About 5 years ago I saw my friend Katie pull out some envelopes from her purse to pay for something. I thought, “Wow, you mean, someone I know actually uses Dave Ramsey’s envelope system?” I had this mixed reaction. Part of me wanted to have my own set of envelopes so that I wouldn’t overspend. The other part of me, what Dave calls the “Free Spirit,” was like, “Nah, no way, I don’t want to feel restricted. That would be way too slow, cumbersome, and inconvenient. It’s so much easier to swipe plastic.”

Using envelopes seemed like something quaint, but good for my character. Kind of like using a washboard to do laundry. Dave would appreciate the analogy because just as using the washboard was his grandma’s way of doing laundry, the envelope system is what he calls “Grandma’s way of handling money.” At the time I couldn’t imagine how it would work for me. We didn’t have consistent income, so I didn’t know how we could even plan a budget.

Fast forward five years to last fall. My husband got an out-of-state job offer with consistent income, after years of the roller coaster ride of being self-employed. I had heard of Dave Ramsey in 2004 but it was too hard for me to listen to him on the radio because his show played at night in our area and that’s when I was doing dinner, supervising the kids washing dishes, and bedtime routines. So I was interacting with the kids a lot. When I got my used-but-new to me iPhone it was finally sooooo convenient to listen to the Dave Ramsey show, in the form of a podcast. I subscribed to it with iTunes. So now I can listen whenever I want! After many weeks of listening while I packed our home for our move to AZ, I was convinced that not only did we need the envelope system, but we needed the whole Financial Peace University kit. So we got it for Christmas. (If you ever order anything from Dave Ramsey, be prepared not to use a credit card! He is, after all, credit card’s number one enemy! You can only buy stuff from his web site using debit cards. We did pay for it with plastic, but it was backed by cash in the bank.)

It’s been almost five full months since I started using the cash envelope system that came with the kit. At first it was really awkward. I felt so self-conscious taking it out and paying for my groceries with cash, feeling like I was slowing everyone down in the line behind me. I am used to it now, though, and I love knowing that I am staying within the “walls” of the categories of my budget because of the “walls” of the envelopes. I give the system 4 1/2 stars. If you get the system that comes with the kit, you will get the “bare bones” version, the Starter System. It looks like a fat checkbook, but instead of pages of checks it has 6 pages of envelopes. Each envelope has flaps with lines, so you can write your deposits and withdrawals of cash transactions on the flaps. These spaces with lines to write the transactions are on the front and back of the flap and the front and back of the envelope.

I have four envelopes that we use cash for: Groceries, My Allowance, Non-food Consumables, and My Kids’ Commissions. My allowance is for things like clothes, garage sale treasures, treats for dates with my husband or kids, getting my hair done, buying books, makeup and hair stuff, miscellaneous stuff, and ahem, library fines. The non food consumable envelope is for things like soap, shampoo, conditioner, all my detergents, toilet paper, and all those things you get consistently at the grocery store that aren’t food, including ziploc bags and tape. The Kids’ Commissions is to pay my kids when they do certain chores without being reminded. I expect them to do all their chores, but if they have to be reminded, then they don’t get paid. We use dry erase charts from Dave’s Financial Peace Jr. Kit (more on that in a future post) to track that performance.

The system has a little pocket to hold cards or receipts and a few extra envelopes that aren’t bound. I guess those are for giving to your spouse. At first I thought they were replacements but they don’t have any holes punched in the side so you can’t attach them to the main system.

I give this system 4 1/2 stars. That’s because it lacks a few little things that would just make it 5 stars, like a snap or clip to keep it shut, and a little pocket for a pencil so I can have a pencil handy to write the transactions.

You can get an upgraded version, the deluxe system, that has the snap and a pen loop. It also has slots for credit, errr, excuse me, that would be debit cards, as well as a place for the checkbook and check register. Here’s a pdf from Dave about how to budget.