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I’m Paying Cash for November and am Loving It

| November 18, 2012 | 10 Comments

I’m using the envelope system this month for the first time. I had heard it talked about a lot on Dave Ramsey’s show over the years and even watched my sister and brother in law jump on board with it but just never got to it until now. I’m finishing up Financial Peace University next week, a 9 week personal finance class, which my girlfriend and I are taking at a local church (yes, I’m a geek and I convinced her to take it with me). I got an envelope wallet in the class materials and felt motivated by the class to give it a try. I have to say, I’m liking it.

My Envelope Categories

The toughest part of doing the envelope system is the planning and timing. To do it right, you need to write out your budget for the month in advance. You need to then decide which budget categories to use cash for. I created cash envelopes for the following categories:

  • Groceries
  • Blow/Entertainment
  • Giving
  • Clothing
  • Toiletries/Personal Care/Home Supplies
  • Eating Out
  • Drinking (adult beverages)
  • Dates (any money spent with my g/f)

Before November began, I calculated how much cash I’d need for each envelope and in total and went to the bank to get the cash. I stuffed my envelopes with the cash and then the real change began.

When Using Cash, You Need to Plan for Purchases

Paying with cash takes a different mindset. When you’re using cash from a specific envelope to pay for things, you need to plan each day and/or purchase in advance. For instance, if you know it’s your friend’s birthday this week and you will be going out to dinner, you need to make sure you have the money from the right envelope that day, potentially before work, if you’re leaving directly from work. It takes a lot more planning to make sure you have the cash on you when you need it. It’s no longer okay to just reach for the debit card when you’re out spending money. Spending now needs to be planned. It’s a big change.

It Feels Different When Spending Cash

Dave’s been saying it for years and it’s true. Spending cash feels differently. My girlfriend and I went out to eat a couple weeks ago for my friend’s birthday. He invited us to join him, his family and other friends at a hibachi grill, which is a wonderful, but expensive experience. It ended up costing over $75, which is unheard of for me to be spending eating out, but it was a special occasion. I planned it in advance, had the cash in my envelope, and paid cash for it. It hurt a little bit. Definitely more than it would have if I would have swiped my debit card. The point here isn’t to make for a painful experience when joining friends for a celebration, but it is a reminder that money is scarce and hard to earn.

Take That, Month. I’ll Pay for You in Cash, Up Front

Using the envelope system has been a good experience. I’m going to try it again next month and see what comes of it. I don’t think it will change my life, but it’s actually fun to pay for the whole month up front, in cash. Take that, month. Your measly bills aren’t going to scare me. I’ll pay for you up front. :)

Cash is Time. Cash is Freedom. Cash is Scarce

That brings me to this point. Cash hurts to spend because it should. Cash is hard to make. We are trading our valuable time for it. Time that we could be out hiking. Time that we could be with our family. Time that we could be resting, praying, singing, golfing or changing the world.

If we’re going to work our lives away for this stuff, let’s let it slip out of our hands only when on purpose.. I’m finding that my budgeting is working much better using cash. I’m actually staying on budget. I’m actually knowing when to stop. It’s a new feeling for me.

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Category: Getting Organized

Comments (10)

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  1. I definitely see the psychology behind it but to me credit cards and cash mean the same thing. Cash almost seems like monopoly money to me. Sad but true.

  2. We tried a spending cleanse for the first time last week – actually wrote about it in this morning’s post. It was also about bringing back mindfulness to our spending – although I am not big on cash at all because for us it’s too easy to lose track of where it went.

    • Cash is very hard to keep track of. It requires writing down every purchase, something I haven’t gotten used to yet, but am working on. Nice work on the spending cleanse. I know those are difficult to do.

  3. I think where this would benefit me most is groceries. I think I sometimes shop a little blindly without thinking of how much something might cost-afterall it’s just going on the debit card. The only thing that I don’t like about the system is having all that cash laying around in different envelopes. I do think it makes you think about how much you are spending on certain items though.

    • I’ve had trouble with groceries this month. Twice, I forgot my cash when I went to the grocery store. I then used my debit card and messed myself all up. The biggest problem for me is remembering to grab my cash when going to the store. It will take some getting used to.

  4. I love how you have an envelope for drinking money. That is some serious planning ahead, my friend.

  5. Andi says:

    I have been wanting to try this… I’ve done it to an extent like withdrawn $X for the month, but never portioned it out specifically. I always seem to make a zillion excuses about why it’s too much work. I have a hard enough time trying to get to the bank just to cash my occasional check (sorry grandma!) but I think you’ve convinced me to get on board the cash envelope train. I might do it in two week segments though, ration for the month, but plan to replenish halfway through. I’m hoping this prevents me from any catastrophic screw ups.

    How have you liked Financial Peace University so far?

  6. Carla says:

    We live off of cash, but don’t use categories anymore. We used to, but I always ended up pulling out cash from the other envies. Some weeks we need more for food, other weeks other items come up and cost more. I figure as long as we’re coming in under what we have alloted for the week, it doesn’t really matter where it goes. :)

  7. I love my credit card rewards too much to pay in cash. I will always use my Discover instead of cash if given the choice. I wrote a post recently on how you can essentially make money by using credit cards instead of cash – as long as you don’t spend more than you would if you were using cash.

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