“If you have debt, go on an all-out war to get rid of it!”

Justin and his family

Justin and his family

In response to our online request for success story submissions, Justin (from Lubbock, Texas) sent us the following statement:

Before Mvelopes, we used the manual envelope system.  Every month, we spent 6-8 hours setting up the envelopes, analyzing the previous months, etc.  Mvelopes has not only allowed us to take this time down to 30 minutes per month, but has given me and my wife a way to see eye to eye.  At a moment’s glance, we can see how much we have in any given category.  There is no more arguing, no more saying “There is no money for that,” etc.  Mvelopes has not only helped our finances, but also our marriage.  Thanks, Mvelopes!

I had the privilege of speaking with Justin today to get more information from him.  I asked him several questions, he answered the questions, and our conversation appears below:

Q:  How long have you been using Mvelopes?

A:  Just over a year.

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

A:  It allows us to plan for the next month before it actually arrives.  We divide our money up among virtual envelopes before that month hits.  So, during the month, we know exactly where to spend and in what categories.  It gives us a finite amount to spend in each category and, if we go over that amount, we know we’ve spent more than we’ve made.

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

A: For some time, we carried a balance on four or five different credit cards.  I was diligent about transferring the balances to zero percent interest accounts, and I thought I was managing our finances well, but what I was actually doing was just moving the debt around.  We learned about Dave Ramsey’s debt-reduction plan and started following it.  We initially reduced our debt by approximately $15,000.  Then, about six months later, we discovered Mvelopes and, by using Dave’s plan and Mvelopes, we were able to eliminate an additional $15,000 in debt, for a total of $30,000.  I was previously using a spreadsheet to monitor our finances, and it just wasn’t working for us.  It was complicated and time-consuming to use.  Mvelopes has really helped.  We have now eliminated all of our debt, except for our mortgage.  Approximately 10 years ago, we bought a house that was far too expensive.  We’ve now sold that house and have purchased a house that is much more affordable and we’ve already paid off a good portion of that new mortgage.

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

A: We are currently working on building our emergency fund and have saved roughly $12,000 so far.

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

A: We have an interest-bearing checking account, so we keep all of our savings in that account.  Our average checking account balance used to be approximately $600 and it’s now about $14,000.

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

A: The first goal we set was to pay off all of our debt and, as I said, we have paid off all of our debt (except our mortgage) and we’re now working on building our emergency fund.  We also set a goal to go on vacation when our debt was paid off, and we were able to go on a family ski trip to Telluride for three days (see photo), and we paid cash for that trip!  In addition, we recently had to replace a car and we paid cash for the car, too.  At the end of each month, I like taking my excess amounts from month-to-month envelopes and putting those funds towards my current goal (i.e., debt elimination, emergency fund, etc.).  That seems to help accelerate things.

Q:  What are your next financial goals?

A: We plan to build the college fund for our children and to really hit retirement hard, and pay off our mortgage.

Q:  How many envelopes have you created?

A: Approximately 30 envelopes.  I like to be specific with our envelopes.  They’re basically broken up into categories–auto, medical, cash for groceries, household, insurance, utilities, etc.  Within those categories, I break it down further.  For example, with utilities, I have an envelope for the water bill, electrical, telephone, etc.  Under medical, I include medical insurance costs and even have an envelope for the deductible, so that when we have medical expenses, the amount for the deductible is already there.  Under the auto category, we have maintenance, repairs, and car fund.

Q:  How has Mvelopes helped to reduce financial stress?

A: I used to spend probably 6 to 8 hours a month looking at our various categories and moving things around in spreadsheets.  At that time, just the drain of time was stressful because it left me little time to do other things.  The stress was high between my wife and me.  I found it difficult to communicate with my wife about where things were with our finances.  The spreadsheets were complicated and not easy to explain or understand.  Now, we spend probably (at most) an hour a month just dragging things into envelopes and funding the envelopes.  In fact, my wife now manages our budget most of the time, which is very helpful.  There are some months that I don’t even touch the budget, since my wife can do it all.

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

A: My wife and I are now able to see exactly where we are with our finances.  That alone has reduced our stress by approximately 200 percent!  We don’t have the proverbial money fight anymore.

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

A: If you have debt, go on an all-out war to get rid of it.  Use Mvelopes as the tool to track every cent and definitely don’t spend what you don’t have.  It’s an amazing feeling when you no longer have debt and you have an emergency fund.  In fact, there’s an incredible sense of security associated with it that I could never explain.  In the past, I was absolutely terrified to give up our credit cards because I just knew something would happen (we might have an emergency) and I wouldn’t have enough money available.  Now that we have between $10,000 to $12,000 in the bank, life is so much better, and I feel a much greater sense of security than I ever did having and/or using credit cards.

Q:  If you could create a “tag line” for Mvelopes–keeping in mind what it’s done for you–what would the tag line be?

A: Mvelopes puts MY money at my fingertips.

Justin, it was a pleasure to speak with you today.  Thank you so much for taking time for our interview.  I very much enjoyed hearing how successful you and your wife have been as you’ve attacked and paid off your credit card debt and greatly improved your financial situation.  I also really liked hearing about the goal you set to take a family ski vacation after you paid off your debt–and then you paid cash for the vacation.  Awesome!  From the sounds of things, you’ll have that mortgage paid off in no time and you’ll have college funds established for your children and a great retirement account for you and your wife.  We wish you and your family continued financial success and much happiness.