Let’s talk about money management. A lot of people have heard of a celebrity named Dave Ramsey. Dave is a financial adviser, radios show host, and acclaimed author. Dave’s book, “The Total Money Makeover” helps people learn the ins and outs of debt and how to get out of debt and stay out of debt. In fact, Dave’s number one goal is for people to live debt free.
One of the principles Dave uses in his strategy is to get people to use envelopes to help manage their money. Envelopes? you ask. Yes, envelopes. Dave has a strategy in which you set a monthly budget. Let’s say your food, rent, gas, utilities, and some extra spending money. Dave’s strategy says once you have been paid from your employer that you should immediately withdraw the cash you need for expenses. If you’re rent is $700 a month you would get your paycheck, take out $700 in cash, and place it in an envelope you have tapped to your wall marked “rent”. Now that the money is set aside for rent you need to do the exact same thing for your food, utilities, phone bill, etc. The second you get your paycheck, take out the cash and place it in your envelopes and DON’T TOUCH THE MONEY!
When you need to go to the grocery store, go to your food envelope. When you have to pay rent, go to your rent envelope. Anything you have left over from your paycheck that didn’t go into your envelopes should go into a savings account or into paying off debt. Don’t go out and buy the latest video game with the extra money, but PAY OFF DEBT!
This method is effective IF you stay focused. You have to already have budget in place and have planned out your finances in order for this system to work. If your food budget is $400 a month and you only take out $200 for your food envelope the process is pointless.
at FIRMS we believe that the first step to paying off debt is setting an honest budget and sticking to it. Don’t do anything halfway, go all out and get focused on setting your budget and taking back control of your finances.
As a premiere debt collection agency FIRMS is always here to help you manage your money and pay off your debts through our blogs. Do you have any specific questions on money management or debt? Comment below and we will be glad to respond!