Cash Only Budgeting- General Budget & Finance

I had mentioned Dave Ramsey's cash-only strategies earlier, and had heard from at least one other person who's doing this. Is anyone else using a cash-only system, and if so, how do you implement it? Do you have one cash envelope, or several? How do you classify your expenditures? How do you

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  1. #1
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    Default Cash Only Budgeting


    I had mentioned Dave Ramsey's cash-only strategies earlier, and had
    heard from at least one other person who's doing this. Is anyone
    else using a cash-only system, and if so, how do you implement it?
    Do you have one cash envelope, or several? How do you classify your
    expenditures? How do you handle a trip to Wal-Mart that involves an
    oil change, diapers, a gallon of milk, and socks?

    My wife and I are butting heads somewhat over exactly how to make
    this work, so any feedback is appreciated.

    Thanks in advance,


    Vince
    From: "bootkiller" <bootkiller@hotmail.com>
    Date: Wed Feb 18, 2004 10:13 am
    Subject: Cash-only budgeting

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  3. #2
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    I do this too, and usually I will pay for it out of my grocery envie, then when
    I get home transfer the money back to the grocery envie from the other envis,
    i.e. car maint. food,
    Christy

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  5. #3
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    Vince,

    I use a plastic multi section coupon holder to hold my cash- one
    section per spending division...(hope this makes sense). I think I
    bought my coupon holder at Kmart or Walmart, but I have seen them at
    the one dollar store too. As far as multiple division purchases from
    one store, I guess you'd have to either use like a $20 from one
    section and then deduct the money from the other sections later to be
    extremely correct, or maybe keep small bills in the sections and if
    the milk is 3.00, the socks 2.00 or what ever, then take 3 ones out
    of the "grocery" section, 2.00 out of "clothing allowance"...just
    keep it as close to correct as possible. Maybe someone else has an
    easier solution.

    Lisa

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    Vince,
    I use a combination of Dave Ramsey and Mary Hunt. I keep a specified
    amount for my "cash only" for groceries, food out, and gasoline. I
    keep specified amounts for car maintenance, clothing, home repairs,
    medical, etc. in a seperate checking account. If I were buying
    multiple "categories" at Wal-Mart or such, I would write a check for
    the car oil and socks. I would check out seperately for the milk,
    etc. and pay with cash. I know I do this with Christmas presents so
    I have an individual receipt for something if there is a possibility
    it would need to be returned and have never had a clerk complain.
    Because my "cash only" categories are so few, I never really have a

    problem with jostling the cash back and forth. If you try to make it
    a complicated, convoluted program it will be too frustrating and your
    wife will probably hate it and fight you at every turn, keep it
    really simple. That is my 5 cents worth! HTH
    SandyL

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    WHere do I find info on these two people.I really need help with
    my spending and budgeting. the cash only practie seems like a great
    idea. Do they have any other good ideas? PAM

    http://www.daveramsey.com

    http://www.cheapskatemonthly.com I think

    I use a combination of both too. I save using the "Freedom Accounts"
    method.

    They also have books you can get at your library. Just look them up under
    "author."
    Lynda

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  11. #6
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    I found Dave Ramsey's books in the public library. "Financial Peace
    Revisited" is a very good book, and a quick read (probably because of
    the big type!). Dave Ramsey has a syndicated radio show, and does a
    lot of financial counseling and seminars through churches.
    Consequently, he tends to couch things in terms of basic Christian
    ethics, of tithing, stewardship, and debt as a form of servitude. If
    you don't have a problem with this approach, it works well. (Suze
    Orman takes a psychological approach to get to the same places.)

    Anyway, he advocates setting a spending limit for each major
    category: groceries, entertainment, car maintenance, etc., and then
    withdrawing that amount in cash. Each category has an envelope. If
    you go grocery shopping, you grab the grocery envelope. If you want
    to go out to eat, check the entertainment envelope. Once the money's
    gone, it's gone. This way you're spending real money instead of
    tracking figures in a check register. Makes you think more about
    what you're spending on, and how to stay within a limit.

    Then there's the debt snowball: First, build up a cash reserve of
    perhaps $1000. This is your emergency fund. Rank your debts in order
    of smallest to largest, irregardless of the interest rates. Make
    mimimum payments on each debt, and focus on paying off the smallest
    one first. This frees up cash. Take the minimum payment from your
    first debt, and add that to the minimum payment on the second debt
    until that one is paid off, and so on down the line until all you
    have to pay on is your house. He advocates getting mad at your debt
    so you'll pay it off faster. Right now we're in the process of
    building the emergency fund. I can't wait until I can start paying
    off the debts.

    Anyway, get to your public library and start looking. "Financial
    Peace Revisited" is worth the read.

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    The big point of conflict is what is classified as what. I have
    postulated three categories: groceries, baby expenses, and mad
    money/entertainment. Under baby expenses I put diapers, wipes,
    clothes, toys, videos, etc.: stuff the baby uses that we don't. Take-
    out food or dinner at a restaurant comes under entertainment. My
    wife wants to put diapers and take-out food under groceries. She
    also doesn't feel comfortable carrying cash. She'd much rather use
    the debit card or checkbook. Of course, we've been trying that and
    it hasn't worked, for various reasons. I'm sure we'll get it worked
    out, but it's a little frustrating right now.

    THanks for all the input,

    Vince

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    Vince,
    Perhaps you could have a "groceries/household" category--food at
    home, diapers, wipes, HABA, paper goods, etc. all the things
    necessary for running a household--then an "entertainment/family"
    category--toys, videos, take-out food, dinner out. I know for me if
    I lump take-out food into groceries, my grocery money is gone REALLY,
    REALLY fast! I think once she gets use to using cash it will be
    easier for her. Please remember she will only need to carry the cash
    she is planning on spending THAT day. If you have $400.00 to spend
    on groceries/household for the month you wouldn't have to carry it
    all with you each time you go to the store. Just take an estimated
    amount based on your shopping list. Of course you would need to make
    a list and stick to it. HTH
    SandyL

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    I use a modified cash system based on Dave's method.

    I have a set amount budget for each category and
    written down on the top of a piece of notebook paper,
    then I use my debt card for everything and seperate
    the categories onto my notebook paper, subtracting
    from the total and once it get's to zero or very close
    I either stop spending in that category for the month
    or else i "transfer" from one category to another if
    there is extra in another I know I wont use.

    It seems like a lot of work but honestly if you keep
    your recipts for the day it only takes about 10 to 15
    minutes at teh end of the day to do and about an hour
    at the beginnign of the month.

    Jaclyn
    From: Jaclyn Meeks <j_meeks_99@>
    Date: Thu Feb 19, 2004 12:31 am
    Subject: Re: Budget101.com : Cash-only budgeting

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    We do something similar too--
    When DH gets paid, I allocate the money for specific things--some gets
    transferred to savings accounts, write mortgage checks, etc. Then I keep a
    post-it note in my checkbook with a list for the expenses during that pay
    period:

    Phone bill-$26
    Groceries-$150

    etc.

    If there is any surplus in the checking account over and beyond what we need for
    that 2 week period, I transfer it out of checking into a savings account. I use
    either a check, debit card or a credit card for the monthly expenses on the
    post-it note. When we use our credit card, I write it down in the checkbook and
    subtract it just like I had written a check. Prevents that "not real money"
    feeling, it's just like spending cash almost. DH travels a lot and uses the
    credit card for company travel, so we end up getting several hundred dollars
    back at the end of the year from their "rebate" program (it's a local credit
    union Visa) so that's why we use our credit card for monthly expenses. But I
    really do have myself "fooled" into using it like a debit card.

    Betsy

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    Boy, I messed up this formatting My new reply is below the stars.

    Vince,
    Perhaps you could have a "groceries/household" category--food at
    home, diapers, wipes, HABA, paper goods, etc. all the things
    necessary for running a household--then an "entertainment/family"
    category--toys, videos, take-out food, dinner out.

    ************************************************** *************

    That's what we have--$150/payperiod (2 weeks) is grocery/household/misc.
    Basically anything I could buy at the grocery store falls under that
    category--cat food and litter, kitchen utensils, storage containers, etc. Also
    when I find those $3 kids shoes at Target when I'm grocery shopping--it gets
    lumped into the Grocery/Household/Misc. I guess "misc" encompasses unplanned
    bargains found when grocery shopping. I like having it that way, because I can
    always cut back on food expenses for a week to make up for stocking up on $20
    worth of sale items on the Target endcaps. It gives me more flexibility but
    also limits on bargains--because there can be "too much of a good thing", lol

    I have to say that I throw some Tightwad Gazette in with the Dave Ramsey that
    I agree with--her belief is that you shouldn't have a tight weekly amount for
    things--because you don't know what great bargains you will find that will save
    you a lot of money over the next few months. If you find chicken breasts for
    $0.75/lb or whatever and you only have $5 available in your weekly grocery
    budget, but you have room in your freezer, and will use, 20 lbs of chicken, a
    tight budget will only hurt you in the end.

    I think it's a good thing to do for a few months, to stick to a strict budget
    week by week, but once it becomes a mindset, a little flexibility can actually
    be better--spend $25 this week, $125 next week, and end up with $200 worth of
    groceries because you stocked up in bulk at the sales!

    Betsy

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  23. #12
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    >> Just take an estimated amount based on your shopping list. Of
    >> course you would need to make a list and stick to it. HTH

    Therein lies the problem! We're both recreational shoppers; I'm
    particularly bad with food. My wife learned early on to check each
    and every aisle of a store when shopping so as not to miss a good
    deal. I can walk into a grocery store for peanut butter and come out
    with a pork roast, tilapia filets, and cheese, babbling all the while
    about the amazing dinners I can make. I might or might not have
    actually bought the peanut butter. So, a good dose of discipline all
    around, then!

    The idea of setting internal limits on a collective fund does sound
    good, though; all depends on how much skullwork we want to do.

    Vince

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    Vince,
    I am a mom to 5 and I too have wondered in the past how the babies'
    products should be categorized. I have tried doing it many ways and
    finally settled on having a Groceries (all food purchased, including
    baby's foods and formula etc.) Health and Beauty Products "HBP" which
    diapers and wipes fall into just as toilet paper would for the rest
    of the family, as well as cleaning products and medicine which
    promote good health ) I put any toys, videos and take out food in
    the "Entertainment" category, "gas and Maint." for our van
    and "Household" for items purchased for the house whether it is for
    decor or repair. I do have a few additional categories that don't
    get used as much but still need a "category" such as dues for my
    kids' activities and field trips. I keep a three ring binder with
    sectioned tabs for each category. There is a plastic money holding
    envelope (from $ store) to keep the money until needed for the bill
    or for shopping. I staple receipts to a piece of paper, or write the
    amount down. I usually shop at different stores for different things
    so it is easy for me to keep it seperate but I have also asked for
    food and nonfood items to be rung up seperately at the register and
    have not had any complaints from cashiers or other customers. It
    really doesn't take that much more time if you are prepared and
    organized when you go to the store.

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    I heard that if you use plastic, you tend to spend 25-50% more than you
    intended, because you are removing the pain of forking over real dollars.
    I probably heard that from Dave Ramsey's radio program. I used to spend
    $100 every time I went to Wal-mart, now it's $25-$50, and I go less often.
    And pay cash.

    My friend, who works for a bank, says that banks want you to use debit cards
    for everything, because you lose track of the balance and then
    bing-bing-bing, you get hit with an "insufficient funds fee" or else they
    can charge you interest on the "below-limit" loan you can sign up for.

    And from a police officer friend -- don't take your purse into stores, just
    your i.d., your cash (tucked into the front pocket of jeans, or a fanny
    pack), and just the things you use. And never take mail into the car to
    sort through.

    You are much more likely to get ripped off by bounced fees, credit card
    fees, and late payments, than you are if you are carrying some cash in your
    jeans. After all, who would know if you carry a modest amount of a cash
    unless you broadcast it or waved it around. And I have had identity
    theft -- having your credit cards, checking, etc is much worse than losing a
    little money.

    My 2 cents
    [Lynda]

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    That's why I write down every purchase in my checkbook, even if it's on a credit
    card I spend cash much more freely than I write checks (or write down credit
    card purchases). I just don't take cash seriously

    That is a Dave Ramsey thing, he says you spend more with credit cards. I just
    haven't found it to be true since I started writing everything down when I'm at
    the store--just like I'd write down a check, while I'm at the register.

    Betsy

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