Yesterday was CINCO DE MAYO!!! I love it :) It’s like this random little holiday that pops up and says: “Hey You! Let’s go have some fun!”. I had quite a busy day yesterday!
I signed my loan papers for my house! I can honestly say I’m beginning to feel like an adult :) My loan officer was quite impressed with me. She said that I am one of the youngest people they have ever had the privileged of approving for a loan. She even brought the other loan officers in to meet me. They wanted to know about this “Dave Ramsey” thing I do. I will say that if you follow the financial peace university program it will change your life. Last year, I was struggling with my finances. I couldn’t understand why I was making more than enough money to live on but always seeming to just squeak by at the end of the month. I knew my mom and dad lived by a budget (which I had..but you know what happens when you see a cute pair of shoes..) and did this “Dave Ramsey” thing.
One weekend, I was exasperated with my finances. I took my bank statements, credit card statements and drove over to their house to ask for help. Yes, yes, I can ask for help when I need although I am typically very pig-headed about asking for help.
Mom and dad sat down and explained to me the wonders of the envelope system. One of the greatest things my grandpa taught me growing up was this..if you don’t have the money for it, don’t buy it. He used this system as well. I had to explain it to my loan officer yesterday as they were a little bewildered to why I only have about $200 in my checking account. Yet had all this cash..so here’s my explanation of how it works for me :)
Budget each paycheck! Budget is a dirty word to most people, but you must budget down to the last dime if you’re going to successfully implement the envelope system. Seriously! Get nitty-gritty! My mom and I took 6 months of my bank statements and went through them with a comb. I saw how much those random little Redbox stops were costing me and that I was overspending on food (big surprise..I love to eat).
Divide and conquer :) Of course, there will be budget items that you cannot include in your envelope system, like bills paid by check or automatic withdraw. However, you can create categories like food, gas, clothing and entertainment. I do create envelopes for anything that gets auto-drafted. They are red and I write the day they come out and how much is left to pay off for my student loans.
Fill ‘er Up, Up, Up! After you’ve categorized your cash expenses, fill each envelope with the money allotted for it in your budget. For example, if you allow $100 for clothing, put $100 in cash in your clothing envelope for the month. I then write on the back of the envelope how much is in it. If you take money out, it gets deducted on the back of the envelope.
When it’s gone, it’s gone :( Once you’ve spent all the money in a given envelope, you’re done spending for that category. If you go on a shopping spree and spend the $100 in your clothing envelope, you can’t spend any more on clothes until you budget for that category again. That means no visits to the ATM to withdraw more money! THIS ONE IS HARD! But after 16 months of living by this system, I can whole hearted-ly say its worth it. For example, my truck had to have $450 worth of work done to it last month. Instead of being freaked out because I didn’t have $400 bucks..I merely pulled out my “Truck Repairs” envelope and paid cash. Because I paid cash, the Auto repair shop dropped it down $50 :) He said they hate dealing with credit cards because it costs him extra money. So hey..you might be able to save some money here & there :)
Don’t be tempted! While debit cards can’t get you directly into debt, if used carelessly, they can cause you to over-spend. There’s something psychological about spending cash that hurts more than swiping a piece of plastic. If spending cash whenever possible can become a habit, you’ll be less likely to over-spend or buy on impulse. I have found this to be super true. If I have to hand a cashier $40 for a pair of shoes..I’m probably going to put them back.
Give it time. It will take a few months to perfect your envelope system. Don’t give up after a month or two if it’s not clicking. You’ll get the hang of it and see how beneficial the envelope system is as you dump debt, build wealth, and achieve financial peace! See … simple! I took me about 3 months to get the system fine tuned for me.
Certainly, some bills may come in at different times of the month, so you’ll need to adjust your written game plan to take it one step further. You need to plan the budget based upon your pay periods. Say that you get paid twice a month. If you can write down which bills you plan on paying from each paycheck, you will not be left with a surprise bill. Spend each month’s income and each individual paycheck on paper before it comes in.
I tell you all of this because it blew my loan officer’s mind. At 26, I drive an almost new vehicle that was paid for in cash (also got a better deal on it because I paid cash!). I have no credit card debt (I have 2 credit cards merely because I needed to build up my credit..Kohl’s & Victoria Secret). The only outstanding debt I currently have is a student loan from college that will be completely paid off on February 15th of 2015 (After-which I shall promptly dance around my living room!). Needless to say, I am not your typical 26-year-old. However, I will tell you that utilizing the Dave Ramsey system did hurt me a little bit in my loan application process. I have great credit, but not having a lot of money in your checking account is a big red flag to a loan company. I had to write a letter explaining the Dave Ramsey system and that I have more money in cash. Who knew people didn’t like cold, hard cash anymore? Geez..
So after 2 hours of signing my life away..I was excited to meet up with my friends to celebrate Cinco de Mayo! We met up at one of the local Mexican restaurants (they have the best margaritas and fresh guacamole in town!) T-Crunk and I are both on the 24 Day Challenge so we knew we would have to make some healthy choices. Both of us had saved some calories for dinner because we had anticipated eating out. Our waiter (who knows us by name because we eat there so often) had us covered though :) He told Teri she should try the “skinny” margarita (Calories: 124). Their skinny margarita is made with fresh lime/orange juice, agave nectar and tequila. The difference in taste she said was amazing! For my dinner, I choose chicken enchiladas (393 calories for the 3) and was only able to eat 2. Teri and I split a small basket of chips and the salsa is made fresh daily :)
The boys discovered the mechanical bull outside and it was instantly a competition to see who could last the longest. There were 5 of them and 4 of us girls. Being that I was sporting white pants, I politely declined. Secretly, because I really didn’t want to lose the yummy enchiladas I just eaten. Teri said no way Jose..and then of course we tried to talk her boyfriend into it. But Bob said he was having more fun winning free t-shirts from the DJ (don’t mess with Bob if there’s music trivia..he’s the king at it.) We settled around the mechanical bull to watch the fun. Tyler made it about 5 seconds, Nick lasted a little bit longer and CB won for staying on longer than 30 seconds. CB did manage to get hung up the second time he came off. Needless to say, we spent the next five minutes treating his hands because the rope sliced it quite nicely. But what’s life if you don’t come out with a few battle scars? It got him another free t-shirt so he wasn’t really complaining. We spent the rest of the night showing the little kids how to do the hokey pokey..I seriously thought everyone knew how to do that! They didn’t know how to do the chicken dance or the macarena either!! What are they learning in school these days? It was a fun night to celebrate with friends :)
Oh! Bob came home with 5 t-shirts, CB came home with 4, Teri came home with 2 and I ended up with one & a key chain :)
What did you do for Cinco de Mayo?
One Chicken Dancing Lemon