Friday, January 13, 2012

Debt weapon #3

I couldn't come up with a more creative title so I've been dragging my feet in writing this. But I am absolutely convinced that this change of habit was big in helping ME keep our budget each month.

I'm a spender. I generally don't buy big things, but I can $25 us at Target many times over, busting our budget. I was frequently going over our grocery budget, in part because we didn't budget enough, but even when we did I was still going over. We were still using our debit card for everything (the credit card was long gone). We kept track of our spending in a computer program and I always knew where we were at, but we kept going over.

Until we became a (mostly) cash-only family. We use cash for most of our expenses. It took a little getting used to and a little trial and error. For example, we tried doing cash for gas, but the envelope was either at home or with the wrong person. For gas, we keep using our debit card, which actually keeps us OUT of the gas station and less tempted to buy a drink or candy. But for groceries, personal spending money, clothing, gifts, personal care (haircuts, etc.), and entertainment we get cash out and keep it separated by envelopes (i have a special wallet with several compartments). It is a little more painful to spend cash. I ask myself "do I really need this" with a lot more clarity when I'm spending cash versus when I'm swiping my debit card.

The separating the cash by envelopes (or compartments) was also key. Otherwise mama was likely to buy herself a pair of shoes with money that should go to groceries.

For groceries, we get the money out every week or two weeks for what we will need. The other categories we just get out one lump sum each month. If we have extra left over, it just gets added on to next month. Some months (like this one), no one needs clothes. Other months it seems that everyone needs new underwear and shoes, so the building up of money in the envelopes generally works well.

This was huge for taming my spending. Not only did the budget free me to spend without guilt yet give me guidelines to stay in, it also gave me a much better visual of what was left to spend and gave me an emotional checkpoint to keep my spending in check.

I use me a lot because I'm the one that does most of the shopping for anything and everything our household needs because I love to shop. My personal spending money was almost always gone at the end of the month...somehow the hubby never spends his and saves up to buy things.

And unlike the credit card commercial, I have never found that cash slows the flow of activity in the checkout line.

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