Friday, September 25, 2009

Making Your Money Go Farther

This guest post is by Tisha Tolar, a writer for, where she provides information about credit card consolidation, debt relief and how to get out of debt.

With falling stock prices and job layoffs, stretching your money is more important now than it has been in many years. Budgeting is a common technique for managing money; yet many people find the budgeting process too convoluted. The spreadsheets and receipts become overwhelming.

With any system, if it becomes too much work, you quit doing it. The solution for finding the right way to track your spending involves creating a system that is simple and easy to use with no more than one or two steps.

Instead of using a combination of credit cards, checks, debit cards and cash, use an envelope system. The envelope system involves the use of only cash. This system pays for expenses such as food, haircuts, entertainment, gasoline, gifts and clothing. It generally does not cover fixed expenses such as mortgage, utilities, and telephone, tuition and loan payments. Here is how it works:

Determine how much money you should be spending or have available to spend each month. Note that the amount should not exceed the disposable income you have available after paying your fixed expenses.
To arrive at this amount, subtract your monthly fixed expenses from your monthly income. The amount left is your disposable amount.
Divide your monthly disposable amount of money by four. This is how you arrive at your weekly budget.
Put cash in an envelope equal to the weekly amount you set aside.
For one week, all the money you spend comes from the cash in the envelope. This means you will not be using credit cards, debit cards or writing checks. This also means you don’t have to transfer the information from your receipts to a gad-awful spreadsheet.
At the end of the week, any leftover funds can be set aside for emergencies or larger purchases. Another option is to move the leftover money into next week’s envelope.

The cash envelope system will stretch your money as it will force you to become more aware of how you spend your money. For example, if it is Tuesday and you only have $20 left for the rest of the week, you might decide to forgo going out for lunch and instead swing by home to eat leftover pizza from last night.

As you use the cash envelope system you will likely become more familiar with the concept of cash flow. For instance, if you buy $50 of groceries on Monday and by the end of the week, your family will only eat $20 of those groceries purchased, you have an extra $30 of food sitting on your pantry shelves. That same $30 could have been used on Thursday for haircuts or an evening at the movie theater.

In addition to helping you determine what is truly valuable in your life, this thought provoking system will stretch your dollar, put you in control and leave you feeling much better about yourself.

This guest post is by - Tisha Tolar is a writer for, where she provides information about credit card consolidation, debt relief and how to get out of debt.