Author: The Dave Ramsey envelope system has helped millions of people pay off debt and live a better life; myself (and my husband) included! But after 4 years of using the envelope system I was fed up with the flimsy paper, the tearing, and the fact that I had to carry such an ugly wallet!
So I came up with a simple, no-sew alternative to the Dave Ramsey envelope system that cost less than a dollar and works even better than the original!
Early in our marriage my husband and I made some foolish money decisions that have cost us far more than just the money it’s taken to repay the debt.
Those decisions plagued every moment of our lives for the following 8 years and we are only just now coming out from under all that debt with the help of our family blog!
Many people had mentioned Dave Ramsey’s method of budgeting to us, but we always blew them off. Oh how I wish we had listened sooner!
Finally, we started working the Dave Ramsey system, and I even further worked to save money by developing my own Food Budget System that allows us to eat an all organic diet for $300 a month!
Now just a few years after finally making these changes we have paid off over $75,000 and are almost completely debt free!
But as perfect as the envelope system is in theory the practical application of the idea left a lot to be desired.
I gave up my beautiful leather wallet and replaced it with this rather dull looking blue one that came with the Financial Peace kit. For a while the sacrifice seemed worth it, but I wish I had figured out this method option sooner!
The paper envelopes tear easily (and you need to buy new ones), you can’t keep change in the appropriate folders because it falls out, but there isn’t a separate pouch to store the change, so it just ended up at the bottom of my purse. There was also nowhere to put ID card, debit cards, or membership cards… so they too littered the floor of my purse.
Every time I needed my ID I had to dig through my purse, hoping I could find it quickly. It was so embarrassing. Finally, I sat down and figured out an alternative.
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No-Sew Alternative to the Dave Ramsey Envelope System
Since I had a beautiful leather wallet from my grandmother, I knew I wanted to figure out an alternative to the envelope system that would work with an existing wallet.
And since I had a newborn, I wanted to make sure that whatever idea I went with was a no-sew, easy and quick method that I could throw together in 5 minutes or less!
Step One:
I went to Target and grabbed a plastic folder in red (my favorite color, pick your favorite color for yours!). It cost $0.98 and I actually have enough left over to make another one!
Step Two:
Then I measured the size of my wallet, marked the size with sharpie, made tabs and got to cutting.
Make sure that you are staggering the tabs along the top as you cut so that you can see all the labels once you’re finished.
Step Three:
Place all the dividers in order of tabs, then label them with a sharpie starting with your most used category on the left.
From there, I just slipped the dividers into my favorite wallet and labeled them appropriately.
Now I have a place for my change, all my cards, photos of friends and family, and I still get to keep my money organized by category!
Plus, the smooth plastic material helps the money slide much more easily and makes having separate categories much easier to manage.
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4 Year Review
Updated: I’ve been using this method for about 4 years now, and I can say without hesitation that it is a thousand times better than the original paper envelope system.
My purse is clean, I can find things quickly, and I never lose my drivers license! I’m absolutely in love with this new method, and I hope you enjoy it too.
I thought you were going to write that you couldn’t make the envelope system work for you and I was going to say “Amen”! I have tried the envelope/cash thing and it hasn’t worked for me yet. I’m going to try again though this year. I think you’re system looks great and I’m so happy that you’re almost out of debt! We paid off my husband’s student loan last month and only have our mortgage now to pay. It looks like you have a lot of posts I need to read about budgeting! Visiting from Alder Collective.
Congratulations on paying off that student loan Angela!!! That’s such an amazing feeling!!
It took me awhile to get the hang of the Dave Ramsey budgeting ideas, but it was so worth it! Keep at it and forget the envelope part… This really works way better!
Stick around and read more, let me know what you think, and thanks for stopping by!
What a clever idea, I love how you have kept the essence of the system but put your own twist on it to make it work for you. Red is one of my favourite colours too! It is also nice being able to buy a little treat knowing you have the pennies for it!
Amen to that! Thanks for stopping by friend!!
What a great idea, I was worried when I saw the title that you were going to bash the envelope system!! Glad to see it worked for you guys, we’re back at Baby Step #1 again because of some bad money decisions in 2015, but we’re hitting the ground running. Our hardest part with the cash system is our cash flow right now doesn’t really let us do it very well. But once I’m back to work and bringing in a regular paycheck we’ll be able to make it work again.
The only thing I would worry about is carrying all that cash in my wallet. With individual envelopes, you only grab the one(s) you are going to use when you leave the house to do errands.