A Modified Dave Ramsey Cash Envelope System

As many of you know, I'm a huge fan of Dave Ramsey's Financial Peace concepts. Starting this August, I'm implementing a modified version of his cash envelope budgeting scheme. In Dave's scheme, you make a budget for every item and put the appropriate amount of cash in an envelope for that item. For example, if you've budgeted $400 per month for food, then you have an envelope marked "Food" with $400 cash in it at the beginning of the month. That's all you get and you'd better make it last. I like the concept, but it doesn't work perfectly for me. Because my travel schedule is so variable, I don't have the requisite consistency to make such a plan work. Instead, what I've done is modify it slightly.

First, I budgeted for all of my known costs. Mortgage, insurance, utilities (estimated), property taxes, averaged car repair per month, savings, school tuition for the kids and so forth. These were all of the items that were going to remain constant regardless of my monthly activities. It is crucial to note that savings was considered a fixed expense. This is key to the purpose of Dave's plan. This left me with an amount, let's call it $350, to cover all of the variable costs for the month. That would be food, gas, clothing, school field trips for the kids, etc.

The $350 is just the starting point. Out of that comes my expenses while on the road. Into that goes my per diem for my trips and any other odds and ends I might receive. For example, my little dribs and drabs of cash from Pay Per Post go into this. This is the only envelope I use and it covers everything variable.

Mathematically, the key feature of Dave's plan is that it eliminates uncertainty from your finances. That is, I know that I will save X dollars per month because I have forced all of my variable costs into a single budget line. Without such a plan, savings gets blown away month after month because something always comes up that seems like a good idea. After all, I'm tired when I get home from travel and I don't really feel like cooking. Would it be so bad to go and get a fish burrito? And I could really use a new pair of shoes. Where does that money come from? Without such a system, it comes from a big blob of cash in your checking account. With the system, it comes from the envelope whose cash content is known. It doesn't take a rocket scientist to see if you can or cannot afford those shoes this month.

The other thing this does is force you into making decisions on the margin which is where they should be. That is, will I be happier with a pair of shoes or going out to dinner four times? Will my marginal increase in pleasure be greater if I choose the shoes or the sushi? The envelope only has so much money in it and spending it on one thing means it can't be spent on something else.

I've only been using it for a few days and already it's changed the way I look at my financial decisions. I've always been pretty disciplined in my spending, but this codifies it and forces every financial decision to be made based on sound principles. On the downside, it adds stress to my life as I have not received my per diem payment from my last trip and the envelope is getting pretty empty. However, since I know that several fairly large payments will show up this week, I know that my stress is only temporary. In any case, the stress should always have been there since all I've done is to make myself painfully aware of the exact mathematics of the situation. I haven't changed reality, I've just clarified my perception of it.

If you use a system like this or a different one you like better, leave a description or a link in the comments and I will post it here as an update.

For more tips on living frugally, visit this week's Festival of Frugality.

Update: After trying this for 7 months, I've posted my report card post and lessons learned.

Brunch in the Office

Our Maximum Leader got to enjoy the remnants of some canned beef stew in her office furniture this morning as I took a break from my chores. Her delight over the food seemed to indicate that there's little difference between canned beef stew and cat food.


Oh well, it gave us the energy to get to the rest of our days. Mine is finishing up the weekend tasks. Hers is sleeping.

If you haven't had your fill of cats, you can always check out this week's Carnival.

Heavenly Light on Mission Bay

For a friend.


Though we are all afflicted with adversity in one form or another, we are also blessed with the grace and strength to see to it that the sacrifices that have been made for us were worthwhile.

The MGB Comes Home

After about ten years in storage in a barn in Ramona, the Chronovore (Time Eater) has come home.


I think it could use a wash, don't you? After that, we'll rebuild the engine and transmission. The body is in great shape. Very little rust and the paint stayed pretty fresh all the while it was in the barn.

Update: After a delicate sponge bath given while the Chronovore was still in the garage, she shined up very nicely.


I had to do it in the garage since my driveway has a slope and the car doesn't start yet.

Clouds

Just flew in...arms tired...you know the rest.

I've been playing with getting cloud photos from the air. This time wasn't so successful, but here's my favorite of the bunch. Cotton candy? Cauliflower? Ice cream? What's it look like to you?


On the way out, I got stuck at DFW for 4 hours while a thunderstorm rolled through. It would have been a great opportunity for cloud photos, but it was too dark by the time we took off to see them. Instead, I got this surreal shot of the Dallas lights at night. It looks like the lights are beginning to swirl around the center of the picture. You can click on either photo to get a higher resolution version.

China is not Trying to Poison Us

...we're just using their products all wrong.

From today's WSJ.

Mattel Inc.'s recall of nearly one million lead-tainted toys shows the challenge Chinese companies increasingly pose for U.S. partners: how to benefit from low-priced goods without getting torpedoed by safety and regulatory risks.

The Mattel recall, comprising 83 types of toys from its Fisher-Price unit, involves excessive levels of lead paint in toys -- a common problem in China despite lead-paint regulations both there and in the U.S.

Blah blah blah. Second verse, same as the first. Now for the interesting part.

The Chinese government has tried to reassure consumers about the safety of its products. Chinese Minister of Commerce Bo Xilai said this week that more than 99% of Chinese exports are safe and of good quality.

I have to say this is true. Much of the food they ship to us does not contain lead paint. Many of their toys do not contain poisonous, plastic solvents used to make the measured protein levels higher. Can they help it if we stupid Americans aren't following the simple instructions, written in Chinese, on the labels?

This topical ointment toy for small children contains very little lead paint.
I mean, would it kill us to learn a second language? What's the point of being multicultural if we can't understand what they're saying (and warning us about on the product labels)? We make this big deal about how literate we are, but when it comes to crunch time and we need to read, just where are we? I think this calls for a massive increase in education spending. Come to think of it, doesn't everything call for massive increases in education spending?

This delicious food product contains only minute traces of plastic solvents.
(Testing for biological contaminants is still incomplete.)
How much easier do they have to make it for us?

The Way it was Supposed to Be

I just heard a Frank Sinatra cover of "Thanks for the Memory." It was horrid. Below is a YouTube of the very first version of it, sung by Bob Hope and Shirley Ross from the movie, The Big Broadcast of 1938. Despite the weakness of the voices, I think it's one of the most beautiful songs of all time. In this part of the story, Bob meets his ex-wife, Shirley, in a bar on board on a cruise ship.

Enjoy.

Groovy

If cats are your bag, man, then check out this stuff.

Nancy Pelosi's Lap Dog Works at the Washington Post

Our Patriarch of the Airwaves turns us on to this cringe-inducing article by Harold Meyerson in the WaPo today. As you read it, try not to think of some little, in-bred lap dog wriggling in pleasure at the site of his mistress. Maybe more than just wriggling. Maybe wetting himself for sheer joy.

Here's some excerpts. Please take your Pepto Bismol before reading.

In short, it's one of those weeks when Nancy Pelosi has no doubts about the wisdom of her decision to become speaker of the House.

"What's it like?" she asked herself, beaming, at the conclusion of a breakfast meeting with roughly 20 liberal journalists yesterday morning.

"It's fabulous! Absolutely fabulous!"

Harold is quoting the Spealer asking herself her own question in front of an already fawning audience. One can see the "journalists" quivering and yipping and yapping in paroxysms of ecstasy.

Of course, the situation hasn't always been this rosy.

Republicans have succeeded in tanking Congress's approval ratings

The majority party as a victim of the minority party? Of course. Why didn't I see that before? Poor Nancy! It just makes you want to tear up some slippers in rage when you see what those Rethuglies have done! Little Poopsie-Bear Harold finishes up with this whipped cream.

"It's about our children's ability to breathe clean air. Nothing less than the planet is at stake."...Thus, the most elegant of happy warriors, in a week when it's fun to be speaker.

I would be sick to my stomach to write this, even for a politician I deeply respected. This is so over the top that it's not even something a party hack could dream up, at least not one outside some Cuban or Venezuelan propaganda bureau. What's the WaPo doing publshing this airhead's prose? I thought they had some standards. This is too creepy to read.

I wonder if Harold sneaks into Nancy's house when she's gone to put on her clothes.

IT Support as Wile E Coyote

At work we have a very well-intentioned IT applications development group. They keep trying to develop applications for the workforce. Unfortunately, they are stuck in the 1990s. Their solutions all revolve around closed, integrated products like Oracle. Meanwhile, we have another, smaller group that provides us single-purpose web applications like Movable Type blogs and a simple web server to which we can ftp files. The Oracle systems must go through rigorous specifications, trial groups, test periods, analysis and discussion. Meetings upon meetings are held as we ponderously ponder our future IT needs. Meanwhile, the blogs and the filespace and all of the attendant commercially-available products are taking off. Users are constantly finding creative, new ways to be productive with them.

The end result is that our IT applications development group is like Wile E Coyote in the old Warner Brothers cartoons. They create elaborate systems for fulfilling customer needs and end up getting flattened by the speeding Web 2.0 capabilities. Sort of like this.

Because I was Afraid That There Were not Enough Pictures of Cats on the Internet

Well, that and the fact that she has the glow of Feline Theocratic Sacredness about her.

Would You Kill Your TV for a Million Dollars?

First, read this.

Then watch this.

Any questions?

Those Lazy Days of Summer

...look like pretty much all the other lazy days for our Maximum Leader.

Asian Pop Culture

This is a Pay Per Post ad. But I would have done it anyway after I saw the blog.

Asian Pop with Yein Jee is an Asian Pop Culture blog with all kinds of cool stuff. It's an eclectic blog and I liked it as soon as I saw it. It has movie reviews, artist profiles and all kinds of cool stories. My favorite was one written around this photo of a potato that looks like a foot.


Read his post to find out more.

I just found an even better one. Dig this. Wow.

For those interested in anime (I'm not one of them), his blog has what seems to have up-to-date posts on it as well. I liked the concise articles and Yein Jee uses graphics and photos to good effect. I'm not sure if I'll induct him into the Feline Theocracy just yet, but I'll be going back to visit in the future. If you stop by, let me know what you think.

In his Pay Per Post ad request, he insists that I include this link. Asian Girls. I'm not sure why. His blog does not seem to go in the direction suggested by the link. If it did, I'd be writing a very different blog review. My suggestion to young Mr. Jee is to drop the implications of that link and that title and focus on pop culture instead.

Not a Mustang, but an MGB

I've written previously that I was looking for a late 60s Mustang project car that I could work on with my son. We've changed our minds and will be bringing home my 1973 MGB that's been in storage for a decade. We'll save the money we would have spent buying the Mustang and will be able to use that on the restoration of the B. Here's a photo of a fully restored 73 B in the same color as my car, Glacier White.


I can't wait to get started. Photos and stories to follow.

Mac vs. PC

Laurie McGuinness is a genius. Now I want to see one about the iPhone. :-)

The Road to Financial Peace Gets Rocky

I'm a huge fan of Dave Ramsey's work on personal finances. If you haven't got a copy of his book, Financial Peace, I highly recommend it.

In that book, he lays out a simple, seven step plan for managing your money. Some of the steps were easy for me, like paying off all of my non-mortgage loans and moving from a credit card to a debit card. Now comes the hard part. Saving money.

Once the bills for my car and credit card stopped coming and I found myself with some extra money each month, the driving force behind my financial discipline melted away. "Yes, yes, I'll save my money," I would tell myself, "but wouldn't it be nice to finally have a stereo system in the garage? I'd really like a TV in the living room, too." One thing piled on another and I started cruising Craig's List and eBay with the feeling that I had cash in my pocket.

The problem was that I didn't really have cash in my pocket. I had paid off my debts, but I had yet to build up my savings. Dave recommends that you have 3-6 months of living expenses in liquid savings. I had something like 3 weeks worth of expenses saved. I could see that progress towards 3 months of savings was going to be slow, too. Did it really make a difference if it took a little while longer to save the money? After all, that smoker for making great BBQ didn't cost that much and it would really add to my cooking repertoire.

Wondering about the wisdom of buying stereos and smokers, I deferred my purchases and didn't spend the money. As I sat and thought about my financial history, I recalled that every month seemed to bring a large, unexpected bill. In my old house, it was usually related to something breaking down in the house. Here, it could be child or vehicle-related. Without that liquid savings, I'd be back on the credit cards in no time.

Then the troubles started to hit. My PC died. My TiVo died. My microwave's front door glass broke. Our family vacation ended up being more expensive than I had expected because Dollar Rental Car had been giving me AA miles instead of Dollar points and I had to pay for my rental car instead of getting it for free. All of them were small to medium-cost items, but they added up quickly.

Luckily, I hadn't given in to my impulses to buy things and I had my savings to draw upon. My problems quickly ate away at my storehouse of cash, but it never got to the point where I had to draw out the credit card and use that. Now I'm convinced. The money goes into savings until at least 3 months of expenses are there. It's hard to do and it's not always fun, but when you need the cash and you've got it on hand, you feel really, really good about yourself.

Frugality is the order of the day over at the Festival of, well, Frugality.

La Jolla Sunset

Turbo Hamster

Putting on her Game Face

We've had more raccoon infestations recently. A troop of four of them came in through our Maximum Leader's cat door the other night and made it all the way upstairs before she jumped out in front of them and growled at them. This woke me and we chased the little bandits away. We're back into lock down mode at night to keep them out.

Would you mess with this cat?
The last two nights, however, our Maximum Leader has gone outside to play and has stayed out past lockdown. We haven't been able to find her and she's had to spend those nights outside. She doesn't seem to mind it and always comes in right away in the morning. The nights have been so beautiful lately that I don't blame her.

As for the raccoons, I'm not sure what to do about them outside of just closing off all entrances to the house. It's a hassle and forces me to get the litter box out again, something I dislike immensely, but it seems to be the only method of keeping them out that works.

For more furry fun, visit this week's Friday Ark and Carnival of the Cats.