Have you seen that Facebook meme that says, “Someday we old folks will use cursive writing as a secret code?” People look at us with the same dazed eyes when we talk about the “envelope system” to manage money as the kids in our lives look at notes of ours written in cursive. We won’t pontificate on the values of the envelope system. For that, you can read our book. If the envelope system is too antiquated or not practical for you, meet our new partner, Mvelopes.
But before you do . . . .
Cash is King
We fought the good fight. We denied it. We lied to ourselves. We lied to each other, but we eventually accepted that cash is king. There are people who use credit cards and pay off their balances month after month, but those people are few and far between.
I, also, hear there are people who go to bed with uncorked bottles of wine in their kitchen. They’re like those damn unicorns I can’t find.
Consider that the average American household with credit card debt spends about $1,300 annually servicing their credit card debt. That doesn’t include their costs for servicing student loan or mortgage debt. That’s straight up credit cards!
If their average household income is $51,939, a rise of $1,300 would be a 2.5 percent raise. That’s a good raise in this economy. That’s a new fridge or the cost of a nice one-man vacation, according to American Express. That’s 24 percent of the maximum allowable annual Roth IRA contribution.
The credit card system was designed for banks to make money. Banks don’t make as much money when we pay off our balances each month, as opposed to carrying a balance from month-to-month.
This is why, in part, we amassed $51,000 in credit card debt. As much as we wanted to be advanced credit card users, we weren’t. When we accepted that, we paid off our debt. Before then, it was one step forward and two steps back.
The Envelope System
In our book, 4: The Four Principles of a Debt Free Life, we talk about the envelope system we used to pay off our debt. We literally used three white envelopes, one for “Social Spending,” one for “Gas Spending” and one for “Groceries Spending”.
Each paycheck we put our allotted cash for each category in its corresponding envelope. When cash ran out, it ran out.
At first, this felt extremely restrictive, but we adapted and it helped us pay off our $51,000 of credit card debt in two and a half years.
Like kids today trying to read cursive, you’re probably thinking our envelope system is old-school and not in a cool way.
We might have agreed with you until now!
Mvelopes is the award-winning budgeting app (that link will take you to Mvelopes’ free Debt Analysis application that we know you need) that brings the envelope system into the same century as smartphones, Mars Rovers and velvet tracksuits.
From your phone, Mvelopes gives you up to 25 envelopes to budget your spending. You can itemize transactions in real-time for easy tracking. There is an easy envelope spending view and both net worth tracking and cash flow reports.
Mvelopes is much more than a slick version of white, paper envelopes in your junk drawer. In addition to helping you budget, Mvelopes will help you pay off your debt faster just as our envelope system did for us. Having a system to easily track spending and monitor income and expenses will simplify paying off your debt.
Having all your financial information at your fingertips on your phone means you’ll never be unsure of where you stand financially from paycheck-to-paycheck and month-to-month.
Mvelopes is more than a pretty user-interface, it’s a coaching team too. Mvelopes’ basic package provides enough financial help for most people. If you need more help than a tool, like a human, Mvelopes has that. Along with the basic Mvelopes’ app features, you’ll get video content, eBooks, a debt-reduction plan, a financial mastery course and a real, live human.
One of Mvelopes’ Certified Budgeting Coaches will act as your financial accountability partner. They’ll help you build an emergency fund, pay off debt, develop cash savings and lay the groundwork for your financial goals.
Of course, if you don’t need that much help or don’t want to pay a fee, Mvelopes’ basic package is more than enough. Click here to get Mvelopes’ free Debt Analysis and then choose either Mvelopes’ Basic Plan, Premium without Coaching Plan or Premium with Coaching Plan.
We all rely on tools to help us get to where we want to go. Whether it’s a car and maps, a car and GPS, envelopes or Mvelopes, find the tool or tools best for you. If we knew about Mvelopes when we were paying off our debt, we would’ve used them. That’s why we’re recommending them to you now.
Other articles to help you manage your money:
- 3 Things You Should Know about Cash and Cash Equivalents
- Using Cash Can Limit Risk of Identity Theft
- 4 Debt Lessons We Learned To Save You Time & Money