Cash: The Experiment

I’ve been trying to follow Dave Ramsey’s suggestion of living a cash-only existence. By paying for my membership to Financial Peace University (FPU) I also received a lovely wallet that contains envelopes in it. I have 7 different labeled envelopes in my wallet:

  1. Food
  2. Gas
  3. Pet Supplies
  4. Daycare
  5. Clothing
  6. Entertainment
  7. Miscellaneous

I have $820 a month that will eventually get put into each of these envelopes to pay for all non-bill expenses. But since I get paid twice a month and I don’t really want to pull out $400 at a time, I’ve decided to pull out money weekly, every Monday.

I made myself a “pay schedule” that tells me how much to pull out each Monday and which envelope to put the amount in to. I made it so that I was only putting $20s into each envelope so I didn’t have those confusing times of thinking “Well, I’ll put $40 in this envelope of $0 in that one but really there is $30 in that one and $10 in this one.” Just makes it easier to only put money in the envelope once during the month and make that amount be $20.

So I am giving myself for gas $40 the first week of the month and $20 for each addition. The reason that week 1 gets more is because I’m assuming that if it is a long month I’ll REALLY need to fill up by the time the new month arrives. I may change this to put the $40 on the back end so that it can cover two weeks if necessary. We’ll see how this month goes since March is a long month.

For pet food and supplies I am just giving myself $20 per week. So far I’ve used this money to buy cat food and dog treats. Because of the amount I had left in my envelope I bought a less expensive (but HUGE) box of dog treats for Jack at Costco. Seriously, there are enough treats in there for him to have some every day for a year.

Food I am giving myself $100 per week. Last week I only used $70 of this. Paying for food in cash hurts. I didn’t think it would. But seeing those $20 in my envelope slowly go away makes each purchase a conscious act. When I drove up to Starbucks I would say “If I go buy that latte I’ll have only $40 left for the next 3 days. Is that enough for the purchases I have coming up?

When I did a trial run of the envelopes for a week before March started it also made a difference. I had $8 left in my food envelope and BF and I were buying snacks for game. I grabbed the stuff I wanted. Then I calculated how much it would have costed. Old SS4BC would have just bought everything. New cash only SS4BC noted that the total purchase was more than $8, so I put one of my vitamin waters back. It wasn’t huge, but it was a realization that I was overspending when I put each purchase on plastic.

Clothes I’m only giving myself $20/month. Since I started this debt-free journey I have not spent much money on clothes. Mainly because I don’t feel like I deserve new clothes until I’m credit card debt free. I have more than enough clothes to get me through just about any situation. The $20/month is to save for new shoes because I tend to go through about a pair per year, and the pairs I like cost $70. The extra is for any other little clothing purchases I decide I want to make. I have none in mind at the time.

Entertainment I get $40/month. This past weekend BF, my sister and I went to see a play put on at my school. We had a great time, but I spent my $20 entertainment fund + $5 of my miscellaneous fund. It seems like the miscellaneous fund is just becoming a toilettries/overflow from other envelopes. We had a fantastic time at the show though. =)

I get $20/week ($100/month) for miscellaneous expenses. This is a “catch-all” for toiletries, gifts, electronics, etc. I’m curious to see how quickly this envelope grows or whether it shall be a highly used envelop like the food one.

The only main downfall I’ve found from using envelopes was how to pay for purchases at stores where I get things in more than one category. I’ve ended up simply buying things in two purchases. So for instance, when I was at Costco I did one purchase to buy dog treats and then a separate purchase to buy the almonds that I wanted as a snack food. The cashier’s didn’t mind and there was no one in line behind me, but I still felt a little weird separating my purchase out like that. But it helped keep my money straight in each envelope.

According to the Costco cashiers, people do stuff like that all the time so I shouldn’t worry about it.

BF and I have both noticed a different in my spending habits the past two weeks. Seeing the little differences that I’ve made has encouraged him to consider using a cash only system. He’s just not quite sure how he’ll do it. I mentioned to him that one way he might start is to keep using his debit card but use a program like Mint or Quicken to monitor his transactions. I’m not sure if Mint does this but I know that Quicken will let you designate how much of your  money you want spent on certain items and then it will send you an email if you’re getting close.

That sort of budgetting might be easier for him now, but I’ll let him decide what he wants to do. For now I’m really happy with how the envelopes are going. I didn’t think I would like it and it feels a little weird at times paying for everything in cash, but I can already see that I’m saving money this way.

Another downfall though? Online shopping… a lot harder to do… which is probably a good thing!


13 Responses to Cash: The Experiment

  1. Cash is soooo hard, good luck!!

  2. It’s neat to read about. Good luck!

  3. TeacHer says:

    If I had to name the #1 thing I did that got me out of credit card debt, it was moving to an all-cash system. It REALLY helped. You seem very committed to getting out of debt, so I know it will work for you. In fact, I’ve been meaning to leave a comment to let you know that I really admire you. Even when a major life event comes up (moving, your sister moving in, etc.) that some people might see as a setback, you persevere and remain committed to your goals. I can’t think of another blogger (myself included) who has kept their eyes on the prize in the same way you have. Great work, and I can’t wait to read your debt free post some day soon!

    Side note: I now use my cc for EVERYTHING but pay it off every month – I get great rewards with my card (sorry Dave!).

    • SS4BC says:

      Awww TeacHer, you flatter me. I’m trying to persevere. It doesn’t come easy, but I’m just so sick of this debt that I don’t know anything else BUT to persevere at this point.

      I truly appreciate your kind words, they’re a huge inspiration to me! =D

  4. Emma says:

    I’ve been following Dave’s program along with you for just about the same amount time (through his book, not FPU). I really admire how you’ve stuck with it. I have a lot of credit card debt to pay off, and am now living cash only. Like you mentioned, I found taking big chunks of cash out twice a month to be a challenge, so I love your weekly idea! (That $30 in one envelope, $10 in another was such a pain!)

    I always get stuck on how much to put in the envelope for food, and how much for “extra”, so I enjoy reading about your ideas and results. Keep up the great work! Here’s to being debt-free one day 🙂

  5. PBMFMM says:

    I also use a cash system and take money out weekly, the hardest part I have had is getting the exact amount so I might change mine they way yours is and get even amounts out. My checking account is in another state so this makes it harder but the rewards are well worth it. I’m still plugging away at my debt and I think your doing a great job so keep up the great work 🙂 Oh BTW when I took my out bi-monthly I spent waay more so I switched back to weekly.

    • SS4BC says:

      Yup, getting amounts that aren’t in increments of $20 was too hard. So I think this weekly schedule will work well for that.

  6. Wow, this is great. I don’t know if I can go cash only because I am the opposite with cash in hand- I go crazy. For that reason, I have pretty much kept no more than 10 on hand at any point and carry around a mental image of my checking account. I wonder what Dave would say about that.

    • SS4BC says:

      If I have cash AND a card, I spend the cash like crazy. There is something about having plastic in my pocket that makes cash seem worthless. But if I JUST use cash then it becomes more valuable because there is no plastic as a “safety” net.

  7. Red says:

    Great post. I think the cash-only system is something a lot of people have misconceptions about. For instance, I heard a lot of “I could never do that – I spend MORE when I use cash” when I did cash only. Unless your spending is totally out of control, there’s no way you would spend MORE with the envelope system – so long as you’re strict with yourself about not withdrawing more cash if you run out. I withdrew a set amount every week, and like you said, it hurt me to spend the money because I knew if I bought one thing it meant I couldn’t buy another. Or it might even mean I couldn’t make it through the week. Now, when I withdrew cash WHILE using my debit card, I definitely treated cash like fun money and spent it however I wanted, but that’s a different story. Keep up the great work!

  8. I’m trying to do the cash thing too. I did well in January and February. March is starting to be a real downer. @_@;;

  9. Wow. I’m not sure if I could switch to a cash only – but I can see how it would make it so much harder to go over budget – you see the money physically leave you – which is painful….

    Good for you!

  10. Pingback: Cash: The Experiment Part 2 « Small Steps for Big Change

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