Envelope Budget System

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If you've gone thru your expenses and whittled it down and they're still too much, maybe consider getting a different job. You need to increase your revenue. Start shopping around or ask for a raise. Go back to school part time if you need some additional training or to finish up a degree or something.

That isn't that bad of a price for a bundle of tv, Internet, and phone. But I'd get rid of all but the internet. Get the 15 Mbps Internet, it will stream Netflix no problem. I used to actually use Netflix on 5 Mbps and it didn't even pause to buffer.
 
I've never used the envelope method but it seems to make a lot of sense. I use software to track my checking account and budget. I found 2 software (1 for my pc & 1 for my android phone) that are electronic checkbooks that, after inputting my recurring credit and debit, allows me to look ahead 6 months to see if I will go under (in the red) in my checking account. I used to go under a lot in the past and paid some heavy over draft fees. With these apps, I avoid those fees altogether now. The softwares I use are Checkbook App on my phone and Ace Money on my P.C. I just look at the balance I have right before my next paycheck and see what I have left that I can transfer to my savings or use for extra splurges like buying steaks, dining out, etc.

One major thing I did to get extra cash each month is decrease my IRA contribution every month from $500 down to $100. In my case, I put the extra $350 or so (after taxes) toward my credit card payment to pay it off sooner.
 
When I did our checkbook I used Quicken, would catagorize everything and would occasionally look at the "reports" to see where the money was going. Nothing like tracking to help see where it is going. If you don't want Quicken then do something in Excel, or at least get a notebook and track receipts there. Nothing against envelopes, if it works for you great--but CC's can give cash back and prevent you from carrying change, or from carrying large amounts of cash.

$350/month seems excessive for food at first glance, but that's a bit more than $10 per day. I think we spend $10k/year for a family of four. But my wife likes to cook, we often buy in bulk and that can be a big cost saver. I'd look into how you're spending money there, and aim for something around half that. Maybe buy a larger cut of meat, on sale, cook that and Tupperware the rest for the week.

Ditch cable, and go prepaid on the cell. I pay $6/month for my Tracphone, which is technically a smartphone; I rarely use the data 'cept when on vacation. WiFi is increasingly all around. My wife uses PagePlus and pays even less than I do. We're stuck with landline phone, and get the cheapest DSL with that. Greatest thing ever was getting rid of cable eons ago; after a couple of years we had no idea what was on TV (wasn't watching commercials anymore) and still don't know what we are missing. [Back before I got married and got cable, I would tell the wife & others that if they wanted to give me a gift, Christmas/Bday/otherwise, they could just tape a few hours of the History Channel or whatever. No one ever took me up on it! Would have been a low-buck gift that I would have been tickled to get. Oh well.] We do have an outdoor TV antenna, and I do like watching the shows on PBS occasionally.
 
Originally Posted By: GMFan
Originally Posted By: Pop_Rivit

It may not seem like it when you're 29, but about the time you reach your late 50's and retirement is looming large in the windshield, you'll realize how much that self discipline paid off, especially when the people around you are bemoaning the fact that they failed to plan, and they hope that social security will be enough to get them by in their golden years. It happens sooner and faster than you think.


Great point. I've been contributing to a 401k since 22 years old once I got my first job out of school and for the last few years now I've been maxing out my 401k and Roth IRA. The "winging-it" budget is pretty much near impossible at my income level when maxing out these accounts but I know full well the benefits of doing so. This is not to say that I haven't been dreaming of and at this point nearly hear the exhaust note of a brand new V8 5.0L Mustang in my sleep. Every couple of weeks I pull up some classic Dave Ramsey "new car rant" on YouTube to slap sense into me so I stay the course.
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Personally (this is strictly personal), I wouldn't max out Roth IRA or 401k before buying a home. The reason is that both home and Roth IRA are investment and home would reduce your living expense now (in theory at least), while Roth should only be withdrawn after retirement. I would contribute 401k up to the employer matched portion and then put the rest of the money in the "down payment saving fund" instead.

Now if you are not as disciplined and want to stay away from distraction by using a Roth IRA, that's ok too.

There are many ways to reduce living expense. As mentioned the cable bill can be almost eliminated if you cut the cord and use only cheap, low speed internet (probably around $20-35 a month), and stream video via free or near free service (Library has a lot of free video you can borrow if you don't need the latest and greatest). Cell phone can be cheap if you go to low cost provider like Cricket or MetroPCS, etc, and find a few friends to split a family plan (I am on Cricket and pay $20 per line with 2.5GB / mo, it is ATT being slightly slower).

The biggest saving you can do at your age is to share an apartment with a roommate or two.
 
Originally Posted By: PandaBear
Originally Posted By: GMFan
Originally Posted By: Pop_Rivit

It may not seem like it when you're 29, but about the time you reach your late 50's and retirement is looming large in the windshield, you'll realize how much that self discipline paid off, especially when the people around you are bemoaning the fact that they failed to plan, and they hope that social security will be enough to get them by in their golden years. It happens sooner and faster than you think.


Great point. I've been contributing to a 401k since 22 years old once I got my first job out of school and for the last few years now I've been maxing out my 401k and Roth IRA. The "winging-it" budget is pretty much near impossible at my income level when maxing out these accounts but I know full well the benefits of doing so. This is not to say that I haven't been dreaming of and at this point nearly hear the exhaust note of a brand new V8 5.0L Mustang in my sleep. Every couple of weeks I pull up some classic Dave Ramsey "new car rant" on YouTube to slap sense into me so I stay the course.
grin.gif



Personally (this is strictly personal), I wouldn't max out Roth IRA or 401k before buying a home. The reason is that both home and Roth IRA are investment and home would reduce your living expense now (in theory at least), while Roth should only be withdrawn after retirement. I would contribute 401k up to the employer matched portion and then put the rest of the money in the "down payment saving fund" instead.

Now if you are not as disciplined and want to stay away from distraction by using a Roth IRA, that's ok too.

A Roth IRA allows for withdrawal of contributions prior to 59.5 without penalty, so that allows for a bit more flexibility if one really needs that cash for say a down payment. Granted, the risk that comes with investing may make that a problematic tactic, but it's good to know the option exists.
 
A cable bill for $145/month which includes cable, internet and phone is what they charge these days in most places. If you want that convenience and all of those channels instantly available, that is what it costs.

As has been suggested by several posters, there are cheaper alternatives just not as convenient.
 
This is a rudimentary form of fund accounting and seems to work well for some people in that it introduces some discipline to their spending habits.
The day will come for all of us when we'd like to be able to come home from work for the last time and pursue other interests, some of which might generate income.
Spending less now and investing the surplus will make the difference between being able to afford retirement and either sweating the bills each month in retirement, which would be a drag, or having to work until you drop or become disabled, which would be a shame.
 
So I've been running the envelope system for this first time since the start of this month and it's working well so far. The biggest impact it has made on me is the ability to be more giving/charitable. Since I have the money set aside for the month for each expense category, I feel less "selfish" when it comes to giving. By setting yourself a budget you actually feel more free - which is counter intuitive, because you feel in control and know regardless that as long as you stick to it you will come out ahead.

I've realized you are a lot less stressed when your money has a "label" on it. I feel so much more in control.

I will keep everyone posted after a few months on how things are going. I have already realized that I will need to adjust the budget for each of my spending categories. I'm already finding I was too stingy with some categories and too generous on others. From what I've read it takes a few months to nail it down.
 
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