The Chronic Consumer

A few days ago, I wrote a post about how envelope budgeting has helped my family meet our financial obligations. It seems, however, that one of the things I said in my post has stirred up a bit of controversy with a few readers.

I’ve gotten several emails telling me that we shouldn’t be spending any extra cash left over in the envelopes at the end of the month, but instead should carry the balance forward, put the money into an emergency fund, or deposit it all into savings.

These are actually good points, so I appreciate the fact that you guys have brought up the issue. The reason we’re able to spend the leftovers is that we already make provisions for an emergency fund and for savings, and don’t feel that we need to keep putting every extra cent away. Yes, we could carry balances forward — and we sometimes do just that when we think we’re going to spend more the next month. But for the most part, we feel comfortable enough with our financial health to have a little fun.

So while your concerns were valid (since you didn’t know the whole story), I hope my explanations were satisfactory. Trust me, it’s not as though we’re burning through our guaranteed issue life insurance policy payment or our retirement savings when we spend this extra dough! I’ve found that budgeting is always more successful when you allow for fun purchases, and I’ll continue to follow this philosophy.

We’ve always had a bit of trouble staying within a budget, so I’m always trying new systems and strategies. The one that has worked best for us is the envelope budgeting system, in which the cash needed for a particular expense is put into its own envelope. There’s nothing flashy or unique about the system, and it’s about as basic as you can get, but it really works.

What I like best about these envelopes is that we can easily add and subtract them as our needs change. For example, we’re not the kind of people who spend money on clothes every month, so we only put the “Clothing” envelope in play a couple times per year, like near Christmastime and during the back-to-school months. Similarly, if we know we’re going on vacation soon, we’ll add extra envelopes for fun money and souvenirs as well as for something more practical like travel medical insurance. Once our vacation passes, the envelopes disappear as well.

Another feature I like about our envelope budgeting system is the way we dispose of any cash that’s left over. In odd-numbered months, we put the leftovers back into savings, but in even-numbered months, we get to spend the leftovers on fun stuff. That always gives us a little extra incentive to be disciplined!

Anyway, if you’re having trouble starting or sticking to a household budget, I highly recommend the envelope system. It works wonders!

I’ve stressed this point before, but it’s so important that I want to mention it again. In this day and age, there’s no reason to stick with a bad car insurance policy that forces you to pay high premiums or huge deductions before seeing a cent from the insurer.

Sure, in the past it was a difficult, time-consuming process to get quotes and compare rates, but not anymore. Now that consumers can shop for car insurance online, there’s no excuse for paying more than you absolutely have to. I’ve changed insurance carriers four times in the past five years, and have lower premiums now than I ever have before.

If you’re looking for a way to free up some cash in your household budget, then I suggest periodically reviewing your auto insurance policy and comparing your premiums to others that are available. You might be surprised at how much money you can save this way!

It seems that no matter who I talk to, the subject eventually comes around to saving money. Everyone is having problems and is looking to scrimp and save in any way possible.

When it comes to clothes shopping, many of my friends have admitted that they no longer buy offerings from designer labels. Those who used to shop at Nordstrom’s now set their sights a bit lower. Those who used to shop at Old Navy or whatever now go to Target and Wal-Mart. This applies to all items of apparel, from work stuff to weekend wear and even lingerie.

I for one am pretty sick of all this talk about saving money, not being able to make ends meet, etc. etc. I can’t wait for the economy to get back on track so I can start spending freely again! I need to shop!!

At an online message board that I frequent, there was a recent discussion about unfair billing practices by some store and bank credit cards. Specifically, we were talking about the way these companies charge extra fees if you try to make online payments on the day your bill is due.

One example given was for a place called WomanWithin.com, which apparently used to be the Lane Bryant store card. Anyway, if you go to pay your WomanWithin bill, you have two options: schedule the payment for the next day at no charge, or pay today for a $10 fee. In other words, if you didn’t know that you had to schedule a payment, you’d get stuck paying either a $10 fee to get the payment processed on the same day or pay the associated late fees and/or interest charges.

What’s that all about? That means even if I’m ready, willing, and able to pay my bill on the day it’s due, I’d still have to cough up some sort of extra fee!

WomanWithin is not the only guilty party. Others mentioned include Chase credit cards, utility companies, and even the IRS’s online tax payment processor.

If you use a lot of different credit cards or payment methods when you shop, then it would be a good idea to review the fine print for each of them to see if you could be subject to late fees and penalties even if you try to pay on time. Otherwise, your accounts might end up in the hands of a few debt collection agencies before you know it!

This hasn’t happened to me since I was fresh out of college, but it looks like I’m going to be short on my credit card bill this month! I put aside the cash that I needed to cover everything I charged during the billing cycle — or so I thought. It turns out that I completely forgot about an automatic renewal for a subscription that I’ve had for years.

It’s no biggie, really, since I’ll still pay what I can and then have a small balance to carry forward for next month. I just hate getting charged those high interest rates for a stupid mistake that could have been avoided. I guess I should start using household budgeting and planning software so this doesn’t happen again!