So, remember how I resolved to ditch the credit card and move to an all cash model with our budget this year? I didn't really think it would make that big of a difference. I thought I was responsible with our money as it was. I kept to a zero-out model budget and paid off the credit card in full each month. I used our debit card for most day-to-day purchases. I didn't think cash would really change our spending habits much. I thought it would just add a weird layer of inconvenience in which I must keep track of different envelopes filled with cash for different purchases.
I was wrong, people. So wrong.
Cash is a game changer.
Here's how it worked: At the beginning of the month we made a trip to the bank and got out money for our various budgeted envelopes. Right now, those are: kid's stuff, entertainment, pets, clothing/haircuts, health/home, lunch money (for Rob), and groceries. We continue to use our debit card for gas, because it's more convenient and we don't tend to overspend or fudge the numbers on gas expenses. We also decided to only get out $100 per week for groceries to avoid an end of month fiasco in which there was no money or food left in the house.
Do you know how much money we have spent outside of those envelopes? None. None whatsoever. Actually, most envelopes still have some money left inside.
There is something very helpful about having the visual aid of cash to show you that when the money's gone it's gone. When you can physically see it, you really don't want that money to be gone.
Our first week with a grocery envelope was hard (first world problems hard, but still). I had to go without greek yogurt for three whole days and shift one of our meals to later in the week because I had no heavy cream, and I had spent all the money. But after that hard hitting lesson, I was much more careful about meal planning within the budget and making sure I had all ingredients on hand. Right now we've still got $40 in the envelope, five days left in the month, and no need for a grocery trip until February.
The other envelopes were cake. We just didn't use them unless we really needed them. Diapers, printer ink, a haircut, dog food, some gallon freezer bags - all the expenses had a cash envelope linked to them, so we stuck to the necessities.
Rob has been hoarding his lunch money, brown bagging it for work lunches, and he's just happy as a clam, because he has pocket cash for whatever he damn well pleases. He's also very happy with the results of my micromanaging of the envelope system, which has saved us a ton of money compared to last month.
So far we've saved $400 on groceries (that's cut in HALF, my friends), $60 on work lunches, $120 on kid related expenses, $120 on entertainment/going out expenses, and $300 on all the rest. That's $1000 of savings over the course of a month. Granted, last month was exceptional in our lack of monetary discretion (between Christmas and Rob's new higher-paying job we got carried away), but the results are still astounding.
And balancing the budget is SO MUCH EASIER. I do it weekly instead of daily and not once have I panicked because the numbers on my spreadsheet don't match the numbers in my bank account. Despite my preconceived notions, it was actually much easier to handle cash than a debit and/or credit card.
Tell me, did you make any money resolutions this year? How are they going?