So I decided to just try the Cash Envelope system, which is a lot simpler.

One thing I’ve noticed about using the Cash Envelope system of budgeting over the last couple of months is that (a) I’m always within my budget, unless something catastrophic happens and b) in general I’m spending less and thinking about money less-all I need to really do is look at my upcoming bills once or twice a month, and once a month I stock my cash envelopes–that’s it. and (c) the routine of pulling out the envelopes when I make a purchase has kind of de-trained me from thinking of using the plastic cards or associating them automatically with buying things. Instead I am associating an envelope of cash with buying things, which puts an automatic moderating behavior and brake on me. I do use my credit card (since I don’t like using my debit card) for gas and for online purchases, but those expenses are only like once or twice a month, whereas the cash envelopes get used multiple times per month. Using the credit card feels unusual now, which to me is a good thing.

Finally,

I do want to remind everyone that you also need to think back and remember what got you in debt in the first place…spending more than you earn. It may seem “obvious” and redundant, but when setting up the budget, you must be REALLY ready to make this a lifestyle of less spending and not just a period where you pay off the cards, and then start back at your old ways again, and wind up in the same shape a ways down the road. You just cant go on a fiscal diet for a time and expect it to last. It must be a lifestyle change, a way of life.

A reasonable budget is definitely the key. Reasonable in that both you and your spouse agree to it and that it is something you all can live with. Use an allowance system for all members of the family. After all necessary expenses(rent, utilities etc) have been taken care of, an allowance can be given to each family member who gets a pre-set amount of $$ each “payday” to spend as they please. This money comes from the $$ leftover in the budget. For the budget master, the budget never goes over from month to month. For family members, everyone has a “payday” with $$ to spend as they like.

We have used an allowance system for over 16 years in our house. It kept us disciplined, yet gave us freedom to spend our $$ the way we wanted without gripes from the spouse on how we spent our allowance. Check out http://www.theallowancesystem.com for an eBook that explains it all.