I have a confession to make. We have built up debt on our credit cards again. This means we are now back to baby step two. And this time around we are using real cash envelopes
After we moved house at the end of last year we had cleared all our consumer debt (2 credit cards and 2 loans) and we were aiming to save up to clear the car finance. However we both became lax with our budget (well we didn’t do one) and we both fell back into the trap of spending on our cards.
I also abandoned this blog while we moved and got settled. But thankfully we realised what was happening and so although we are back to BS2. We have a lot less to clear this time around.
So we are back on our budget only this time we decided to make a slight change. We had always sort of followed the cash envelope system but neither of us were keen on dealing with cash when we could just use a debit card. So we would allocate funds in the budget to our ‘cash envelopes’ that were actually non existent and just tracked along in our heads. This meant it was much easier to overspend.
So this time around I have brought in real physical cash envelopes, and although we are only 2 weeks into the new system I already love it and feel it works much better at curbing our spending.
What are our new cash envelopes?
I do still have some ‘cash envelopes’ online in the form of online savings accounts. Our £1k emergency fund is in one, and I have another for pets as I always buy the food in bulk online as it is cheaper that way. Our car maintenance fund is also online.
But for physical cash envelopes I have one each for our groceries, petrol, my own spend (my husband still prefers his personal spend to be in his account as he mostly spends online) our joint/ entertainment spend and our clothing.
The hardest part is remembering to take money out when I need to. Mostly petrol, I usually only realise I need a top up when I am running really low. But the garage is only around the corner so it isn’t a big deal if I have to nip home for the cash first.
What I have found is that I really like putting money back into the envelopes. This isn’t something I could experience when spending online. But coming back from grocery shopping and adding a few notes back into the relevant cash envelope when I have come in under budget is such a good feeling. And is something you can only experience with a physical cash envelope. The money really does feel more ‘real’ when you are handing over notes rather than a card. I feel like a kid playing shop.