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In keeping with living below your means there are multiple ways to go about it.  I think the easiest to start with is to buy purchases using cash whenever possible.

Think about it.  When you use your ATM or credit card do you really “think” about the money coming out of your checking account or having to pay for it later?  Or do you just swipe? I bet you don’t even think twice when you go into StarBucks or the grocery store. You just swipe and go.  

I have found it liberating to use cash.  Yes, liberating. I feel good when I have the cash to buy something and know that I owe nothing else to no one for this purchase.  I’m not saying that you owe anyone when you use your ATM or credit card (when you pay it in full every month) but according to a study “Spend til it hurts” by MIT published in Carnegie Mellon magazine, The pain centers of the brain are activated based on MRI studies when you use cash. They are not activated when you use plastic. You feel pain when you spend with cash, so you have a tendency to spend less

I bought the Dave Ramsey Deluxe Envelope System You don’t have to buy one, you can just use regular envelopes but I find this wallet is very efficient in keeping everything categorized that I need and it’s very easy to use.

The goal here is to “feel the pain” when you have to spend any money.  Feel the pain of the money leaving your hand.  

Also Dave Ramsey has a  free budgeting app called EveryDollar  This is a fantastic way to budget that connects to your checking account to see every category that you have set up and keep track of.  The only reason I don’t use this app at this time in my journey is because I get paid every two weeks and it is easier for me to use the Dave Ramsey Allocated Spending Plan.

I use Personal Capital keep track of my networth.  I can see all of my accounts (retirement, checking, savings, etc.) in one place.  Instead of going to each separate entity to look at my balances, Personal Capital shows it all on one page.  It is digital financial software available for your computer and cell phone. Try it…it’s free. There is no obligation.

Anyways, back to using an envelope system.  The envelope system is set up to allocate a certain amount of money that is determined ahead of time, then you put the amount of cash you have decided on in each envelope.  You spend the money that is in each envelope and when it’s gone, it’s gone. There is no more money in that envelope to use.  

When I first started on the envelope system, I had an envelope for almost every category.  Groceries, Gas for Car, Food Out, House Maintenance, Car Maintenance, Clothing, Medications, Dr.s/Dentist Visits, Vitamins, Hair, Gifts, Pet Supplies, and Misc.  And I carried all the envelopes around in my wallet. It was fantastic to go anywhere I needed and just pull out the cash that was required but it got to the point where I was carrying more than a few hundred dollars with me, which to some extent could be dangerous.  When at a cash register, you pull out this wallet with all these envelopes, you have all this cash, people give you a weird look, and you never know who is watching you.

So once I started following some of the FIRE bloggers (Mr. Money Mustache, Root of Good, Accidental Fire, Chris Reining) I found out that all the money I was waiting to spend, especially the maintenance envelopes, was being wasted because it could be sitting in a brokerage account earning interest.

So now every two weeks when I get paid, I do my budgeting (Dave Ramsey’s Allocated Spending Plan figure out how much I need for each category, go to the bank, get the cash and divide it into the envelopes that I have.

I currently only use 5 envelopes:



Food Out



The clothing envelope doesn’t get filled with every paycheck.  I go months without buying clothes. So now it just gets filled when I know ahead of time that I am going to buy some clothes/shoes, etc.  The same goes if I know I will have to buy any birthday gifts for the upcoming two week period.

Here is an example of what I do (I am just using an arbitrary number):

Paycheck = $1000

Groceries $200

Gas $200

Food Out $200

Misc $200

I actually use less money than my example, but you will probably get the idea.  So, when you go to the grocery store, gas station, etc you can not spend more than what’s in your envelope…and that envelope is supposed to last you until your next paycheck. It does take some getting used to, but once you get used to it and find out how much more money you were spending prior to using the envelopes, you’ll wonder why you didn’t start this earlier in your life.  The less money you spend, the more you have to put towards your debt or your retirement.

Let me know what you think about the envelope budgeting system.

Here’s to reading on!

Disclaimer: Please use your common sense. The information provided on this website does not, and is not intended to, constitute legal/financial/medical advice; instead, all information, content, and materials available on this site are for general informational purposes only.

Affiliate Disclosure: Posts may contain affiliate links for which I’ll receive a small commission. Thanks!

I do not get any money or free items from Vanguard or Personal Capital.  Vanguard just happens to be one of the most popular money management companies that most FIRE bloggers and myself use.  Vanguard is the largest provider of mutual funds and the second-largest provider of exchange-traded funds (ETFs) in the world.  Personal Capital is a wealth management company and provides free and fee based versions of online financial management tools. 

No, that is not me and my boyfriend (BF) walking on the beach. We both have longer hair! That is a free picture from Pixaby.


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