by Elizabeth S.
Hello from a very snowy Nova Scotia! My flight was indeed canceled, which was briefly devastating (until I looked at my work schedule and realized I could shift my vacation a day). Air Canada has been experiencing issues with their new booking system and I was in the thick of that mess. I tried to change my flight well before the storm (and before my flight was canceled) but never got through. Ditto after cancelation. However, I was able to find a new flight myself (no thanks to Air Canada) and I am finally here. Snowfall accumulation is 30 inches (!!!) of snow at my mother’s house. It all came down on Wednesday.
I’m planning on not spending money. We’re about 20 minutes from town here, so it will be home-cooked meals and quiet nights.
Financial updates:
I didn’t yet find out what my compensation will be for 2020, which is disappointing. We’ve been waiting for an eternity for department budget approvals at work this year. In the meantime, I’m still working on my personal budget. I feel torn between two ways of handling things:
- The envelope/jar method: take out cash, put in envelopes, don’t go over.
- Using all cards and tracking everything by viewing and categorizing each transaction.
Either way, I’ll have my budget spreadsheet going. I’m fairly averse to envelopes/jars of cash, but I also haven’t given this method a chance. I do like the protection and convenience of cards. Cash can be lost or stolen! I’m curious if there is a possible hybrid method here, too. Jars for categories I need special attention paid to. If I’m being serious though, I need help in all categories.
I remember first hearing about jars watching a Canadian tv show called Til Debt Do Us Part hosted by Gail Vaz Oxlade (who has recently been in trouble for choice words on Twitter). It looks like it aired in the US as well. A lot of people really swear by this method! But I have questions, like: Where do you keep the envelopes of cash? Do you actually withdraw all of your spending money each paycheck? How does this work with e-commerce being so prevalent in 2020?
I’d really love to hear from readers about this because I am beginning one of these two methods next week.
Next big financial goal
My next big goal is to reduce my monthly fixed expenses. They are out of control. Granted, I am automatically paying more than I need to for a number of expenses, such as my student loan and line of credit. But I also have a number of subscriptions, memberships, and revolving expenses I would like to examine and ultimately limit.
I’m spending today breaking down my budget into categories and I will share the new numbers in my next post, completely transparently. I know I’m getting a decent raise this year, and I plan on keeping the same standard of living I have today. I’ll automatically divert any extra funds to debt or my employer-matched retirement account (which is already being matched to the max at 3%, but I’d like to contribute more).
I know that I need to be disciplined financially or I will never be a homeowner. I’m doing mediocre at best right now. I’m chipping away at debt, not adding any debt, saving regularly. I still contribute to three savings piles each month. But you, the readers, have front row seats to the gratuitous frivolity that also exists in my financial life. I could be paying off debt considerably faster.
I read your comments, and I am really thinking hard about how to apply your feedback. Thank you for reading and commenting while I sort this out!
Elizabeth is a single woman in her early 30s, working as a manager at a software company and living in the most expensive city in Canada. She hopes to blog about her journey to eliminate debt and build savings for home ownership someday. Whenever she has taken two financial steps forward, she’s always taken a step back with a bad credit card purchase (we’re looking at you, unnecessary iPhone of May 2019). Elizabeth lives alone with her fur kids, a dog and cat, and when she’s not in front of the computer, she enjoys running, camping, reading, and baseball.
Just last month, you expressed your distain for tracking every transaction. If that is the case, then I think hybrid system is best. List your set expenses that are the same every month. Take out cash for the other expenses that include multiple transactions (groceries, entertainment) and your tracking should be much easier. I feel like you have not seriously tried a budgeting system because you are looking for a “perfect” system. There is no perfect system and budgeting is a chore no matter which way you do it. Commit to a system for a month or two. If you don’t like it after a couple of months, then try something else. You should definitely purge your expense list and eliminate anything that does not contribute to your financial/life goals. You should have done this months ago! If course, knowing what you need to cut required tracking all of your expenses. So we are back to that again. Bottom line is that it requires time and effort and difficult decisions to manage your money. It is not easy or fun at first. But the reward comes after you have a set system in place for making financial decisions and can see increasing net worth/decreasing debt month to month, Year to Year. This is a marathon!
I don’t like the cash system because it just disappears unless you’re counting every transaction. I also like the data with an online tracking system: trends, number of transactions, where, etc. This has helped me realize that I usually blow my grocery budget if I hit one stressful week or if I go every day. That being said envelopes would be the best system to make yourself not go over budget for things like groceries and entertainment spend. I imagine the guilt would be extreme going to take out cash to refill the envelope before it is time! I’ve never tried it, but I’ve been lucky enough to have enough fluff in my budget that it wasn’t critical to stay within budget down to the $10 mark. You’re right though, it could be just as confusing if you’re buying stuff online.
I am however a huge advocate of using credit cards for the purchase protection. Any “stuff” purchases that you expect to last a long time, or you want return/warranty protection on, I would make an exception and put it on a credit card but take the money out of the envelopes. This shouldn’t be too much.
I think once you get fully on board with sticking to your budget for a few months you can graduate from the envelopes to an automated tracking like mint.
I loved Til Debt Do Us Part. Was really sad when it was cancelled!
I also like the theory behind the envelope system, but not the logistics. I recommend a free app called Good Budget that allows you to set up virtual envelopes. You set up a certain budget for each envelope and track your transactions (it’s quick and easy). The app shows you how much you have left in each envelope and if you’re over or under based on days left in the month.
You have an option for an upgraded version of the app that ties directly to your accounts, but we don’t use it that way. We use it solely to track discretionary spending and irregular expenses. We know that our fixed, non-negotiable expenses are pretty stable month-to-month, so we just keep them accounted for in our overall budget, but don’t track them with the app. It’s super simple and helpful in keeping our day-to-day spending on track.
This is a really cool idea! I am checking it out now.
My financial guy recommended the Mint app, which I think you may use already? Also, Gail is doing a MasterClass on Twitter, if you follow her or have a Twitter account, that can be helpful as well.
I experience a lot of gratuitous frivolity as well, and I am determined to cut down too. No more unnecessary purchases, or clothing purchases, and hopefully i can get on board with bringing food to work this week. Also, I am thinking of using my reloadable tims card to have an amount on it every month, and once it is done, it is done. Maybe $20? So I can eat at my office once a week in a pinch!
I love Til Debt Do Us Part. You can still find old episodes on you tube.
I don’t like the cash system because you can lose it all or have it stolen and then what. A man called him to Dave Ramsey years ago when I used to listen. He asked for advise from Dave about what do you do when that happened. Dave told him pretty much to be more careful next time. It’s all fine and good if you are already past debt repayment and into wealthy building, but if you can barely make it and lose all your cash budgets, egads. No thanks