How To Pay for Things With Cash: An FPU Graduate's Testimony

Financial Peace University is a 9-week course taught on DVD by nationally syndicated radio host Dave Ramsey.

The class covers everything from how to control spending with a budget to real estate and investing for retirement.

Millions of families have taken this course and many have similar success stories:

They’ve paid off some debt
Couples save their first $1,000 since getting married
And improved their marriage by working together

But there is one thing that happens when somebody takes a leap of faith and jumps head-first into the cash envelope system: They stop overspending and experience a level of financial control like they’ve never felt before.
Welcome Sarah; FPU Graduate
Sarah has a Bachelor’s and Master’s Degree in Education. She works for a non-profit that helps homeless families with small children. Sarah assists their clients with housing, food, utilities and getting them into a stable situation. She also helps them with their job skills and to learn how to budget. So why would Sarah take FPU?
Why take Financial Peace University?
Sarah says they were on the right track with their moneyplan but knew they could learn something new to put themselves into a better situation. The biggest thing she learned from FPU is HOW TO STICK TO A BUDGET.

Admittedly, Sarah said she was being cocky with her spending. Financial Peace University was the welcome wake-up call she needed. Now they are finishing up their first $1,000 in the bank and starting to attack some serious student loan debt.
Paying for things with cash
This was a new thing  Taking cash out of her bank account was scary to her. She was afraid that taking too much out would cause her to run out of money, which in hindsight doesn’t make any sense now.

Nobody is going hungry. Sarah says the opposite has happened: There is some pretty good food in our house right now. She is not missing out on all the impulse purchases they used to make and is sticking to her moneyplan.
Start paying for things with cash
Many of Sarah’s clients get paid with Pay-cards, debit cards that replaced paychecks and is becoming much more common today. She is beginning to ask them to do what she does: Take the cash out of the account and divvy it up into cash envelopes.

Decide how much to spend on things you purchase outside of the house. This would include food, clothing, eating out and entertainment.
Label envelopes with the budget categories (i.e.: Food)
Take that much money out of the bank and place it into envelopes
Use those envelopes to make the purchases
Do not buy other things from these envelopes
When you run out of cash, you stop spending

For more about how to pay for things with cash, listen to Coach Greg Pare in Episode 130.
Interesting side effect when you pay for things with cash
I have noticed that my clients who still use credit and debit cards always say “we paid for it with the card”.

However, when they start using cash envelopes they say “I used my cash envelopes”.

Notice the difference? You FEEL like you are in control of the cash - which you totally are! Cards don’t give you the same feeling of ownership, even when it’s a debit card tied directly to the same account that the cash comes out of. Interesting.

Do you own your money or are you just “putting it on the card”?