The Envelope System

Doesn't it seem like cash is so old-fashioned these days? Everything is charged, financed, or, at best, paid for with a debit card. Well, I am here to tell you that paying cash (like, actual dollar bills) for things will greatly decrease your spending habits and help you get control of your money.

Used to, my husband and I used debit for everything. This made it terrifically difficult to control how much money we were actually spending. We just swiped the card and checked our balance every once in awhile. When we switched to cash, we saw a HUGE decrease in the amount we spent. Because, as Dave Ramsey says, paying cash registers as pain in your brain. It's hard to watch those envelopes get smaller as the month goes on. So, you spend less so they stay fat!

Today's post is a financial lesson and craft project all in one. My first objective is to encourage you to start paying cash for certain purchases so that you can better control your spending.

Here are the categories we use cash for:
groceries
restaurants
clothing
gifts
discretionary ("blow" money)-my husband and I each get our own envelope for this

Since we already use the envelope system, I spent today's challenge making my own, custom envelope system. And, I'm going to show you how I did it!

First, I found an envelope that was big enough to fit cash in. It was from some sort of junk mail item. I carefully pulled apart all of the seams and laid it out flat. I found some cute scrapbook paper (12X12 sheets) that I had leftover from a previous project. You can also use plain cardstock and stamps for a more custom look. I traced the taken apart envelope onto the back of the scrapbook paper and cut it out.

Then, I just folded it the way the original envelope was folded. I used a glue stick, but double sided tape probably works better.

I labeled each envelope with a Sharpie.

I used the scraps to make "ledger" sheets to put inside each envelope. That way, we can write down what we spend so we know where our money is going!

How God Used Dave Ramsey To Completely Change Our Lives

Bear with me, as this testimony may get a bit lengthy :)

Back in 2008, several people we knew took the Financial Peace University course at our church. We saw it advertised quite a bit, but decided it wasn't for us. We made good money and had no credit cards, so we thought we were doing quite well. That August, we found out we were expecting our first child. And, it seemed like everyone was talking about FPU. We decided to try it out, you know, just in case we ever found ourselves in financial difficulty.

As soon as the class started, we made our budget and really started sticking to it. We prioritized our spending and made LOTS of cutbacks. We went from eating out about 5-6 times a week to twice a month. Matt started listening to Dave's radio show in the afternoons. One day, Dave mentioned that if you have a large expense coming up (like the birth of a child), you should stop the debt snowball and start saving as much as you can. Once the big event is passed and paid for, then throw what is left of that money toward your debt. We did this and over the next few months, we were able to save over $10,000.

In November, I got the opportunity to go back to my old job (I was in nursing school and not working at this time). I accepted because extra money is always great! The same week that I started, Matt got laid off from his job. What timing. That began 2 years of financial turmoil in the life of our family. Due to the recession, construction jobs, even corporate ones like Matt had, were virtually impossible to come by. He applied for everything he could think of. We even had to move out of our apartment and in with friends during this time. What was meant to be a "few weeks" turned into 5 months living in a spare bedroom. And, yes, that included not having a place of our own to bring our newborn baby home to. As a first time mom, it's devastating to not be able to decorate a nursery and prepare for baby in your own space. But, how blessed we were to have those friends!

Because of gracious friends, my small, part-time income, and Matt's unemployment benefits, we were able to save even during this time. Then, 3 weeks after the birth of our daughter, Matt's dad passed away. He had owned his own business doing custom home building and remodeling. Within a few weeks, several of his clients were calling Matt to come finish what Roger had been working on. After a couple weeks of commuting, we felt that God was leading us to move for Matt to take over the business full-time. So, we packed up our stuff (which was already packed, in storage) and headed out here. We were blessed with the opportunity to live in Matt's granddad's house for just the cost of bills.

Soon, however, those jobs were complete and it proved tough to get much more work. Around the time I finished nursing school in December of 2009, our savings ran out. And, to add to that, I was unable to find a job. The nursing field was hit by the recession, as well. The answer I got from everyone was "we just don't have the money to train a new nurse right now." Even more, in January, we found out we were expecting another little one.

The next 7 months were some of the most stressful and horrible of my life, although they were filled with so much joy. Does that make sense? The stress and horror came from not knowing if we'd be able to keep the lights on day to day. The joy came from our marriage partnership, our sweet baby girl, and the growing baby inside me.

Even through all the uncertainty, God was good. Somehow, all of our bills got paid every month, even though we weren't quite sure where the money was coming from. My daughter and I both got on Medicaid and we applied for food stamps. For the applications, I had to document our income and provide verification of it. I could document how much money we deposited into our account, but didn't really know how to verify where it came from. All I can say is that God worked miracles during those times. Money literally came from Heaven.

Around the time that our second daughter was born, Matt started getting some work again. Not super steady, but work nonetheless. Life was still very tough and by the end of the year we were relying on Christmas and birthday money.

Then, the next miracle. The week before Christmas (2010) I applied for a job at a psych hospital. I didn't really want to work psych, but it was a new posting I hadn't seen before, so I thought I might as well apply. The same week, Matt's uncle asked if he could start doing some work over there after Christmas. A couple days before Christmas, the Director of Nursing at the psych hospital called me and asked me to come in and visit with him. I went the next week and he hired me on the spot. I applied for this job on a whim, but ended up loving it! And, Matt has been overly busy with work since the beginning of the year. All of a sudden, when 2011 hit, we had more work than we could handle! Praise the Lord.

Because of Dave Ramsey and FPU, we made it through these past 2 years without adding a single penny to our debt. We worked hard and relied on God and He provided. And, no, I don't believe that God EVER uses debt as a way to provide for His children.

Proverbs 22:7-The rich rule over the poor, and the borrower is slave to the lender.

Romans 13:8-Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law.

Because we didn't dig our hole any deeper with new debt, we were basically able to pick up where we left off. We did have to redo Baby Step 1 and we have a few "catch-up" purchases to make (eye exams and glasses, things for the kids, etc.) but we are no worse off than when we started this journey.

The joy I felt when we transferred the last of our $1,000 into the savings account was amazing. Such a burden lifted off. Making our budget has become a fun time because we can actually put stuff on it besides electricity, water, gas, and food.

Had we not learned to live off less than we make and not learned what budget items are actually priorities, we would have come out of this trial with loads of debt and our 2 year emergency would have become a lifetime of financial devastation.

This is why I am so passionate about Dave Ramsey and Biblical finance. It changed our family tree and I hope and pray you will let it change yours.

By the way, when we moved and found a new church, Matt began the process of starting an FPU class before we actually joined. We are now in the 3rd semester of teaching it and we are so blessed to see it change other people's lives like it did ours!