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Paper or Plastic??

No—I am not talking about the type of bag you are being asked to put your groceries in. Nowadays, it seems that everywhere you go, you can use a debit or credit card. It can be convenient to just whip out that plastic and swipe it and be on your way. However, using plastic can make you spend more! Changing your ways requires a change in your lifestyle, which can be hard. Where can you turn? I can tell you in two words—Dave Ramsey.

My husband and I learned about Dave Ramsey in October 2007. By following his Total Money Makeover system, we are on track to be DEBT FREE (other than our home) by the March of 2010! And let me say, THAT is an amazing feeling!

Don’t know who this guy is? Check out his Web site and you can learn about him. He really has a lot to say about credit cards, debt (secured and unsecured) and how to “Live like no one else, so you can live like no one else!” Which, in a nutshell means ... do things like no one else right now and you will have the financial freedom to do things others can’t later on.

I will admit that we don’t have the newest cars. We still have a 25" tube television. We don’t own a BlueRay Disc player. We don’t eat out that often. But, as a result, we will be out of debt in a matter of months. Then, we get to save and go pay CASH for our new HDTV and BlueRay player.

We will save cash to purchase that van and drive it off of the lot knowing we own it free and clear. We will get to take our children to different events and pay cash for it, knowing we are not going to be paying for it six months afterwards. Christmas, birthdays and holidays are all paid for right away. No dreading walking to the mailbox January 1st for this family!

We now tell our money where it has to go instead of it telling us what to do. For the first time in my life, I don’t stress about money and neither does my husband. When I sit down at the computer, I don’t have to worry about how we are going to pay all of our bills. And, as the saying goes, “If Mama ain’t happy ain’t NOBODY happy!” And in this household let me tell you what—MAMA is very happy!

So, how do you do this? First of all, you need to be sure that you and your spouse or significant other are both on board. You both have to agree that this is going to require a complete change in your lifestyle. You have to be able and willing to commit to what it will take to get there!

One of the biggest changes is to set up a budget to account for every single penny coming into your house and then use CASH for most of your purchases. This is what Dave calls “The Envelope System.” You literally take envelopes and mark on them what you will use the cash for. Our family has the following:

Each pay period, I head to the bank and get the amount of cash we need to insert into each envelope (based upon our budget). I provide a denominations quantity list to the teller and so I walk out with the correct number of singles, fives, tens and twenties to fill up my envelopes so I can begin my two week budget.

As we spend money, we indicate on the envelope where we went and how much we spent so that we can account for every single cent. As we have quickly learned, when you use cash, you tend to spend less as you can see in your hand how much money you have. It really makes you think twice before you hand it over, knowing that you won’t have any more to spend until your next pay day.

It is amazing to see that many times, the envelopes are not even empty at the end of that two week period as we are so careful about not spending frivolously. I then take that extra money and sometimes use it towards our debt. However, there are other times that I stash it into an envelope to use for mad money when we just want to go have fun, or as I am doing now, saving it to use to help others in need this holiday season.

So the next time you are getting ready to drop that bill in the mail, grab a few extra envelopes and create your own envelope system. You will soon come to agree—cash is king!

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