Frugal cash. . . .

In September, I signed up for one of Dave Ramsey's local Financial Peace University courses. Although I feel that I've learned quite a bit on my own and through my regular blog reading, I wanted to go through FPU with a group of like-minded individuals, as a way to jumpstart my motivation to get out of debt. Although our group was small, there were a couple of people there who were just at the beginning of their journey, and a couple who were basically at the end of their journey and thinking about next steps. I fell somewhere in the middle, in that I already have "Baby Step #1" completed ($1,000 emergency fund) and I've been diligently working multiple part time jobs.

Unfortunately, about halfway through the course I had to stop attending, after I picked up an additional job; having "class" one night a week while attempting to TEACH classes for the first time was just too much for me. Although I did drop out early, I got what I wanted out of the class; a new sense of purpose, the knowledge that I am NOT in this alone, and motivation to continue on my path towards a debt-free life.

If you are struggling to correct the financial mistakes of your past and you are not familiar with Dave Ramsey's Total Money Makeover, I highly recommend it. One of the suggestions in the book is to use the 'cash envelope' system in which you budget for various costs (such as groceries, entertainment, gas, etc) and pay for all of those items in cold, hard cash. Since part of my course registration included my very own Dave Ramsey cash envelope system, I started using it in mid-September and I haven't looked back since!


Essentially, I pull several hundred dollars out of my checking account at the beginning of the month for groceries, entertainment, gas, and "miscellaneous" purchases. The theory is that we spend LESS money when we have to part with actual cash (rather than throwing down the debit or - horrors - credit card), and that once the money in the envelope is gone, it's GONE. No spending a little extra on this or that, because the money literally isn't there.

Although I don't follow all of the "rules" in that I often borrow money from one envelope (usually entertainment) to fund purchases in another category (usually miscellaneous, which is the bane of my existence), the system has worked well for me. Although I love the convenience of using my debit card at the grocery store, Walgreens, Target, and any of the other businesses I frequent, I never lose track of how much I've spent anymore. If I have $25 left in my entertainment envelope, then I know exactly how much I've spent that month, and what's more, I know how much I have remaining to spend. That's pretty huge for me, as pre-frugal-living I frequently lost track of both my income and my spending.

This is definitely not an 'easy' system to use or to get used to. I'm still figuring how the best plan of attack, and have had to adjust my habits to include actual change! I haven't carried nickels, dimes and quarters around in my purse in years! On the bright side, my change jar has never been more full! Although I'm using Dave Ramsey's "system", this is something you could pick up at the local Target or Office Depot store; get a little expanding file folder (I believe they come in 'check' size, which would be perfect for cash) and you're set!

Does anyone else use the cash envelope system, or anything like it? Do you have any tips to share? If so, please comment!

P.S. If I'm not mistaken, this is Finally Frugal's 300th post! I wonder how many there will be when I can finally announce that I'm debt free? (-: