Personal Finance

The Stupid-Simple Budgeting Trick I’m Using to Stop Blowing 5 Figures a Month

Expertise: Personal Development, Business Management, Real Estate Investing Basics, Landlording & Rental Properties, Personal Finance, Flipping Houses
125 Articles Written
Young Couple Lying On Carpet Invoice With Calculator

I’ll set the stage for you. Every Friday, the credit card balance email would arrive, and I would be physically sick and terrified to open it. It was like the Russian roulette of email, wondering how horrible of a job we did this week at following our “budget.”

Oh my god, how did we spend this much money?

*Insert the throwing up emoji.*

I felt like a complete failure.

How did we do this again? Didn’t we figure this out finally?

The Background

Having a clear budget—and a clear process for where the income goes—is essential. My wife and I have worked together on our budget for years now. But it’s also easy for the lifestyle creep to begin, to get shiny object syndrome. We’d had the blessing of our income steadily increasing for a number of years, but for a time, our skills and diligence with saving, budgeting, and knowing what to do with the money had not grown with it.

You may be thinking, “Tough life.” The trolls of the internet are literally digging their way through the interwebs towards this post as we speak. “The guy’s complaining about having all these bucks to blow on whatever.”

Let me suggest instead we put the focus on this adage: It’s not what you make, it’s what you keep.

bearded man wearing white shirt hovered over pile of pennies counting them

The Excuses

For multiple months in a row, my wife and I would have these weekly conversations about “sticking to our budget.” We would then take turns arguing back and worth about what we had or hadn’t done. Where we spent the money and whose fault it was. There were lots of great reasons why we had made the decisions we had—and how it would be totally different the following week or month.

The problem is, these were all excuses. This dinner. These things for the kids. Some hunting crap. The thing on the counter. That lunch. These toys for the kids. That tractor part I had to have. That little flight across the country. Fancy new shades. These Lululemon pants.

Anyway, you know what all of that really is, right? Excuses. No ownership of the problem.

Related: 4 Steps to Buy the Car You Want Within the Budget You Can Afford

The Results

At the end of the game of your favorite sports team, it’s easy to see the score, right? There is a winner and a loser. Back then, our budget, savings, and investments were the big fat losers. And our credit card, the stupid crap we were buying, and our bad behavior and habits were winning.

Although we were making awesome money on a regular basis, I was feeling literally broke. Our system and our budget wasn’t working. We were literally paying these credit card bills in increments and could blow more than five figures on a monthly basis. So embarrassing.

Something had to change.

The  Conversation

My wife and I were texting back and forth. I believe that conversation went something like:

Me: “Hi love, hope you are having a great day… [adorable kiss emoji]!”

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Mrs.: “Thanks love, you too. Awesome day with the kids here. I’m sure you’re out there crushing it, you amazing man you. What an adorable beard you have, too. I’ll have a whiskey waiting for you on the counter with one of those cool round ice cubes as soon as you get home tonight.” [Some embellishment here may be possible.] 

Me: “Oh yeah, thanks love. Crushing it ALL. DAY.”

Me: “BTW, have you happened to look at the credit card today?”

Mrs.: “No, been busy with the kids at the library and the grocery store, then taking care of your stuff, then cleaning, and then school with the kids, and then…”

Me: “Yeah, it’s like… $4K. THIS WEEK! How in the world did we do this, AGAIN!”

Mrs.: “Wow.”

Me: “What in the world are we going to do? This is such a nightmare.”

Mrs.: “It’s time. We need to go back to the envelope system.”

Me: “Holy cow, why didn’t I think of that?”

The Transition to the Envelope System

I’ll point out, it’s not an easy transition after you are used to doing whatever you want. And believe me, I was at least 50% if not more like 70% at fault for the spending in the household. It’s fun to get whatever you want. But it also has its downsides. Like blowing all your money, leaving you feeling broke and stuck.

If you aren’t familiar with this, Dave Ramsey and many others have spoken at length on the envelope system. The premise is, you write out your budget for how you will spend your money monthly. Anything that is paid directly, like a car payment or a mortgage, is accounted for, which would then be paid via bill pay. Then, everything else budget-wise, such as eating out, clothes, groceries, fun money, kids sports, toys, whatever, is paid out by cash from the envelopes. No exceptions.

The Execution

Usually, I have a monthly draw from our business around the first. So, after having my draw completed, I walked into the branch of the bank and walked up to the teller I knew by name. I handed her my check and then asked, “I’d like to deposit this check, and I’d also like to withdraw $4,000 in cash please.”

I had this feeling she was thinking to herself, “Is this dude really taking that much to the… strip club? Wow.”

I got a pretty good chuckle at that thought. I let the pause go for another few seconds, and then said, “We are doing the envelope system at home now. Have you heard of it?”

Related: The Foolproof Monthly Budget: How to Save Up Money to Buy Investment Properties

It fun to share what we were doing as she gathered everything together.

She stepped back over to the teller station with this giant stack of cash. I was thinking, did she do the math wrong here? It’s like 2+ inches think, made up of $20s and $100s. She counted it once (with a machine in that quantity) and then walked over to me to count it out. I swear it felt like five minutes counting these bills out. Every few minutes, I would look around to see if there were other people around wondering what in the world I had gotten myself into.

I was thinking, “I wonder if this is what the drug dealers feel like?” And now I have to walk out of the bank with this. The cash doesn’t fit in the bank envelope. Or two. So I just carried the stack out and walked directly to my truck.

When I got home, I showed my wife this same stack of cash and said something funny like, “Giddy up, momma.” I’m sure she was impressed. And I was seriously hopeful this would finally get us back on track.

The Outcome

The previous time we used the envelope system, maybe four or five years ago, we used them for well over a year, with great success. We have now been doing the envelopes for two or three weeks. And just like the last time, I have felt an immediate sense of calmness in our decision. If we want to eat out, we do. If my wife needs something for the kids, she gets it. But we know that the money in the envelope is what is budgeted, and we have to work together within the categories to make sure we are on the same page. It’s a lot harder to spend a $100 bill out of your wallet than it is to pull out your credit card and swipe it.

So, I will do a follow-up on this in another six to nine months and give examples of what we have run into, what was working, what we had to tweak, and some of the results from savings and spending.

Final Thoughts

It’s my goal with this post to tell the truth. Making money is actually the easy part. Keeping it, investing it, and not raising your lifestyle every time you make more money is hard.

No matter if you make $2K a month or $100K a month, you need a budget. You need to tell your money where it’s going and to hold it and yourself accountable for the outcome. No more excuses. No more email roulette with the credit card statement. Own the outcome, and let’s get after it.

How do you budget in your household? What has worked, and what have the challenges been?

Comment below!

Nathan Brooks is the co-founder and CEO of Bridge Turnkey Investments, a Kansas City-based company renovating and selling more than 100 turnkey prop...
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    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied about 2 years ago
    Hi Nathan: We’ve never done, or put ourselves on, a budget. To say we live well is a very conservative statement. So, now, after 13 years as full time real estate investors, we’re discussing cutting our lifestyle back. I think we did it backwards…. At a time when most would be ramping their lifestyle up, we realize that we have way more than enough coming in to live very comfortably if we just live less lavishly. Thanks for your encouragement because I’m dreading (fearing?) the cutback – but anxious for all the extra “in the envelope” every month. Wish me luck… Great post, by the way.
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied about 2 years ago
    Hi Karen – thanks so much for reading and sharing here. Honestly, it is a little scary. It’s true. If feels like you don’t have the “control” that you have had. But, you will also love the feeling (and contentment) that comes with having more direct connection with how much (or how little) you spend. I wish you the best of luck with it … I do believe you will find it to be easier of a transition that you think.
    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied about 2 years ago
    Mike McKinzie Investor from Westminster, CO
    Replied about 2 years ago
    Nathan, excellent article. Our last two purchases were two homes in Belton, MO, just outside of Kansas City. My wife used the envelope system for years but I never did, I have a natural disposition to NOT spend money. Personally, I have always thought of writing a book and called it: MONEY: Not meant to be spent. Yes, it is a play on rhyming words, but the idea behind it is that money has only two uses, spend or invest, and that we should look at money as an investment FIRST and spending SECOND. Every person on the planet, from Jeff Bezos and Warren Buffett to the guy urban camping in the local park, has a PERSONAL BUSINESS. The ONLY employees of that business are DOLLAR BILLS. When you invest that Dollar, it is working FOR YOU. And when you spend that Dollar, you have just FIRED that employee. And while we have to spend on housing, food, utilities, etc…., we should always know how many Dollars we FIRED this month. Fired dollars do NOT come back, they are now someone else’s employee. Thus, now we have to WORK, instead of our dollars working for us, to get new employees. For example, we sold a rental this month, due to extenuating circumstances and we did NOT do a 1031, which we usually do. Did we go out and buy a bunch of nice stuff? NO, we put 100%, after paying the Capital Gains, into paying off a mortgage on another house, an appreciating much higher area house. Did I mention that borrowed dollars are like hiring from a TEMP AGENCY. Good to have, but it comes with a higher cost. So if I borrow at 5%, it better work hard enough to bring me 10% returns, or more. Bottom line, like you said, is, “DO YOU KNOW WHAT YOUR EMPLOYEE’S ARE DOING?” If you do not, then the envelope system will help you keep better control of your employees!
    Chad Matthews Rental Property Investor from Philomath, OR
    Replied about 2 years ago
    This is a great analogy. Thanks for sharing it.
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied about 2 years ago
    Mike, this is an awesome way to think about how you are using the money you have earned or saved. I think the issue is, unlike you, I am NOT good at not spending money. So I’ve had to find ways to create a system that makes sense, and that I can follow easily. I love thinking through how you are using the funds you have earned and invest and create more opportunities for passive income, or wealth building. It’s also a good way to say … “I can go to dinner, or buy those shoes I want … but I have a budget and a place to know where that money is going to come from.” So thats important too. And, to remember … it’s not about HOW MUCH money at this point. Although, for obvious reasons you don’t want to spend more than you have budgeted, or that you should budget. But its always good to enjoy your life, and the hard work that you have put in. Reflect, be inspired, understand where your money is going because you have directed it … and get after it! (Congrats on the Belton, Mo houses too!)
    Justin Smith from Charleston, SC
    Replied about 2 years ago
    I like this idea and I’d like to try and implement it. For groceries and dining out it makes sense. For many people however that’s where it’s easy application ends. For example let’s say you buy used clothing and shoes on ebay, or electronics, or whatever. Perhaps sometimes it gets out of hand and this is a place where you could cut back. The thing is, that’s a fine place to get your clothing or camera equipment or whatever else from. You’ll save A LOT of money buying used on Ebay over buying retail. So how do you handle the envelope system in this situation (and there are a ton of other potential situations). This behavior has the potential to save you money, but it’s also habit forming just like shopping…
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied about 2 years ago
    Hi Justin. This is definitely a potential issue and I agree with you, you have to work through how to deal with it. For us, we would just use the credit card then, and pull the money immediately from the envelopes and deposit back in the bank, and pay the card immediately. Then you have been able to use the ease of buying what you needed or wanted, and still used the envelopes. It is a little bit of a pain, but thats also not a bad thing. Then, you have a reason to ponder if you really need that XYZ thing, and willing to go through the few extra steps to buy it. Thanks for sharing Justin!
    Cindy Larsen Rental Property Investor from Lakewood, WA
    Replied about 2 years ago
    Nathan. Very well written article. I agree that a budget is vary important. But the envelope system is too old school for me. For one thing, I use cashback credit cards, with autopayment in full every month, for everything possible. With the envelope system, I would not be getting 6% back at the grocery store, 3% back on gas, and 2% back on everything else. That adds up to significant amounts of money over a year, and it is nontaxable, since it is a discount, not income. Instead, I take my ipad with me everywhere. I can easily check how much I have spent of my budget in less than a minute before making any unusual purchase. I can check how much is in the bank to make sure I don’t spend money via credit cards that I do not have in the bank. Joint credit card accounts make it easy to see what is being spent by the whole family. I also have different credit cards that I use for RE related purchases vs personal purchases, which makes the accounting easier to see and understand. The idea is much the same as any budget: control your spending, and don’t spend money that you don’t have. But I prefer the more modern high tech approach. I don’t waste time balancing a checkbook (I almost never write checks): I just look up the information real time, so i have the ability to know my financial state anytime I want to. With autopayment in full, I never have to pay interest on my credit cards. And my cashback goes to my real estate budget 🙂 Cindy
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied about 2 years ago
    Cindy – I LOVE everything you are saying. I too have several of those “cash back” cards. And, for many people … I’m sure they are awesome. I was also paying the credit card off at the end of the month, but we were spending SO much more money than what we had planned to. That is so awesome you are able to keep track of your spending, have a really well laid out plan, and you are good about keeping with it. You have a system, and you RUN it. Which is what you need. Thanks so much for sharing!! And go buy some more real estate!
    Chad Matthews Rental Property Investor from Philomath, OR
    Replied about 2 years ago
    Hi Nathan. Thanks for sharing your story. I have seen this system up close and personal. My parents used this system. Somehow, however, the envelope was always empty a bit too early. They were poor managers of their money. Some very close friends used this system and their envelopes were never empty. They were astute managers of their money. My wife and I are both frugal types. We both had jobs as kids, grew up relatively poor, and learned the value of money. It seems that there is a spender and a saver in most relationships. In those cases, I believe a tight budget is beneficial and brings peace and agreement. Since my wife and I are both frugal we actually found a budget to be detrimental. (Yeah, I know, it sounds crazy). We established a budget but couldn’t get past feeling like we had free money at the end of the month when we hadn’t spent it. Then, like a couple of newly minted millionaires, we would go spend the money stupidly on foolish things. Rather than a traditional budget, we have found that we live by certain principles that guide our spending. We spend money on necessary things first (needs vs. wants). We also value experiences so we tend to spend on memory making experiences rather than on “things” which wear out. Whichever method a person chooses it is important to set goals, establish principles and priorities, and then commit to the plan. Our expenses are a reflection of our values … If you want to know what a person truly values … look at where their dollars go. Good luck with your new plan. I applaud you for being proactive in taking back control over the financial aspect of your life. I can’t speak for you, but I find I constantly have to adjust my practices and priorities because I tend to slowly let things get out of whack. Here’s to some discipline and freedom!
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied about 2 years ago
    Chad – Thanks so much for the detailed and honest response here. It’s so hard for me to imagine being that frugal. I have a hard time with it. For us, the envelopes have worked really really well. The bottom line I think is simple. You have to have a system. A plan. And now focus, and a future goal. And as long as you are doing those things … whatever plan or system it is doesn’t really matter. So yes, here’s to the discipline and freedom, and getting after it!
    Deanna Opgenort Rental Property Investor from San Diego, CA
    Replied about 2 years ago
    Hi Mike – I think I am similar to you in the “spend only what’s needed, not what’s avail” mindset, which means I haven’t really had to budget for decades (in college I was living on $15/week for food/entertainment/supplies, so I kind of feel like I did my time in the budgeting world).. I think my parents began to worry about what kind of miser they were raising when I was a kid and they discovered one Halloween that I still had most of my Halloween candy from the previous year hoarded away. How funny it is to have your parents sit you down and try to teach you that it’s OK to SPEND money rather than just saving it LOL. What had actually happened of course is that it was in the back of the cupboard, & I had mostly forgotten about it. As it turns out, that “out-of-sight/out-of-mind” method of saving is really effective for saving $ as well as Halloween candy. I keep a running tally of my tax pending liability (Ah, the joy of estimated taxes!). The savings & tax set-aside money goes into an entirely different bank from my day-to-day income/expenses bank – out of sight, out of mind. If I have enough cash in my day-to-day account to pay the estimated taxes when they are due I pay them from the “regular” account, leaving the set-aside money as instant, mostly painless savings. I do have a couple advantages in budgeting — I’m inherently cheap…er, FRUGAL. I’m also self-employed in a tech job that pays reasonably well. I’ve always owned my (used) cars, & always chosen inexpensive shared housing. I’m also single & no kids, so I am only answerable to myself, which definitely helps.
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied about 2 years ago
    Deanna thanks for sharing! All of you frugal folks have something special. I love that you are able to do that, save well, not have the insane frustration or stress associated with having that huge tax payment or spending a bunch of money you didn’t intend to. I’m curious, with so many who are so frugal, how does it feel when you DO spend money? Is it hard to? Does it feel like you are doing something you shouldn’t?
    Robert Huang
    Replied about 2 years ago
    it’s a good problem to have. i never could pull the trigger on something pricey–not in the mentality, but i am sure if i have 5 figures to spend per month, and i tried it and liked it, it may be hard to pull back.
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied about 2 years ago
    It’s definitely relative Robert. But I think the principal applies regardless of how much money you make. Be clear on your budget. Have a plan in place where the money goes. And then work on growing you wealth, income, whatever it is your goal is. Thanks for sharing!
    Joseph Druther Investor from Pinehurst, NC
    Replied about 2 years ago
    Great post nathan! And timely, too. We definitely ascribed to Dave’s plan and that gave us the foundation to quit my job and started us on the journey. People always gave us a hard time about it, but sticking to the plan gave us the results we wanted. Now we can afford a lot more and have gotten lazy with the budget. Thanks for the encouragement to hop back on the envelope train 😉
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied about 2 years ago
    Thats well said Joseph. We definitely got lazy with it too. But I was also having that pull telling me, hey, idiot … stop BLOWING all your money! But sometimes its fun to do crazy stuff. Have the fun car… whatever. I just want to make sure I have a plan, a goal, and be able to know where the money is actually going. Love to hear what you guys end up doing, and if you make some changes!
    Delaney Ridgley from Charlotte, North Carolina
    Replied about 2 years ago
    I loved your post, thanks for sharing Nathan! My husband and I got married about a year ago, and I was SO worried about whether or not we were going to be able to stick to a budget as a couple. We have used an app called “Mvelopes” and it has worked miracles for us. It’s the envelope system, except digital. It syncs with our banks and automatically uploads all of our transactions, which we assign to various “mvelopes.” If you ever want to get away from taking wads of cash out, try the app out! I’ve been using it for about 3 years and would highly recommend 🙂 Thanks again for your post!
    Gianni Laverde Investor from Corona, NY
    Replied about 2 years ago
    Nathan, I had never heard of the envelope system. Might need to start using it so I can control my expenses and save for that next property. Thanks for sharing.
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied about 2 years ago
    Good luck with it Gianni! Hope that it helps with your finances sir!
    Elaine Youngman
    Replied about 2 years ago
    Thanks for sharing your story! It blows my mind how easy it is to spend money and then have to ask yourself “What the heck did I actually buy with all that???” at the end of the month. We started using YNAB, which is an electronic version of the envelope system, about 4 years ago and it’s been pretty transformative. We live on about 70% of what we used to, and it doesn’t feel like a lifestyle reduction at all! I’m not frugal by nature either, and I’ve found this method totally freeing. If I look in the budget and see that there’s money available in the proper envelope, I don’t have to feel guilty about this purchase, because I *already decided to put this money in this envelope.* It’s sitting here just waiting for me to spend it and feel happy about it!
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied about 2 years ago
    Elaine … thanks so much for taking a minute and sharing in the conversation here. So many great ideas and people finding ways to spend less. 70% is AWESOME. And what a difference in the stress level too, I bet. I’ll check out this version as well. Thanks!
    Matt Gilroy from Spokane, WA
    Replied about 2 years ago
    Nathan, great article! After reading this and feeling a bit like someones talking directly to me and our situation you’ve encouraged me to implement the cash envelope system (again.) My wife and I used to use this system when we were first married and didn’t have much money. Funny how much more we saved back then! Thanks!!
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied about 2 years ago
    Matt … I’m so thankful for what you’ve said here. One of the things I truly try to do is write from honestly and truth. And to be able to hear this really spoke to you is really meaningful to me. Let me know how it goes … please! I want to include you guys who have said this is a change you are going to make, and write about it in 3-6 months.
    Johanna Silva
    Replied about 1 year ago
    Have you heard of YNAB or You Need a Budget? It's essentially an envelope system, but, instead of counting money, you look at the website or the app on your phone. Before you. go out for dinner, you look at your dining out category, for example. We have been using it for about 20 months and I cannot put into words how helpful it has been for our family.