The Beginning:Have you ever been looking over your credit card spending and started noticing odd charges? Not those $5 lattes you forgot about, I mean spending that wasn't you or your husband? Well I did, on multiple occasions. Come to find out, someone was using my credit card fraudulently! Gasp!
The Catalyst:
I wasted hours of my life on phone calls with customer service and the fraud department trying to straighten out something that I didn't do. Needless to say after it happened to both our cards with the same company I got "upset" to put it lightly. Why was I fighting for my own money? Why was I having to prove my innocence? As soon as I got off the phone I googled, "cash only guy" because I couldn't remember the guys name for the life of me. Of course Dave Ramsey's name came up first. I looked up his book and immediately did what any cheap person would do, I went to the library! I checked out "Total Money Makeover" (this was before my Kindle Fire days).
The Answer:
I couldn't wait to read about a way of life that was free from credit cards. Which seems completely impossible at the time! I had questions and the book had the answers. By the time my husband got home from work I was ready to make my case. Thankfully, my husband is the saver of the two of us, so it didn't take much to persuade him. It was a defining moment in our lives. A moment that would alter the course of our future in good way. It was scary, it was crazy, it was not normal, but by golly we were gonna do it!
The Change:
And we did. We made a written budget. In Dave Ramsey's plan you start with your monthly income and then you divide it all up between what you spend which may include retirement and savings. I can't go into all the details obviously because it took a whole book for Dave Ramsey to communicate the plan. I recommend that you read the book or attend Financial Peace University (you can do this via book, online, or in person at a church in your community). I also recommend that you listen to his radio archives. My goal is to share that it is possible to convert your way of thinking about money and debt.
The Cash Envelope System
- I went to Targets dollar section and picked up a plastic coupon accordion book.
- When I got home I got out a permanent pen and wrote out my categories.
- Groceries
- Allowance
- Dog
- Baby
- Cleaning Supplies
- Restaurant
- Note: Your utilities, gas and other things can obviously be paid using a debit card/check.
- Cash Back Debit Cards exist: Check out the Perk Street Debit Card.
- Go to the bank and get out your cash budgeted for your categories.
- Yes, it is a little work but once you figure it out you won't have to do it again.
- If you have $30 budgeted for gas for the week, you'll need to make sure you get out a $20 bill and a $10 bill for that envelope.
- So for example (these are just random weekly numbers):
- Groceries- $75
- 3- $20's 1- $10 1-$5
- Allowance- $25
- 1-$20 1- $5
- Dog- $25
- 1-$20 1- $5
- Baby- $25
- 1-$20 1- $5
- Cleaning Supplies- $10-
- 1- $10
- Restaurants- $5
- 1- $5
- When you get to the teller, you'll need to flip over the withdrawal slip and ask for:
- 6-$20's, 2- $10's, 5-$5's
- Keep these numbers on a little slip of paper in your wallet so you don't have to remember each time.
- Divide and conquer.
- Split your money up into your plastic coupon book and keep it in your purse like a wallet.
- You only have the money in those divisions to use for those items.
- When the money is out, it's out!
- You'll have to do this little thing called "waiting" until your envelopes are filled up the following week.
The Payoff:
You may be wondering what could be worth all this work? What does all this lead to? What about all those cash back rewards? Well let me tell you. Those little pit stops at the coffee shop and retail therapy sessions at Target add up over time. When you use cash, you suddenly become mindful of where your money is going because it's not a mindless swipe. You have to think about what you are buying and "if" you can afford it.
If you listen to Dave's show you will hear all these insane people that call in and do what's called the "debt free" scream. It's when they call in and let Dave know how much debt they paid off and how long it took them. Then at the count of 3 they yell, "Were Debt Free!"
Young, old, married and unmarried people are paying off mortgages, car loans, & school debt in 3 years and under. It's kind of nuts. But when you get serious about your money and say no to debt, you will find out just how fast you can get those weights off your shoulders!
Have you heard it said that two things that married people fight about are money and "marital relations"? Well imagine removing the money fight from the equation. Think about the arguments, stress or worry you have had in the last week. Was it related to money? Since the day we decided to "go gazelle" as Dave Ramsey calls it, we have eliminated all our debt and have not had a fight about money since that day. Call it a miracle, call it common sense, call it crazy, but it works. You just have to be willing to put in the effort.
Please feel free to comment or post questions you have. I'd love to help clarify things as well as hear from other people that have found success with cash systems.
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