Debt Is A Trap

Continuing on the road to financial success will be filled with trials and errors.  Its mostly about changes in habits, behaviors, along with a strong commitment to those changes.  Something that we have recently implemented in our family is purchasing with cash.  Most of us have numbly become accustomed to swiping the card.  Debit or credit doesn’t matter, we do not see the immediate decline in the balance of the accounts so it is much easier to overspend leaving you short for debt elimination.

In creating your budget, I am sure you had set an amount that you expected to spend for your daily purchases.  Things such as gas, groceries, household goods, all of these should now be purchased from a cash allowance.  Budgeting is tough, those who are paid bi-weekly or longer periods apart can attest to that.  Here is how to get started.

On pay day, set apart the money going to the allocated payments.  What are you waiting for?  Pay them!  With the money left over, split it off for your essentials, the gas and groceries, etc, expected to be purchased before your next pay date.  Now, keep it in a safe place, you really don’t need to carry it around.  Split it up however you feel comfortable.  As you remove it from the envelop, write down the amount you used and for what.  Accountability leads to responsible spending, no one likes to have to explain why $20.00 that week went to gas station garbage.  It all adds up.  Here is something that may surprise you.  At the next pay date, you have a good chance of having left over cash.  Seriously, it can and will happen.  If you continuously overspend an allocated amount.  Take a good hard look at where that money is going.  You will either find that you have to modify that spending habit looking for a cheaper alternative, or that the amount was set too low.  Go ahead and adjust that allocation but make sure you are being frugal with the money.

What to do with the extra?  Say you found that you had an additional $35.00 that didn’t have to go toward replenishing your envelops.  As long as all of your payments are current, I say put it toward the next bill that you are trying to eliminate, or if you have something you would like to save for, start an envelop for that.  You could also use it to increase your emergency fund.

Experts say that we should have set aside enough money to support ourselves for at least three months.  Now that does not mean keep the cash in the house, a savings account you don’t normally access will do just fine, but whatever makes you most comfortable.

Soon after implementing the cash handling program I bet you will find that you have begun to further improve your spending habits and putting more money toward the debt elimination goals.  Happy Saving!