Starting Your Envelope System

Now that you have placed your debt in increasing order, lowered your bills and placed all saved and newly found cash on the lowest debt, you can turn your attention to the envelope system. Learning to save a few bucks a month will prevent a birthday party from throwing you into financial ruin for a month. Since we have followed this method for nearly a year, we now have savings for things that we never thought we would. 

We can't tell you how much to place in each envelope but, I have listed our amounts that we save per month.

Often Forgotten and Yet 'Fun' Spending:

Auto Repairs      $30.00
Auto licenses and tab renewal/taxes     $10.00
Medical Bills      $10.00
Vitamins     $60.00
Dentist/Doctors      $0

Restaurants     $20.00
Clothing     $20.00
Transportation (gas)      $120.00
Drinks (coffee, beers after work and smoothies)      $10.00
Books and Magazines (library and subscriptions are wayyyy cheaper folks)      $25.00/year
Entertainment (movies, children's bouncy house, billards etc.)      $20.00
Vacation      $100 (High Amount because it's how we see our family)
Birthday Parties and Gifts      $10.00
Holiday Expenses (decorations, food, and gifts)      $20.00

Career Licenses      $10.00

Now let me interject here. We didn't start off with all theses envelopes and savings accounts. We really only had auto repairs, restaurants and vacations. We had to build up to this level. We are currently looking a huge medical bill come our way because hubby had surgery in early February. We will only fill vitamins, transportation and career licenses envelopes if need extra money.

Someone commented that all these envelopes are 'wasted' money that could be placed on bills. She is absolutely right. But after nearly a year of savings for a few items and now 8 months on the Dave Ramsey's plan, I can now say that I have the room and need to fill many of these categories to feel comfortable. I don't need to go to my favorite coffee place everyday but $10 allows for me to go twice a month. That fits my cravings and wallet. Auto repairs is just plan smart. Why not prepare for problems that cars always seem to have. My car is only 3 years old and we have fixed two flat tires (one was free!) and soon need to replace all of the tires. We drive alot! If it wasn't for the fact that we have been saving for over a year, we would be stressed as we look deep into our wallets for $800. Everything e

So my advice is to take a deep breathe and figure out what items deserve a small sliver of your monthly income. Start small and work your way up. Stay Positive!