Feb 21, 2012

Cash Only

After Danny read Financial Peace it taught us how to go on a cash only plan.  The reason to go on cash only is to learn to only spend what you have.  Debit cards do come out of your checking account so people think its the best way to go.  While it is better than doing credit...it's not necessarily the best.  The reason is because you can't see exactly  how much you spent, and how much you have left to spend on a certain thing.  There are some people who religiously keep up on the checkbook thing (not me at all) and track how much they just spent so they don't overdraft. And some people will constantly look up online to track how much they've spent (that was us).  But that doesn't solve the problem of seeing how much you have to spend on something like groceries, or gas, or eating out/going on dates, gift money.

So we thought what are things we spend money on every month?  we tracked our monthly statements for about 3 months and saw how much we were spending on stuff.  Then we figured out a reasonable amount of cash for that month for each thing.  So to clarify, these are the different things we get cash out for each month.
Gas (hardest transition was not using the card at the pump...yep we go in and pre-pay)
Eating out
Danny's trip money (so he can eat on the road. He gets a certain amount each week)
Auto money (your cars always need upkeep)
Danny blow-it (it's important to save some money to spend on yourself.  You have cut yourself completely off or you won't stay to it.  like losing weight, you can't give up all foods you love or you won't stick with eating well)
Cathy blow -it money
Baby money
Gift money
Misc. Entertainment

This may seem like a huge list.  But let me explain it a little.  For gas a grocery we have changed it a few times to adjust to ashlynn and we've stopped eating out as much so we needed more grocery money. There are some months we know we'll be traveling more so we add more.  Each month kinda changes according to your plans.  In auto money we knew that we would have an oil change once a month or every other month. We are both commuters and have 3 cars so I get $30 a month in cash for the auto money each month. If we use it that month great, if we don't we save it.  sometimes we have to do 2 cars in a month.  Or we save it towards either registering one of our cars (becuase you have to register your car every year you might as well save for it) or it goes towards a new tire fund or towards maintenance.  Since our cars are old they do need some up keep every year.  This is the same thing for gift money.  We totaled up the amount of family member's danny and I have and mothers and fathers day for both sides.  We figured 20.00 per gift.  We also added some extra for holiday gifts.  Then we figured how much we could spend on each person for Christmas and totaled that up.  What it came out to was about $50.00 a month.  So thats how much cash I take out for gift money.  There are sometimes many months we don't spend any of the gift money so we just end up saving it up. This is the same for eating out, misc. entertainment and so on.  If we don't use it we save it for when we do need it.  We also know exactly how much we have to spend.  And there is no more panic feeling when you need to buy a gift and don't have the money to do it.  it's always there.

We have basically given every dollar we make a place to go.  Whether it is to savings for a vacation, to the student loan or saving for a new car. It all goes into a separate bank account.  We do leave money in our regular account to pay tithing, the baby-sitter, phone bill, internet and car insurance.  Those are the only things that are paid either online or with a check...whatever it may be every bit of money that comes in we know what it's going to go towards. 

When I took on these posts I didn't realize just how much work has gone into this process for us until I started to try and write it down.  If you would like to hear more about how much I get in cash for all the other subjects just ask and I will share what works for us.  I do need to add that we are not perfect in this either.  Have there been times we've used the debit card? yes! Sometimes it was because we bought something we didn't save for. sometimes I have forgotten the cash and needed something, or didn't have the cash for something we wanted.  But we haven't made near as many impulse buys or bought things we couldn't afford.  It has definitly given me and Danny more peace over our money.

These are the type of envelopes we use to keep our cash.

1 comment:

  1. This is something I've been wanting to do. Eric isn't all about the cash only system so I need to convince him. But I want more financial peace and this is the only way I think we'll get there. I'm glad you posted about this and I'd love to chat with you about it sometime. You kids gonna be up this way anytime soon?