“Mvelopes has eliminated the financial ‘guessing game’ for us.”

Bethany and her beautiful family

Bethany and her beautiful family

Yesterday, I had the privilege of conducting a telephone interview with Bethany from Florence, Arizona.  Bethany and her husband are the proud parents of a three-year-old boy and they will soon (next week) be leaving for Ethiopia where they’ll be adopting a baby girl.  During our interview, Bethany shared how helpful using Mvelopes has been in not only helping them save the money they need for this adoption, but in managing their day-to-day living expenses.  She discusses how Mvelopes is unlike any other budgeting program she has ever used before.

Bethany sent us the following information in an e-mail message (which prompted my call): 

Prior to using Mvelopes, we had tried many other budgeting software programs, but always found ourselves perplexed in regards to how much money we actually had in each budgeted area. It seemed it was never cut and dry, or up to date with what was occurring in real-time. Mvelopes has been a life-saver for us in allowing us to find out how much money we have remaining in a particular area, right when we need to know. We love that we can be out running errands and use our cell phones to find out if we have money left in our “eating out” envelope, to decide whether or not we will stop for lunch. It always used to just be a guessing game. Next week we are leaving to travel to Ethiopia to bring home our adopted daughter. Thanks to Mvelopes, we were able to succesfully budget for all of our adoption expenses and come away from the process debt-free. We were also able to track our expenses throughout the lengthy adoption process, in a way that will allow us to easily file for the federal adoption tax credit. So thank you Mvelopes, for helping us bring our daughter home and helping us to run our finances, instead of allowing our finances to run us!

Please continue reading to learn more about Bethany’s Mvelopes experience (she answered the following questions during our telephone conversation).

Q:  How long have you been using Mvelopes?

A:  I think it’s been two years–possibly a little less.

Q:  How has Mvelopes assisted you in living within your income?

A:  I think the main way it has assisted us is just being able to see exactly how much money we have in each area of our budget at the exact time we need to know (it’s always up to date and current).  We have always budgeted, but this program has really helped us.  It’s just different from other programs we have used.  The unique feature of Mvelopes is that the money has to come in before there’s money to fund the envelopes.  If we’re making a decision to spend money and Mvelopes tells us the money is there, then we have confidence knowing that it’s really there to spend.

Q:  How much consumer debt have you been able to eliminate during that time?

A: We haven’t really ever carried debt.  We do have a couple of school loans and we’re working to pay those off, but we never carry credit card debt.  We also have a mortgage and an auto loan, and Mvelopes really helps us budget for those payments.

Q:  How much have you been able to save while using Mvelopes?

A: We have a goal to save at least 10 percent of our gross income and, when we first set up our envelopes, we designated an envelope for that 10 percent savings.  We’ve always been able to save at least that much.  We have a new motivation to save even now, too.  When our son was two-and-a-half years old, we started thinking about having more kids.  Ultimately, we want more kids to love.  Through a set of circumstances, we really felt called to adopt.  My husband is a pastor and we both have a strong Christian faith.  It felt like what we were supposed to do.  We did a lot of research on various ways to adopt and we decided to adopt from Ethiopia and officially applied to our agency one year ago.  We worked on the paperwork for about six months, then received a referral, and were sent photos of our little girl.  After reviewing her file, we knew that this was what we were supposed to do.  When we first decided we were going to adopt a baby, we looked at our entire budget again and knew that we’d probably need to dip into that 10 percent savings envelope, but we also created an “adoption savings” envelope and have been able to save even more.  We have been able to save close to $15,000 in just the last year.  We’ve had fundraisers, garage sales, etc., to help us to get into a better financial situation so that we could manage this adoption without going into debt.

Q:  How much has your average checking account balance increased while using Mvelopes?

A: Maybe by about $1,000 a month.

Q:  What financial goals have you achieved while using Mvelopes?

A: Well, our biggest goal has been saving for the adoption.  We set up ahead of time just how much each stage of the adoption process was going to cost.  We have a tax credit that we’ll be able to apply for this coming spring and our initial goal was to save above and beyond what the tax credit would be.  When all is said and done, we will be debt free for this adoption.

Q:  What are your next financial goals?

A: We are looking at possibly going to one income (we both work right now and we’re hoping to make it so that I can stay home with the kids in a year or so).  As we review our finances and look at our options, that’s something we’re considering.  We hope to be able to have more kids in the future, too.  We also enjoy being able to give to people or things when opportunities come up and we want to continue to be able to give!  We never want to feel that our finances are so restricted that we can’t give to worthy causes.

Q:  How many envelopes have you created?

A: The total number of envelopes we currently have is 52.

Q:  How has Mvelopes helped to reduce financial stress?

A: I think, in marriage, finances can be one of the biggest triggers of fights or arguments.  Part of the stress often comes as a result of simply not knowing where you’re at financially.  When there are questions about whether we have enough to spend on something, we now have a neutral place where we can get that information.  Taking away the unknowns and eliminating the “guessing game” has been very helpful.

Q:  If married, how has Mvelopes helped you better collaborate with your spouse?

A: We are a team.  We came up with the budget together.  We decide how much we’ll put in each envelope.  If I stop working, we’ll know just where we’re at and what that will look like.  We are able to look at things objectively without anyone having to be the bad guy.

Q:  What advice would you give to new Mvelopes users?

A: Be committed to the goals that you set.  Decide what your goals are and create the appropriate envelopes.  When you spend, make sure that you have the funds to do what you want to do, without affecting your goals.  Don’t overspend.  In the end, you’ll really see the benefits pay off.

It was a privilege to speak with Bethany and to learn a little bit about what is going on in her life.  It is definitely an exciting time for her and her family as they prepare to bring their baby daughter (and sister) home from Ethiopia.  Bethany, thank you so much for taking time to share with us the many successes you are enjoying.  And thank you, too, for sharing with us the powerful message that when you have dreams that you want to accomplish, you don’t need to go into debt to make them happen.  We wish you and your family continued success and much happiness.

Get creative with your envelope names

carWho says your envelopes have to be named only things like “Auto Registration,” “Gifts”?  Why not use the envelope name to help you remember when the registration is actually due each year?  Or to remind yourself how much you are planning to set aside for gifts over the course of the year?

My Auto Registration envelope is actually named “Auto Registration (November).”  This way I know when the bill is due and can keep a close eye on how I am doing with my savings goal.  You, of course, could also add in the amount of the bill to the envelope name if you like.  An envelope name like “Auto Reg. (Aug $150)” provides a great deal of detail that can be helpful when reviewing your envelope spending account balances.

The same type of naming can be useful for your monthly bills, such as utilities bills.  You could include, for example, the date the bill is due to help you remember when to pay it (in the event that you do not have it set up with an automatic payment.)   Including the amount of the bill may also be helpful for the bills that do not tend to fluctuate (i.e. cable/satellite, phone, etc.) from month to month.

One of my coaching clients today asked if there was a way to include notes in the envelopes about what you are setting aside money for.  There really isn’t a way to create a note, but she found the idea of adding information to the envelope names very helpful.  She was having trouble remembering when her property tax bills are due, so she added the months to the envelope name and problem fixed.

Please share any tips that you may have for customizing your envelopes, naming them in a more effective way, etc.   It’s always great to hear what methods others use.

-Jennifer, Money for Life Coach

What if your expenses are higher than your income?

walletIn Money for Life Coaching Sessions, I often run into situations where my clients have expenses and initial spending plans higher than their income.  I do what I can to help them balance things out so that their expenses match their income, but really it’s up to them to make the decisions about where they can lower their expenses.

I often suggest that they start by eliminating everything except their required expenses, both monthly and periodic.  Once you know how much you need for your mortgage, utilities, taxes, insurance payments, auto registration, minimum debt payments, etc. then you have a clearer vision of how much you can spend on the discretionary areas.

After you have entered all of your required expenses, you can clearly see exactly how much income you have left to spend on the discretionary areas of spending by looking at the difference at the bottom of the spending plan window.  Depending on what this amount is, you may want to explore options for lowering some of your bills.  Here are a few ideas

  • Changing plans on your cell phone, home phone, cable or satellite, etc. can help to lower costs.
  • Sometimes asking your credit card companies for lower interest rates will help to lower your monthly debt payments.
  • Installing a programmable thermostat can help to lower your utilities bills.

When you are ready to start making allocations for your discretionary spending, start with the most important things first (i.e. groceries), and then go down the list from there.  When making your allocations, be sure to keep a close eye on the balance of how much you have left to spend.  In order to stay balanced, you may need to make some hard decisions to reduce spending in certain areas, or put other items on hold for a while.   These are not easy decisions to make, but living above your income will continue to jeopardize your financial future.

Once you have gone through all the areas of spending, if you truly do not have enough income, you may want to look at some ways to increase it.  Perhaps taking on a part-time job for a few months, or selling some items that you don’t need any more.

It’s not always easy to live within your income, but spending less than you make on a consistent basis is the only way to improve your financial position and create a stable financial future for you and your family.

-Jennifer, Money for Life Coach

Handling payments to accounts that don’t aggregate

paid2Inevitably there are a few credit cards or store accounts that just won’t aggregate with the Mvelopes system.  It generally has to do with the way the financial institution handles multi-factor authentication (the way they verify that you are, in fact, you when you log into your account online).  It can be a little frustrating yes, but it’s still a pretty easy work around to handle your payments.

So, how do you handle payments to a credit card that isn’t available for aggregation with Mvelopes?  There are a couple different ways to do this, but here is my preferred method.

I have one card, a Banana Republic (BR) card that won’t sync up with Mvelopes.  I don’t use the account very frequently, but when I do, I simply mentally deduct the amount of my purchase from my clothing envelope.  This way I know how much will be left in my clothing envelope after I pay off the BR card. In the event that I have another clothing purchase to make, I now know how much I have left to spend.

When I get home from shopping, I log into Mvelopes Bill Pay and make a payment on my BR card for the amount of my recent purchase.  When the bill payment transaction clears (usually just a couple of days), I simply assign the transaction to the Clothing Envelope.

It’s a little bit of a round-about way to handle it, but it works fairly simply and just take a few extra minutes.   This way I can still use my card and get the points that go along with my purchases, but I am also sure to pay off my balance in full each time I use the account.

– Jennifer Streiff – Money for Life Coach

[photo courtesy of flickr / CC BY 2.0]