Scott’s wages pay for our bills and rent and nothing more. I don’t work so the only money we have for groceries and necessities comes from our tax credits from the government (do Americans get tax credits? Or does that all come at the end of the year in your refund?). So anyway, that is £97 a week, so we basically have to live on just that or else pull out the credit card. So I try to split it up by limiting £50 to groceries/toiletries/house necessities, then £10 for me for the week to take kids to do various fun things (which probably really ends up being about £20, but I still try to stick to £10). The remaining £20-£30 is for whatever else comes up, which is usually more milk and bread or if we want to go out for a meal one night or if kids need clothes. It would be impossible if I still maintained my previous double-income standards of organic foods, but I’ve come to accept that enough sub-par food is better than not enough organic food.

Then we get a monthly child benefit of £135 a month, which goes for extras. £20 gets split between the kids’ savings accounts and £50 goes to savings for school uniforms and tuition (coming up in only 1 1/2 years!)

And finally, to be honest, some months we use the credit card more than we should, if something comes up like a special birthday or a broken-down vehicle. But we try hard to limit that, and in relation to most of the developed world, I think we’re doing pretty well, debt-wise.

In all, I think it’s amazing how well we can live on what we have. God seems to provide for us, even though the budget never looks like it’s gonna be possible!

The best thing about envelopes for us was that it made extra spending money more equitable between the two of us. I’m a saver and Droo’s a spender. Without envelopes, I would be in a mindset of saving up over time to get my splurge items (furniture/home decor), but it would never happen because Droo spent all of the left over money on his splurge items (mostly books and computer stuff). He wasn’t doing it in a purposely selfish way, but since I wasn’t spending, the check register looked like he had money to spend. With all the other cash flow going in and out, I never realized that the reason I couldn’t seem to save $2,000 over time to buy a sofa was because Droo was spending three times more than he should on books.

You could certainly do the same thing with a spreadsheet budget. The envelopes just break it down to a really elementary level. To me, if you are already able to stick to a budget without resorting to envelopes, there’s no reason to resort to a cash only system.

We spend about $300 a month on groceries, including drugstore items. I never use coupons, but there are only two of us. I buy very little processed food. I go shopping two times a month, with a few quick trips in between. I always make a list of everything we’re going to cook for the next two weeks before I go, and I stick to the list. I do buy organic milk and a few other organic items. We eat out 1-2 times a week.

As far as Dave Ramsey’s envelope system: I’ve read one of his books and I’ve heard of envelope systems, but haven’t used them before. I don’t like carrying a lot of cash, either. I did implement envelopes this year in a few categories that we always went over in last year. I based this year’s budget categories on our actual spending from last year, whether we were within last year’s budget or not.

The trick is to remember I have cash in an envelope when I’m at the store! I also do multiple transactions to pay with the appropriate envelope. I wrote on each envelope what was in it, and withdraw the lot at the bank at the beginning of the month, making sure to itemize the withdrawal in Quicken. I then stick all the change and the receipt back in the envelope.

My envelopes are: alcohol, clothing, entertainment (eating out, movies, etc.), garden, and gifts (I also withdraw the kids’ allowances for the month).

Wow, it is true that it hurts more to spend cash! We’ll see how this goes over the course of the year and if this is a system that will work for us. I’ve learned that if we have the money in our account, it WILL get spent, and we justify or “borrow” from future months, which is where we get in trouble with the budget.

For 2009, I did not separate grocery and household. Anything I bought from Sprouts, Target, Kroger, etc. went into one big account, so it’s not a very accurate picture. I buy a lot of vitamins and cleaners at Sprouts, clothes, gifts, and household products at Target, etc. So in that lump category, I spent about $180 per week in 2009. If I bought the same stuff in CA, I bet it would be at least 30% more.

Starting in February, I started itemizing things a bit better. I have spent $85 in groceries this week, but for various reasons we’ve eaten out more this week. I am trying to stay under $125 per week in groceries.

I buy organic milk, yogurt and most produce, but I compromise on cheese and buy conventional Kraft stuff. I have a hard time finding organic meat that isn’t outrageously expensive, but I’ve been happy with the chicken from Sprouts. My kids don’t eat it, so I worry less about it.

I think the best thing for me would be to go to the Dave Ramsey envelope system, but I haven’t bitten the bullet and done that yet. I still worry about carrying around so much cash. Have you tried that?

I was saving a bunch of money when I followed the blogs and got free stuff at Walgreens, but I just haven’t had the time to keep up with that lately. I still shop sales and use coupons, but not as aggressively as I used to. I will pick it back up in the summer when things tend to calm down.

RE: Leigh Ann’s post….have you thought about skipping fabric softener altogether? I stopped using it after reading yucky stuff about it last year, and I haven’t missed it a bit. We use Charlie’s Soap for our laundry and that’s it. Also, check out http://www.moneysavingmom.com (that’s probably who Kristen references in her post), and you might be able to cancel that subscription to the Grocery Game! It’s a little more work, but it’s free. Just a thought.