Dave and I set forth a challenge for ourselves at the beginning of June. For one month we were going to use cash only. Now I pay all of our bills online so we kept that method. However, we did set a budget for groceries, gas, entertainment, beer, and misc. We had separate envelopes for each item. We were not allowed to use the credit or debit card to supplement the money.
So how did do?
We'll after analyzing our finances, I was shocked that were over spending every month by $200.00. We didn't notice because items were put on the credit card and then paid for later. Let me state this, we don't have a credit card balance. We pay it off every month. We assumed we were well within our means. We never went without and we always put money into our savings and Roth IRA accounts.
For the month of June, we ended up having a positive balance number at the end of the month. We did end up putting some items on the credit card. They weren't necessities or emergencies, but we did discuss the purchases prior to making them. I, for one, quickly realized how a dollar drink here or there adds up by the end of two weeks.
Overall, it was a challenge. We're going to continue with the cash method and see how we do. I don't know if we'll keep it up forever, but it was the most beneficial with the miscellaneous purchases. Those will zap your wallet faster than you think!
Editor's Note: Also, if you're looking for a great way to track your expenses and set budgets, I highly recommend Mint.com. It's free and very easy to setup.