Cash Envelope System in a Non-Cash World

So anyone who knows me, knows that I am slightly obsessed with my personal finance (She writes on her personal finance blog). I also happen to be pretty obsessed with Dave Ramsey, he is a personal finance- get out of debt- live debt free guru! I listen to his podcast pretty regularly while at work, and I was even featured on his radio show back in September! I’ll talk about that more in another post I’m sure.

I don’t agree with all of Mr. Ramsey’s ideas and opinions, but I started listening to him after I saw a pin on Pinterest listing his “Baby Steps” to getting out of debt. It’s a great tool he focuses on in his own teachings, and I loved the idea!

He also tells his followers to cut up their credit cards and live entirely through cash transactions.

Which is not really possible. In fact, let’s just say it, it’s not!

But he doesn’t mean, you should only ever carry cash, and shouldn’t use debit cards- YOU HAVE TO. It is not realistic to pay bills via cash, you have to pay them online, or at the very least by check. What he means, by cash, is no credit! You can only pay for things that you have the money to pay for at the time you want to pay for them. New car? No loans. Going out to dinner? You better have money in the bank for that. This is obviously a very simple way of looking at a large problem, but it is designed this way so that people who HAVE issues with credit cards can kick the habit and get themselves out of debt without creating more debt in the process.

He has a cash envelope system for the things you CAN pay cash for. Each month you take out the money you have budgeted for specific things: Groceries, Gas, Pets, etc. Once the money in the envelope is out- it’s out! No more of whatever that was! It really helps to show where your money is going and helps you not make impulse buys. I even followed this plan while I was in college, not perfectly mind you, but it was easier because I was waiting tables and had cash on hand all the time. My paychecks were put in the bank, I used a certain amount of budgeted cash tips to put in my envelopes, and the rest went into my savings jar!

However when I graduated, I promised myself I would try to hold off on serving, and find a job in my desired field. It’s harder to use a cash system when you use plastic to pay for everything!

Thus, MY envelope system was born!

I’ve been using my system pretty successfully for the last month. Instead of cash, I use printed monopolyish-cards that have cash values on them and put them in my designated areas.

Once the section is empty, I’m done for the month!

I also have sections for my check card, my credit card, and my business card. When I use my check card to pay for groceries, I take the cards out of the groceries section and put them into my check card section, likewise for gas on my credit card and so on. If I use my check card to buy something for my business (if/when I leave the right card at home on accident 😛 ) then I put the cards into that section so I know to transfer reimbursement funds later.

This has been a pretty important group of sections, for most banks these days, they require you use your cards at least ten times each per month to avoid fees! Is that ridiculous? YES. And that’s why using all cash wouldn’t work, you would be charged fees for not using your cards. To make this system work for me, I try to remember to move the cards into the right areas as soon as I make a purchase, but I’m certainly not perfect and I do reconcile with my budgeting system when I go update that. I’ll have a post about my online budgeting spreadsheets soon!

This has been my envelope system, let me know if you also use a modified cash envelope system! I’ll make a post about all of your ideas as well!

Sugar and Savings,

xoxo Taylor

Debt Breakdown

In the effort of transparency I am going to breakdown all of my debts, from where I started to where I currently am. Like I said in my intro blog, I didn’t realize how much student loan debt I was actually acquiring while trying to pay for schooling, BUT I am particularly glad that I did not have a credit card during school (“Oh no! But you need credit to have good credit!” -Hush. I will get to my VERY good credit score in another blog post). I watched many of my classmates fall further and further into debt because, when you are broke in college, it’s real easy to just “charge it”. Thankfully, I was terrified of doing that, so I didn’t.

Here is the breakdown of the loans:

(These are the totals of each type of loan over the course of the 3 and a half semesters)

SELF Loan $32,000.00

This is obviously the biggest amount in one single type of a loan, this is the main loan students can get by themselves in Minnesota. There is a $10,000/year limit with a SELF loan but the rates are pretty great, I have a 3.03% variable rate on all of them. These were all from FirstMark Services.

Ford Federal Un-subsidized Loan $5,447.00

This was a loan presented to me through the school I attended. After you filled out a FAFSA for each year, they would send you what you were “awarded” (LIES.). I would be “awarded” a few small “grants” and “scholarships” which barely covered my books, and then I’d also be “awarded” the ability to accept these special loans! Which were “a great deal”, I was assured. Here’s the thing though, I’m not a loan officer for a bank- I don’t know what subsidized, or un-subsidized means. I don’t understand all the fancy jargon hidden in the fine print! I still don’t, sorry I can’t actually help you with that.

Ford Federal Subsidized Loan $16,323.00

Same as above, but for some reason this is significantly more. I don’t know why that is, but it leads me to believe it is the more evil of the two.

Parent PLUS loan $5,000.00

This loan we tried to avoid, I didn’t want to involve my parents anymore than I had to. Obviously I had to to a certain extent, your parents have to co-sign on loans, but I was very determined not to put strain on my family. I only applied for this loan with my mother after it was suggested I take an online class through ANOTHER campus so that I could move into the upper division courses for my minor and thus graduate at my desired time. At no point did either campus alert me to the fact that I would be charged for the class, online fees, and a “campus fee” for a campus I (to this day) have never set foot on! I received an email over the Summer I took that ONE class, saying I owed the other campus $4,000.00 and needed to pay them by the end of the week. I was a hard worker but I didn’t have $4,000.00 cash, just laying around, burning a hole in my pocket. Hence, the dreaded call to mom and dad “I need money…”.

All in all: $58,770.00 and my darling, amazing, loving parents, are not making me pay back the $5,000.00 parent loan.

My personal debt total in 2014: $53,770.00

Ouch. Since graduating December 18th, 2014, I consolidated the subsidized and un-subsidized loans through Great Lakes, a consolidation group. I also paid off a baby SELF loan that I had taken out for my last semester of school and I am officially down to $48,545.99!
Over the next few blogs I’ll be talking about how I do my personal finances, what I do when “life happens”, and my plan to pay off the $48,545.99 in the next 6 years!

Sugar and Savings,

xoxo Taylor

Introducing Sugar and Savings!

Sugar and Savings Logo While I was in college, like most young adults going through our higher education system in this country, I racked up some serious debt. I tried not to; I didn’t have a credit card, I lived with a roommate in a cheap apartment close to school, went to a state school, I bought groceries way more often than I ate out, and I worked my butt off- I had a serving job for 40-45 hours a week, AND I GRADUATED EARLY. I was in college for exactly three and half semesters…. and I still owed $54,000.00 when I graduated.

I thought I had been paying pretty good attention, I was pretty sure I’d be somewhere in the $40k- $45k range, but I was wrong. When I went through my exit counseling and I saw the very big, very real number, I cried. And not a “oh man that sucks” cry, I was “ugly-nose-dripping-how did this happen?!-full-on-sobbing” crying.

In the exit counseling they give you an estimate on how long it will take you to pay off your loans if you pay “X” amount of money per month. At a reasonable monthly payment, it would take me 10+ years. I’d be in my thirties before I had even come close to paying off my debt. To some people, that is reasonable and totally normal in this day in age, to me- that sounded like a whole hell of a lot of “not if I have anything to say about it!”.

Thus began my determination to be completely debt free in 6 years. I was going to do it! I wrote up a plan, I made charts, I’d saved every tip I’d ever gotten from serving, I was READY!

Then I graduated and literally nothing went accordingly to plan.

Since being out of school for a year, I’ve done a lot of things and made progress toward my goal (certainly not at the speed of which I’d prefer but… still.), and life happened. Life happens. After all the finance blogs, and college loan blogs, etc. that I read to keep myself positive about the whole thing, not a single one had prepared me for “life happening”.

Oddly enough, the people who feel compelled to write a blog post about these things (or at least the blogs that get popular), are the people who succeeded. Huh. Who’da thunk?

So here is MY blog- the very real (albeit sometimes depressing), very reasonable, blog about how I am navigating through “life happening” and still planning to be debt free in 6 years. Yes, it has already been a year since graduating, but 7 is still better than 10+ and life happens.

Sugar and Savings,

xoxo Taylor