...because we all have our motley moments!

Monday, January 4, 2010

Spending Money

"Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it?"
~ Luke 14:28

My friend Lindsay, and fellow Motley Mom, let me borrow a few of her Dave Ramsey books before I left Florida. Her family follows Dave's plan to be debt free, and I was so excited to learn more. Dave gives readers baby steps to become debt free, and I am so drawn to him because he is a Christian.

One of the first things I learned from Lindsay and Dave is to pay cash for everything excluding monthly bills. Before, I always used my check card for any and every purchase: McDonald's sausage and egg McMuffin - $2.58, Starbucks tall decaf peppermint mocha - $3.85, GNO at movies - $8.75. Ironically, I was also always afraid to check my bank balance online. I dreaded writing down all of the deductions and I lived in constant fear that an expenditure was forgotten. Spending like this also enabled me to be blissfully unaware of how much we actually spent each month at Starbucks, the grocery store and even on gas.

I do have to spend some time each month budgeting how our money left after paying bills should be spent, but I am so thankful to have money left after paying bills! Grocery shopping has been the biggest challenge for me. I budget $50 per week, which is a challenge alone. Paying cash forces me to keep a total of how much is in my cart, and I forces me to make some tough decisions like, "Do I really want to spend $4.00 on 2 pounds of boneless skinless chicken breasts or would I rather get 4 pounds of split breasts for $4.00?"

Paying with cash is a great way to start tracking your spending. I use an envelope like this, filled with smaller envelopes.

My categories are: fun and farmers market, babysitter, hair care, toiletries, clothing, Walgreen's, prescriptions, co-pays, gas and oil, repairs and tires, groceries, cleaning, entertainment, Starbucks and restaurants. I am planning to add an emergencies envelope to have a few extra dollars for things forgotten or unplanned, like school fundraisers.

Like most new years, I am hoping this year will bring our family more prosperity, but this year, I actually have a plan to make that happen. What money saving goals or tips do you have for the new year?


Pam said...

I have to add two things: I am pretty sure Rachel was my first friend who pays with cash. I learned so much from her on budgeting and couponing, but that is for another post :) Second, is it just me or has the price of toilet paper been creeping up? To save money and paper, I have initiated a 2 square rule in our house :)

Lindsay said...

We're still using our envelopes. Christmas and a vacation were both cash only events this year. Plus we have money set aside to put into the house when we move in (for paint, and lighting....). It feels nice not to stress over money.

fawnda said...

We put most of our money right into our saving account (direct deposit) and only put enough money in our checking to live out the week.. it makes us keep a close eye on what we are spending! it has really helped us save! We also have moved to a cash system. When you pay cash it REALLY makes you think about what you are buying and how much it cost!
Great post!

Karly said...

First of all, let me say that it is amazing to me that you only spend $50 a week on groceries. I won't even say how much I spend, but it's a lot more than that!! I am truly impressed!

Second, to comment on your comment on my post...I would love to meet you over coffee and chocolate someday too. We may have to have a Motley Meet-up! And that quote from Counting Crows is one of my favorite all-time song quotes. I think about it every year at this time. It's like we are kindred spirits.

Last, I am impressed with all y'all. Great job budgeting! I have tried to do this, but I get lazy and go back to the debit card. But you are inspiring me! Maybe I will try again.

Donna said...

Me, too, Karly. I really need to try the cash system. Like Fawnda, we automatically deposit our savings into our savings account and only leave the budgeted "living" amount in checking. Unfortunately, I've been really bad about going over budget and we have to transfer $ from savings almost every month! I really think the cash system might help me track it all better than using my debit card for everything.

Thanks for the timely post on being good stewards of our finances...new year, fresh start, new budget!

Pam said...

Hi everyone - thanks for your comments! Lindsay - good luck on your new house. It will be so nice to not worry about the money while you are getting it ready. Thank you so much for lending me the books. I hope in time they will dramatically change our lives :).

I really like the idea of depositing money into savings - great idea Fawnda!

Karly - you are so sweet! Thank you! Maybe we should all really work on a Motley Moms retreat! Or if you ever have free time when you are in the Midwest, maybe I could meet you and Fawnda.

Donna - paying cash is great! It does take a little preplanning, but I LOVE it. I would highly recommend it. It is worth the effort.

Good luck everyone!