the things that don’t have an envelope come out of our individual spending money. It has been working wonders on our savings account, our pantry and freezer stock, and the financial aspect of our marriage. I’d suggest something like this to anyone who is looking for a good way to keep from spending money you don’t have yet! It worked for me, and I’m sure it can work for you too!