Friday, November 13, 2009

Using the envelope system

This month we began using the envelope system.  I know quite a few people who swear by this method, but I have not been sold on the idea.  I like to know where every single penny is going, and I actually really enjoy importing all of our spending into an excell worksheet.  I don't remember where I heard it, but several months ago I heard someone say something along the lines of "would you rather know where every penny is going, or stay out of debt?"  It stuck with me.

We currently host an exchange student from China.  We have participated in the program for a couple years now, and absolutely love it.  It has been so interesting learning about other cultures, and I love having a friend around the house when Tony's on the road.  An additional perk in doing this though is that we get paid, $550 per month, to open up our home.  Since I'm a SAHM, this money has helped us make it through each month and we definitely rely on it to live!  Last month we found out that this will be our students last quarter with us.  She had planned on staying with us until June so it was a complete shock.  And I must say created some panic among us.  Especially with a new baby on the way.  I spent about a week going through our budget, and realized it was time for us to start using the envelope system.  It was pretty much our only option to make sure we stay afloat, along with lots of prayer that nothing major happens!

So here's how it's broken down:

Mortgage, Car Payment, Cell Phone, Electric, W/S/G, Internet, School Loan, Life/Car Insurance, Credit Card, and Tithe are all being payed online.  These things total aproximately $2300.

$125 is going into savings strictly to pay for the baby being born (this one's been going on all year).

And here's where the envelopes come into play:

Groceries220
Gas/Oil60
Baby50
Household items20
Home Improvement40
Eating Out/Fun30
Clothes30
Beauty20
Medical40
Gifts25
Misc.45

I actually found it rather fun over the past 2 weeks seeing how much money I could have left before the next payday, and I was pleasantly surprised.  We'll see how much is left at the end of the month though :)  I'll make sure and post how it goes.

Does anyone else use this system?  Do you have any tips or pointers about it, or general ideas on cutting costs?

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