About three years ago, my husband and I looked at each other and realized that our spending had gotten out of control. Incredibly horribly way out of control. We’d tried to budget and had managed to beat back some of the problems, but it just wasn’t working.
At the time, we had two separate accounts. Mine was for the household expenses (food, clothes, gas, etc.), his was for the static bills (mortgage, electricity, etc.). The problem was… I was still paying for everything right off the debit card. I thought to myself: if I don’t have money in the account, I won’t buy it. But it didn’t seem to work. I wasn’t accountable for what I was spending because even though it was linked to a cash account, I couldn’t see it. Touch it.
And thus, started the cash only budget.
For the last three years I have taken money out of the bank twice a month when I get paid and put it into little envelopes. The folks at the bank remember me: I’m the crazy lady who has very specific ideas about how she gets her cash and doesn’t like fifties. It’s taken me some time to figure out what I’m budgeting for and honestly, its still an evolving process.
Right now, I have the following envelopes that I fill twice a month: gas, haircuts, kids, piano lessons, books/music, household. If I have to go shopping before I get cash? I use the debit card that comes out of that same account and subtract that from the cash I get. And sometimes that’s a very calculated thing, like when BJ’s sent me a $10 gift certificate if I use my MasterCard. I’m not going to sneeze at ten bucks! So I shopped first, paid with my card, then took out that much less when I hit the bank right afterwards.
Everything else is paid electronically and is mapped out and budgeted. The husband pays the biggest bills, and I’ve got a smattering of other bills now that our jobs have shifted somewhat.
This methodology has been very very helpful when budgets have needed to change. After Katrina, when gas prices went up so remarkably, I realized that I was stealing from the food money in order to keep the cars on the road. Two things happened. We immediately changed out driving patterns to minimize gas usage (really freakin’ hard with two kids going in opposite directions!) and we increased our gas budget after figuring out where we could pull it from.
A few years later, here we are with that same gas budget… and lower prices. But we’re comfortable with the current budget, and gas prices could go back up. So we certainly don’t want to take that money OUT of the budget. Instead, we know camping season (and for us, that means towing season) is coming, with increased cost for gas all around. So every two weeks, when I put new money into the gas money envelope, I take out what was left over and put it away for the summer vacation fund. Specifically ear-marked for towing gas cash, and as a just in case oh frak gas went back up to $4 a gallon fund. Just in case.
I don’t want to get caught out again. And that’s what this budget is all about.
April 21, 2009 at 5:07 pm
Yay for you!! We have always budgeted and spent in a similar fashion. And, like you, we also found a way to reallocate money to increase the gas budget and haven’t downsized, knowing it will likely be needed again. We are using it to contribute to our “new car savings”. With continued careful spending, we will be buying a second car with cash, in a few months!
Kristina (Liz’s friend)
April 21, 2009 at 5:11 pm
Whoa, awesome on the new car!! We have car payments still (the truck) but as soon as Chick is out of private school, I am planning on taking that extra money I’ll have each month and paying down the truck rapidly. I already live without it (although I MIGHT buy a family treat the first month) so it might as well go towards paying a bill which needs to get paid! I’d like to have no car payments again within the year, if we can manage it. We did almost pay cash for the truck, so at least I know there isn’t a long way to go (I think).