Wednesday, July 2, 2008

Cash only, please.

I've spoken about this before (using cash), but it never really got off the ground. I'd do it for a while, then go back to my debit card and check book. (Better than credit cards, right?) Even so, I'm still finding a way to OVERSPEND in nearly every category.

Recently I started watching the show "Til Debt do Us Part", with Gail Vaz-Oxlade as the host. The show basically starts with a couple having major financial difficulties (usually loads of debt), and want her to come and help them figure out how to get out of debt. She takes away all debit and credit cards and makes them live on CASH ONLY. The cash only is for variable expenses (i.e., groceries, entertainment, misc.).

What I LOVE about the show is seeing her set up the glass jars, labeled with the category and how much should go in each for the month. Example: Labels on the jars are "Food" , "Entertainment", "Clothes/Gifts", "transportation" and "misc/other".

To figure this out for yourself (with your own budget), you can go to her "Interactive Budget" online and figure out how much should go in your jars.

Today I figured out how much should go in my jars, although I can't start until the 15th (when I get paid again). My categories are the same and I figured how much I could spend weekly and monthly.

Here are my categories:

Transportation - gasoline and maintenance $550.00 /month $126.92 /week

Food - groceries/eating out $800.00 /month $184.00 /week

Clothes/Gifts - clothes, gifts, Christmas $570 /month $131.54 /week

Entertainment - kids activities, entertainment $285.00 /month $65.77/week

Misc. - cleaning, allowance, pets, household $475.00/month $110.00/week

Once you spend the money in the jars, you put your receipts in the jar that you spent from. It's a way to keep track of what you are actually spending. I'm excited to start this. It's visual. Once the jars are empty, the spending must stop until the next time they get filled. Wow. What a concept...

Gail Vaz Oxlade has a blog and has some pretty interesting posts. Check it out!


RacerX said...

Our cash system has been the #1 thing (IMHO) that has turned around our finances. While we use envelopes the hard truth cannot overspend cash! You spend 18% more when you use credit vs cash since it is easier to not see it as real money.

Our Envelopes are:
Entertainment (movies-videos, etc.)
Dining (Inc all fast food!)
My allowance
Wife's allowance
Kid's allowance
Overflow (which is previous unspent envelope money)

Like I said I believe this and cutting up all credit cards are the two most important things that you can do to achieve financial independance...So start on Independance Day! :)

helen said...

Nice post Sharon. Ive also seen "Til Debt do Us Part" and I've had some experience of the pain that bad debt can cause. I used to have credit cards but found it too easy to use them and things soon spiralled out of control. Thankfully, I had the support of my parents to help me through some tough times.

Canadian Saver said...

I'm guilty of using my CC too much... I want the miles/points and yes, I probably overspend. I honestly need to do the jars too, sometime soon!!!

I can't wait to see how this works for you :-) Good luck!!

Foxie said...

I tried to find that show online, but the only episodes I found wouldn't play since my ISP isn't Canadian. :( I'll have to try again... (I'm half Canadian, that should count for something, right?)

I hate having a ton of cash on me... I keep a mental note of my balance in my head, and cash is never included there since it's already been deducted. That makes it easier for me to spend it on whatever...

I like the idea of replacing the money with the receipts, though. Then you know exactly where it all disappeared to!

CT Mom said...

Good luck with this - I'll be interested to see how you do!

Sharon said...

This will definitely be inconvenient, for sure, but it is definitely needed for us, mainly so we can save for the things we want (i.e. new study furniture). Controlling our spending is the only way this will happen, otherwise we will fritter away $$ that could go towards a much needed desk and credenza!