Overspending

If you have a problem with overspending or do not have a budget then I would recommend Dave Ramsey’s book Financial Peace.

Here are some highlights from Dave Ramsey’s book Financial Peace:

The Envelope System

He says “one way to make sure you don’t overspend is to get on the envelope system.”

Here is how it works:

Allocate however much money you desire and can afford to spend on the following categories each month:

1. Grocery
2. Restaurants
3. Gas and Oil
4. Car repairs and Tires
5. Laundry/Cleaning
6. Toiletries
7. Baby-sitter
8. Cosmetics
9. Hair Care
10. Blow money
11. Entertainment

One of the keys to this system is to pay with cash instead of cards, and checks as it will hurt more and you will think twice before spending when you pay with cash.

It helps with not overspending but it also helps you keep track of how much you spend each month on each category and then you can make the needed adjustments.

You are not keeping within your budget if you are robbing Peter to pay Paul. In other words if you are taking money from the grocery envelope to pay for hair care you are
breaking the budget. You must keep disciplined and only spend the money that is designated to that category.

You may need to add more envelopes and discard others as your lifestyle may be different from the one proposed.

Hope this helps. Remember discipline is the key to freedom. If you discipline yourself to a budget then you can enjoy the freedom of being debt-free and also enjoy being stress free as a result.

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