Claremore Daily Progress

Community News Network

April 12, 2013

Slate: A better way to manage your household budget

(Continued)

CHICAGO —

This example may seem perverse. After all, surely any reasonable person would move around some money in this situation and spend more on gas. But the thing is that lesser mistakes just like this are occurring every day with this system.

Example: You go to the store and milk is more expensive than usual (something about the sequester?) Because you have your limited grocery envelope, you have to respond to this by buying less of some grocery. You could buy less milk, or fewer veggies, or less pasta. However: It may very well be that you'd rather keep with your normal grocery purchase and cut back somewhere else — say, two fewer lattes this week. But because the "coffee" budget is separate from the grocery budget, you end up with the same number of lattes and fewer bananas.

Add up a lot of examples like this, and in the end what you buy may look very different from what you would buy if you thought about all of your dollars as interchangeable.

And the separate envelope mistake can really cost you. Usually, people have an envelope for savings — some amount you'll commit to putting aside every month. Now imagine you overspend for Christmas and end up with $2,000 in credit card debt. You'll plan to pay it down using the money in your monthly "gift" envelopes since, after all, you spent it on gifts. And now you're carrying around credit card debt while still adding to your savings every month.

This is a huge mistake. Unless you are a much better investor than most of us, you're probably collecting only a few percent interest on your savings account. And your credit card is likely charging in excess of 15 percent interest. The difference between paying down your credit card bill and adding to your savings could be hundreds of dollars over the year.

Text Only
Community News Network
  • Wal-Mart to cut prices more aggressively in back-to-school push

    Wal-Mart Stores plans to cut prices more aggressively during this year's back-to-school season and will add inventory to its online store as the chain battles retailers for student spending.

    July 21, 2014

  • Hospitals let patients schedule ER visits

    Three times within a week, 34-year-old Michael Granillo went to the emergency room at Northridge Hospital Medical Center in Los Angeles because of intense back pain. Each time, Granillo, who didn't have insurance, stayed for less than an hour before leaving without being seen by a doctor.

    July 21, 2014

  • Starved Pennsylvania 7-year-old weighed only 25 pounds

    A 7-year-old Pennsylvania boy authorities described as being so underweight he looked like a human skeleton has been released from the hospital.

    July 21, 2014

  • NWS-HB0713-HowardMartin-004.jpg Airman laid to rest back home in Indiana six decades after death

    The mystery of what happened to a military transport plane that disappeared in the fall of 1952 into an Alaskan glacier was solved two years ago when a helicopter crew spotted the wreckage. But it took another two years to retrieve the remains of Airman Howard Miller and 16 other servicemen passengers. Saturday, Miller was laid to rest in his hometown of Elwood, Ind., with full military honors. Hundreds turned out for the funeral and burial services.

    July 13, 2014 2 Photos

  • New York to offer free lunch to all middle-school students

    New York's $75 billion spending plan for the fiscal year that began last week includes the first step toward offering free lunch for all 1.1 million students, expanding a program now reserved only for the city's poorest children.

    July 9, 2014

  • Screen Shot 2014-07-09 at 11.24.10 AM.png VIDEO: Pilot buys pizzas for storm-delayed travelers

    A Frontier Airlines pilot went above and beyond the call of duty when a recent flight from Washington, D.C. to Denver was diverted to Cheyenne, Wyoming due to bad weather.

    July 9, 2014 1 Photo

  • Why North Korean cheerleaders may soon descend on the South

    When you think of North Korea, "cheerleaders" may not be the first thing that springs to mind. The Hermit Kingdom is perhaps better known for less savory things like gulag-like labor camps and leadership purges.

    July 8, 2014

  • Screen Shot 2014-07-08 at 11.46.13 AM.png VIDEO: Foiled beach gear theft goes viral

    Video capturing a bizarre confrontation with two women allegedly attempting to steal beach gear on a Florida beach has gone viral.

    July 8, 2014 1 Photo

  • Screen Shot 2014-07-08 at 10.40.20 AM.png VIDEO: Sleeping fan suing Yankees, ESPN for $10M

    A fan caught on camera sleeping during a recent game at Yankee Stadium has filed suit against the Yankees and ESPN, claiming he suffered emotional distress when two announcers mocked him on the air.

    July 8, 2014 1 Photo

  • VIDEO: A boom in firework sales

    This year could be quite the boom for fireworks sales across the U.S. According to the American Pyrotechnics Association, or the APA, sales are already off to a good start.

    July 4, 2014