Our church is starting Dave Ramsey's Financial Peace University. While we don't have any debt other than our mortgage right now (although I am sure we will accumulate some medical debt with the baby), I think it will be good to go through it and get more saving and investment ideas. Have you ever taken the classes?
You probably know that a big part of Dave's system is using cash envelopes. I definitely like the idea behind cash envelopes--giving every category a budgeted amount and staying within that amount. But for us, the problem we've ran into in the past is it's not always practical.
For example, let's say you're at the grocery store (a big one like Walmart--wink), and you happen to pass by a really great kids' clothes' clearance: a dollar for shirts and a few dollars for pants. This is a great deal, and you can stock up on sizes the kids will need for next fall, but you only have your grocery envelope with you, because you didn't know you would need to take your clothing envelope with you. So do you use the grocery money for the clothes and put clothing money in the grocery envelope when you get home?
Or let's say you go to the park with a friend. Afterwards, she suggests taking the kids out to lunch at somewhere like the Pizza Hut lunch buffet. But you didn't anticipate this, so you don't have your recreation envelope with you. Do you just go ahead and use your debit card and try to line everything up later?
It's situations like these that caused my husband and I to decide that, for us, it was just easier and more practical to use one big cash envelope for everything. No more accounting headaches or unpredictable situations where you don't have the right envelope. There's just one envelope with grocery money plus gas money and spending money inside.
As we go through the classes, we may go back to the old cash envelope system, just to give it another try. Plus, I think the envelope system included in the Financial Peace kit is more like a wallet, with all the categories included inside. That would definitely make it easier to stay on track.
I'd love to talk about emergency funds, too, but let's save that for another time!
So this Coffee Talk Thursday, let's talk about it! Do you use a cash envelope system? Do you love it or also find it can be problematic? How do you make it work for you?
(linked to Works for Me Wednesday)