If you go and ask your grandmother or great grandmother, you will see that they most likely used some sort of envelope system. It may not be as sophisticated as the one Dave Ramsey has created, but it is probably something similar to it. Your great grandparents used to SAVE money before they made a purchase. If they did not have the money they needed in that envelope, they just went without until they could afford it. (I know, going without something until you can afford it...BLOWS my mind!) Why would anyone want to wait for something when they can have it now via a charge card? That is why your grandparents are not in the same financial bind you are in. They actually have the discipline of saving up for a purchase and waiting until they have the money to go out and buy it.
I look at my grandparents and see two people who have saved their whole lives and are now able to retire without having to worry if the government is going to send them their social security check every month. They have enough money saved up, they could probably live until they were well into their 100's and still have money left over. Actually, with them being at the age of 76, they are still invested in the stock market. How crazy is that? My grandparents bought their little two bedroom condo on the lake with cash about 10 years ago and they recently purchased a 2007 Buick LaCrosse. Before that, they had bought my Aunt's 1986 Buick Reagle and drove it around for 5 or 6 years. So...what's my point? My grandparents have saved for what they want. Sure, they could have bought the LaCrosse when it was brand new 2 years ago. They didn't though. They waited and paid cold hard cash for it. My grandpa told the sales guy he would give him 17,000 cash and not a penny more. Talk about negotiating power! (We will cover negotiating another time) He has never had a newer car his whole life. He has worked since he was 14 and just was forced into retirement at age 76, only because the company closed their doors. He worked primarily for two companies his whole life. That is over 50 years of service between two companies. That is AWESOME! That is LOYALTY. Not something we see these days!
If you want to learn how to handle money, talk to your great grandparents or if your grandparents did not fall into the credit trap, talk with your grandparents! They will enjoy your company!
Back to envelopes. Use envelopes for things like gas, food, make-up, groceries, eating out, hair cuts, toiletries, License and taxes, car repairs, house repairs(minor), etc... I think you get what I am saying. Use it for the essentials. Use your checking account to pay your bills. Other than that, carry your envelopes around. When your envelope is low on cash or out, you can't spend anymore until you are able to re-fund your envelopes. That will create discipline.
Closing story for you. My wife and I were at Meijer one evening and she needed to pick up some make up and hair products. I told her there was $20 in that envelope she could use for this stuff. We had everything in hand and got up to the cashier and had her help us. She rang everything up and it came to $19.43. I thought Kristin had the envelope on her and she thought I had it. Neither of us had the envelope we needed for this purchase. We could have used the debit card and re-imbursed ourselves the following day, but we DID NOT! We said if we don't have the cash we will have to come back and get it later. My wife is the one who told me to put the debit card away. I was willing to use it to make her happy. She is the free spirit and she showed some serious discipline. It was AWESOME! As a nerd I was super happy with her that night!
Lesson: If you do not have the cash on you, either go home and get the envelope or just wait until you go back to the store!
Truly better than I deserve,
Your Financial Health Moment!
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