What is the envelope system?
Put everything you absolutely can on automatic payments. This is where the bank issues a check from you account, and pays that money automatically- to whoever you issue it to eg. utilities, car payment, student loans, insurance, mortgage etc. After this is done, every thing else is expendable. This would be food, clothing, home maintenance, toiletries, fun money etc. At the beginning of the month, figure out how much money you want to spend in each of these categories. after you decide, put the money for each category in to a separate envelope, in cash.
We spend 400 a month on food. I keep that money in an envelope and take it to the store each time I go shopping. I keep a running total of the balance on the front of the envelope. When the money is gone, we don't go again. If we have extra money at the end of the month we splurge. We do this with each category. We have been able to free up so much extra cash to go toward paying off debt, by using the envelope system. It is so much more organized than swiping a debit card at every whim.
Hurray for gazelle intensity- we will be out of debt in April of 2012. Yeah! Thanks for teaching us Mr. Dave Ramsey!!
