Changing This One Thing About Your Budget Can Set You up for Success

I learned something incredibly new and life altering that is going to completely change how I set my monthly budget.

One of my debt payoff strategies includes using the envelope system, where I have a certain amount budgeted for discretionary categories like groceries, holidays, shopping and fun. When I would get paid, I would withdraw one total, divide up the money and place the appropriate amounts in each of my envelopes. That way, the amount left in my account would be sufficiently applied to debt repayment. Luckily there is usually a little left over, so I have been able to apply that to one of my debt accounts. I have been seeing my credit card balance go down by $150 to $200 a month!

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Sounds like things are going pretty good right? This envelope system has worked well for so many people, but even though I am sticking to my envelope limits, something doesn’t sit right with me.

And then I discovered something interesting about myself. When I withdrew the money for groceries, $200 a pay period, I would spend the entire $200 for groceries. I would make a list, and calculate my costs as I worked my way through the aisles in the store. If some of the items on my list were on sale, I would have extra money left over, and I could (and I would) treat myself to ice cream, a box of brownie mix, a bag of cheese popcorn (smile). I would go through the two weeks so proud of myself for sticking to my budgeted amount.

You see, once that money is taken out of my bank account, and put in its correct envelope, it’s like saying that money is to be used specifically for that purpose. At least that how my mind sees it. I am restricted to that amount, but I am also allowed to spend and spend until I reach that amount.

As long as I do not go over, I can use everything I have in that envelope. So if my take-home pay is roughly the same each month, I will continue to be able to apply that $150 to $200 extra toward my debt.

But what if instead of budgeting a certain amount I set those categories to zero??

  • What if my grocery envelope is empty?

  • What if I don’t have anything to start with in my shopping envelope?

  • What if I don’t even go to the bank to make a withdrawal every other Friday???


Now, obviously that doesn’t mean that I will never buy groceries again. It means that I don’t have a preset amount to spend on groceries. It means that the groceries I do buy will be paid for with money that could go to pay off my debt, so I need to be intentional about what I buy from the grocery store. I need to have a more solid idea of what intend to make with those ingredients so I stick to buying only what I need.

And if I come across a good deal, I can still buy extra of whatever it is. But I will have first weighed the opportunity cost of buying those items in bulk versus paying down my debt just a little bit more.

For some people, knowing that they have money to spend on groceries, or shopping or fun helps them stick to their budget because it may feel less restrictive. They may feel like they are being rewarded a little each month for working so hard to pay off their debt.

For me it seems limiting in terms of how much I am able to pay toward my debt each month. By filling each of those envelopes with their allotments, I am saying that spending the money in those categories will help balance things out and make me feel good. But what makes me feel good is seeing my debt total go down in significant chunks, and that will only happen with significant chunks being applied to the debt.

So this month, my grocery envelope is empty. My shopping envelope is empty, no money set aside for fun.

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My teens will be returning to college and I know I will have to spend a little extra money on dorm supplies, and gas to travel.

No preset amount though, an amount that says that debt payoff is first priority, and all other things matter second. That will help keep the focus on what is truly important enough to buy and what things can be borrowed, shared or are not really needed.


What other strategies do you use besides the envelope system to stay focused on your debt goals?