For our next success story, I had the privilege of speaking with Stephen and Stephanie from Harrisburg, Pennsylvania. Although many of their comments were similar (in which case, I’ve just included Stephanie’s comments, since our conversation was more lengthy), it was certainly interesting to hear things from the wife’s and the husband’s perspective.
Prior to the telephone interview, Stephanie shared the following comments with us:
“When I found Mvelopes through a desperate Google search, I felt as though I had landed exactly the kind of financial management system we needed. In fact, in my mind, I had always visualized our financial categories as envelopes – perhaps this was because my grandmother always saved using envelopes marked for certain expenses.
Only two months using Mvelopes has dramatically changed our financial outlook. We discovered our problem was excessive withdrawals so we started limiting ourselves to a certain amount of withdrawals per pay check. We are on our way to saving for vacation, new windows and plenty of other upgrades that wouldn’t be possible without this financial management system. Thank you!”
During our telephone conversation, the following additional insights were shared.
Q: How long have you been using Mvelopes?
Stephanie: Just over one year (I believe we started using it January 1, 2008).
Q: How has Mvelopes assisted you in living within your income?
Stephanie: It has been a great tracking device for us to be able to say we’re only going to spend this amount of money on groceries, eating out, etc. It has kept us honest. We no longer blow money on frivolous things and it keeps us focused.
Stephen: I used to be very guilty of carrying cash in my pocket (something I was encouraged to do when I was young). The downside of that habit is that there is no way to track the funds. For example, I’d withdraw $50-$100 from our checking account, but I’d be unable to account for where that money went. We no longer have a need to have the frequent conversations we used to have: “You withdrew x amount of money–where did you spend it?” We now use the debit card for almost everything and we can easily track where our money is going.
Q: How much consumer debt have you been able to eliminate during that time?
Stephanie: When we started, we didn’t have any credit card debt. However, we did have a few things on credit (Lowe’s, Home Depot) where they offered no interest if paid within a certain period of time. Using Mvelopes really helped us to be diligent with making those payments ($200 or so each month) so that we could avoid paying any interest. We also have a mortgage and student loans, but are working on paying those off.
Q: How much have you been able to save while using Mvelopes?
Stephanie: We have saved about $7,000–and that was one of the reasons we were looking for a program when we found Mvelopes. Building a savings account was a huge part of our motivation in looking for and using Mvelopes.
Q: How much has your average checking account balance increased while using Mvelopes?
Stephanie: Prior to using envelopes, at the end of each pay period, we would basically be at a zero balance in our checking account. We depleted everything we earned within two weeks. We currently have a checking account balance of $9,000. It has been a huge stress relief to keep a balance in the account. I no longer have to worry whether or not we have money to pay bills.
Q: What financial goals have you achieved while using Mvelopes?
Stephanie: Just today, we were able to have windows installed in our house. So, within a year, we were able to plan for that–and make it happen. I was able to take three months off work to stay home with my daughter (I quit my job and didn’t get another job for three moths) and we were perfectly fine because we had enough money set aside to pay our bills. We also saved for a vacation and had a wonderful time. When we went out to dinner, we didn’t have to worry if we had enough to pay for it–we knew the funds were already there.
Stephen: As Stephanie mentioned, we had a 3-month period of time where we cut our household income in half. We were able to successfully manage our funds without any concerns. We had the luxury of being able to take a hit of a loss of half of our household income. That alone made it worth it to for us to use the Mvelopes budgeting system. We realized that it’s far better to have the option of having funds available (that have already been set aside) if/when something like this occurs (the loss of an income) rather than trying to survive when you don’t have that option.
Q: What are your next financial goals?
Stephanie: Our next financial goals are to definitely pay more on our mortgage each month. We don’t want to pay on the mortgage for 30 years. We’re also trying to pay down our cars (we pay more per month than the minimum balance). We’re saving for another vacation and we’re also saving for our daughter’s education. When she starts school, we want to be able to send her to a private school, so we’re saving for that now. We will also eventually need and a bigger house, so we’ve set that goal.
Q: How many envelopes have you created?
Stephanie: Probably about 25.
Q: How has Mvelopes helped to reduce financial stress?
Stephanie: I have always wanted to be financially stable. It was very stressful to live from paycheck to paycheck. In the past, we often ended up using a credit card to help pay for monthly expenses, but we were diligent about paying the card off each month (I definitely didn’t want to pay interest on the credit card). My husband and I often talked about when bills would be due, when the credit card payments would have to be made, etc. There were moments of frustration when one or the other of us would spend money on something (lunch out, a haircut, etc.) that would put the checking account at a zero balance. We frequently had to discuss our spending. I’d also have to call Stephen and tell him to not spend any money or not use the credit card until it was paid off, so we wouldn’t incur interest. It was frustrating for both of us to see that we were living from paycheck to paycheck. We didn’t understand why we weren’t able to do more things with our money, particularly since we have a modest home, a modest mortgage, and we both have good jobs. Prior to using Mvelopes, there were things we wanted to do, but we just couldn’t do them, because we didn’t know how to save and/or manage our money. A tremendous burden has been lifted to know that we now have the money to do the things we want to do.
Q: If married, how has Mvelopes helped you better collaborate with your spouse?
Stephanie: We don’t have nearly as many conversations about money–I am the primary user and manager of our Mvelopes account. Now I simply have Stephen look at the account and we talk about things as a team. He gives me his input on whether he feels the amount in a particular envelope is adequate or not. Then we make adjustments that we both decide to make.
Q: What advice would you give to new Mvelopes users?
Stephanie: Definitely pay down your debts first. Identify where you’re spending more money than you need to. Be aware of where you’re making random withdrawals and, for us, that’s where we were finding extra money. We’d withdraw cash ($40, $60, $100) and couldn’t account for that money. Now we use our debit card all the time so we can track and make sure we’re not going over budget.
Stephen: When Stephanie first mentioned wanting to use the product, I was very skeptical. I didn’t understand the need to pay a fee to help manage our money. However, I am now so appreciative of the product. It definitely makes managing our money stress free. It has made our life a heck of a lot easier. We don’t have time to track things–and we no longer have to, since the system does it automatically for us. We log on, print out our reports, and decide where we need to be more disciplined. We used to “talk” about getting new windows for our house, and now we have them! It has made it so much easier to set financial goals and meet them. Our day-to-day living is so much better now. We keep each other informed and it works very well for us.
Stephanie and Stephen, thank you so much for sharing your advice, insight and experience with us. Congratulations on being able to purchase new windows for your home, increasing your savings, managing a 3-month period on one income, and all the other wonderful successful things you’ve accomplished. Keep up the great work.