The Envelope Method
To get out of debt, you need to come up with a method of budgeting, and stick to it.
One popular method, that has been around for decades, is the “envelope method”.
First, you make a list of all of your expenses – the expenses that you would normally put on a debit card or credit card.
For these expenses you should:
Make a list of the different categories – like groceries, entertainment (movies, lunch with friends, books, magazines, Starbucks), gas, personal grooming (hair, nails),
Figure out how much you will spend in that category in a week, two weeks, or monthly. Two weeks can be a good way to do it, because most people get paid every two weeks.
Put that amount of cash in each envelope.
If you run out before the end of the two weeks – THAT’S IT. You have to do without until the next time period starts.
This forces you to really acknowledge how much you are spending, unlike when you use a debit or credit card. And also unlike a debit or credit card, when you run out of money, you can’t steal from another category – so you will realize that you are spending more than you budgeted.
Then you have to decide if you need to increase that amount, or learn to live within your budget, especially until your debts are paid off.
The envelope system is one of the most popular budgeting systems there is for a reason – it’s simple and it’s effective.