The ways I spend money

I originally wanted to name this post "Dolla Dolla Bill Psychology," but I thought my casual gangster slang might ruin my credibility. Plus, I took the silver grill out of my mouth when I edited. Thus, the responsible (yet boring) "The ways I spend money."

Let me preface this post by saying that while I typically consider myself good at managing my money, I will be honest and admit I practically fell off a financial cliff during December, so I am glad it is a new month and a new year so I can start fresh again. I basically felt like December didn't count, so I was spending loads December 28th-31st, thinking that I could just wipe it from my brain in January. But I'm usually never like that, really.

I've been reading a plethora of new blogs over the break, and a lot of them have New Year Resolution/goal posts (but not the kind you find in football). I admit, I will likely post a bit of something on such a topic in the near future. What I find interesting is the number of people who are aiming toward debt-free goals, and one of the ways they try to achieve this is through "the envelope system".

Don't get me wrong. I think a debt-free goal is fabulous. I wish my mortgage was all paid for. But this envelope system, it would never work for me. The whole concept is that you plan a budget, then take out all the cash you would need and put it in an envelope. For example, you have your grocery envelope with all the cash you plan to spend, your gas envelope, your entertainment envelope, etc. The people that do this say that it works because then they can't spend more than what they budgeted for. Makes sense, I guess.

I would fail at this. It's reverse psychology for me. I feel like cash is free money. I purposely try not to keep more than twenty bucks in my wallet because I don't feel guilty about spending the cash in my wallet. I feel like it is extra money. I feel like cash spent is money unaccounted for. Unless you are awesome at keeping receipts (I'm not), then you don't know where your money went. It's like "Okay, I know I started the week with fifty bucks, but now I only have 17 and I can't remember what I bought." Because, oh darn, the receipts were in my pocket that just went through the wash.

This is what I do:
I always use my credit card to pay for gas, and I always pay off the full amount at the end of the month so I never pay interest.

I try to pay for everything else on my debit card. The reason I do this is because it's all recorded for me on-line. I can't forget where I spent that thirty bucks, because I can log in to my on-line banking and see that I spent it at Target. I am compulsive about checking my on-line account. I do it at least twice a week. I am reminded week after week, month after month, of where I spent my money. I can't forget it, like I would if I just paid cash. For me, there's more accountability. Plus, it's easier to keep track of one debit card than it is to keep track of six envelopes or whatever. Plus, I like that my on-line spending report automatically categorizes for me. I can see how much I spent on gas, groceries, utilities, clothes, office supplies, health care, insurance, etc. etc.

If you are concerned about spending what you don't have, then just make sure there's not more money than what you want to spend in your checking account. Keep the extra in your savings account. But this is just me. I know the envelope system works great for some people. I just know I could never get it to work for me.

Interesting blogs:
Man Vs. Debt This guy and his wife (and daughter) barely own anything and are traveling around the world.

Samantha over at Mama Notes just posted this link to Enemy of Debt.