I can’t believe I’m going to talk publicly about our finances.

My wife and I have been married for 210 months. For the first 205 of them (a little over 17 years), money was the biggest source of stress in our relationship. It bothers me how cliché this is. We’ve all heard that money is the number one point of tension for couples. (According to the American Psychological Association, it’s the top cause of stress among individuals too.) I want an exceptional marriage…but in this area, Kate and I were the rule not the exception.

Kate and I dealt with money stress in different ways. She felt a lot of anxiety and shame—and she was extremely candid with friends (and sometimes strangers) about our struggles to manage our finances. I was frustrated and embarrassed by those struggles, but tried to keep them private. And so I’ll say it again:

I can’t believe I’m going to talk publicly about our finances.

Why am I writing about them now? Because five months ago, everything changed for us. And because I don’t want anyone else to go as long as we did before getting free of the worry, frustration, conflict, and sense of powerlessness that can surround personal and family finance.

A $20,000 Turnaround in Five Months

I said everything changed. But in one sense almost nothing changed. We had the same jobs, the same income, the same living situation, the same basic expenses. But on December 6, we found a budgeting method that actually worked for us. We changed that one thing, and it changed everything else. Here are some of the transformations that show up in a spreadsheet:

• We paid off $5,000 in debt and put $15,000 in savings—a $20,000 turnaround in just five months. (I’ll explain later where this money came from.)

• We increased our monthly giving by 600%.*

• Our monthly bottom-line went from about $500 in the red to $1,160 in the black. And that’s on top of the $1,500 we now budget for savings.

• Not only do we have an emergency fund and savings, we maintain a $1,000 buffer in our spending accounts. (No more overdrafts!)

And here are a few changes that can’t be tracked in Excel:

• Kate and I used to dread our budget conversations. Now we look forward to them.

• Most months it felt like we weren’t on the same page when it came to our budget. Now we work together toward the same shared vision.

• Finances used to be the number one source of tension in our marriage. Now they are source of joy. Actual joy.

• We used to be concerned we weren’t good role models for our two kids when it came to managing our money. Now we feel equipped to pass on skills, tools, and principles that work.

• Once upon a time, money kept us awake at night. Now we have financial peace of mind.

In this review of the Real Money Budgeting Course, I want to talk about what worked for us with the Real Money Budgeting Method, what didn’t (spoiler alert: there wasn’t much), and why Kate and I think this is the simplest, most empowering, and most effective budget plan we’ve ever encountered. At the bottom of this post, I’ve also included the monthly budget spreadsheet Kate and I created based on this plan. If you any questions at all, leave a comment. Kate and I will try to answer as many of your questions as possible.

[*I’m not boasting. I didn’t tell you how much we give—just the increase. Maybe our giving jumped from one dollar to six. In all seriousness: I put this here because generosity is a value important to our family, yet we were rarely able to give us as much money as we we wanted to people and causes we love. And when we did give it was with less of an open heart than we wanted, because the rest of our budget felt so out of control: “What if we need this money to make up a deficit later this month?”]

The Day Everything Changed

In retrospect, signing up for the Real Money Budgeting course was a Hail Mary pass that actually connected.

Over the years, Kate and I tried many budgeting systems. Dave Ramsey. The Motley Fools. The Square Cash Card. The envelope system. And at least a half-dozen brilliant plans we developed ourselves. We learned something from all these experiments, and some (shoutout to Dave Ramsey) were more useful than others. But none clicked.

On paper, we should have been fine. We were fortunate to have steady jobs and to be making a living wage. Why did it seem like we were taking two steps back for each step forward?

Kate and I needed a system that aligned how we track money with how we actually spend money. We needed it to be simple. We needed it to be empowering rather than shame-inducing. And we needed it to be something that worked for both our very different personalities. This is exactly what we found with the Real Money Budgeting Method.

In early December, a month after our 17th anniversary, Kate and I were weary from having our backs against the proverbial wall for so long. I’d met Bob Lotich, creator of Real Money Budgeting, earlier that year. (We were part of the same writers mastermind group.) I was inspired by his story. I followed his blog and podcast over the next several months, and I resonated with his approach to personal finance. I trusted Bob—the way a quarterback trusts his best receiver—and so we registered for his Real Money course on December 6. We watched 14 of the 15 course modules the first night. Touchdown.

It was the best $77 we ever spent.

Why Most Budgets Fail

The simplest way to describe Real Money Budgeting is this: it’s the “envelope system” for the 21st-century.

The envelope system is how our grandparents and great-grandparents managed their money. At the beginning of every month, they put a certain amount of cash in separate envelopes for groceries, gas, household expenses, etc. When an envelope was empty they didn’t spend anymore, or they transferred money from a different envelope. It was a system that worked because (a) the world ran on cash, and (b) the money was real.

The principles behind the envelope system are sound. But there are at least two problems with using it today:

1. It’s almost impossible to do everything with cash now.

Trust me, we tried. Again and again.

2. Most budgeting methods that try to adapt the envelope system for a Debit Card World make our money less “real.” 

These methods include the same budget categories we might use in the envelope system—groceries, transportation, and so forth—but all our income and expenses flow digitally through one account. To categorize and track every purchase requires a lot of time. (Training as a Level Seventeen Spreadsheet Wizard doesn’t hurt either.) And heaven forbid you fall a few days behind. Your best laid plans will quickly go awry.

The way Kate and I used to reconcile our budget with reality was by inserting a line-item (in bold red) labeled HOUSEHOLD MISC. We did this once a week. That was our way of compensating for the fact that our account was $173—or $262 or $298—below where our spreadsheet said it was supposed to be. We assumed it was spent on household miscellany. We had little idea where the money was actually going…or where it was supposed to be going. Our family finances felt like a leaky ship. We couldn’t bail water fast or long enough.

How We Use the Real Money Budgeting Method

Why does Real Money Budgeting work? Because, as Bob Lotich says, it combines the simplicity and accountability of the envelope system, with the convenience of a debit card.

In the Real Money Budgeting method, you’ll utilize multiple bank accounts. These will include at least two checking accounts—Kate and I named our checking accounts “Bills” and “Budget”—and several additional accounts I think of as “envelope accounts”: Giving, Groceries, Gas, Spending, etc. Bob says these envelope accounts should mostly be savings accounts. For reasons I’ll get into below, Kate and I decided to make them checking accounts instead. Here are the checking accounts Kate and I have now:

• Auto & Gas — For gas as well as for future maintenance and repairs.

• Bills — All our recurring bills come from here, most of them using automatic withdrawal. (Note: We didn’t create this account from scratch. It’s been our main checking account for years.)

• Budget — The account linked to our debit cards. We try to keep $500 in here at all times.

• Household Expenses — Now we know what we actually spend on HOUSEHOLD MISC. It’s a lot less than before.

• John Spending — My personal spending account.

• Kate Spending — Kate’s personal spending account.

In addition, we have several savings accounts—including a Main Savings account and a House Savings account. The latter is because we’re buying our home in July, a prospect that would have been unthinkable without Real Money Budgeting.

These are the accounts that made sense for us. Yours will be different. For example, you’ll probably have a Grocery account. We share a grocery account with our housemates (we live in community). All three families transfer money into the account, and then we just keep an eye on it. We also don’t have a Giving account…yet. Most of our giving comes out automatically from Bills, and then we just improvise as other giving opportunities arise. We plan to set up a Giving savings account next month.

At the beginning of the month, our paychecks go into the Bills account. We then transfer the money we’ve budgeted for each major category into the corresponding accounts. We use our debit cards (linked to our Budget account) for purchases. Then, periodically, we transfer money from the right “envelope account” to the Budget account to cover what we spent on the cards. 

Here’s a real-life example. I just spent $87 ordering books online from Powell’s, the iconic Portland bookstore. To cover that, I will move $87 from the John Spending account to Budget. This allows me to keep track of my personal spending and keeps the Budget account balance topped off at $500. Oh, and ends overdraft charges forever.

I can only hope my description is making sense. If I’m making this sound complicated, it’s not. A gifted teacher, Bob does an awesome job explaining it in the course. He walks you through the process step-by-step, with easy-to-understand graphics and screen share. It didn’t take us more than a few hours to set everything up.

While I was initially wary about opening and managing seven or eight new accounts, it’s actually no sweat. It took me a couple tries to figure out the flow. It took Kate two minutes. In fact, when Kate went in to our credit union to set up our new accounts, the bank employee looked at her skeptically and said, “I don’t know, I’ve never heard of a system like this.”

To which Kate replied, “I guarantee you that in six months we’ll have more money in our accounts than ever before.”

And she was right. As usual.

Our Story

Even Kate and I can’t believe the dramatic turnaround our finances have taken. In fact, when I showed Kate a printed draft of this blog post, she wrote this note on the last page: “It feels unbelievable. If you’re reading this thinking it’s unrealistic for you, trust me that you can do this too. Maybe we were just so ready after 17 years of trying everything, but this has been the easiest method and with the biggest reward.”

To better understand how we got here, we went back and looked at our budget spreadsheets for the six months before we signed up for the Real Money Budgeting course. From June through November 2019, our actual expenses exceeded income by an average of $487 per month.

Each month, we started with a pristine budget. With the greatest hopes and best intentions, we included line items for savings and giving too. Most months, we put money in savings on the 1st but had used it all up again by the 30th. Similarly, we were never able to give away as much as we wanted or planned, though we always gave at least a little money and practiced generosity in other ways.

Now, five months after we completed the course, our monthly income exceeds actual expenses by $1,166. The turnaround was almost immediate too, beginning in January. We’re also able to save $1,500 per month and keep it there.

There was some out-of-the-ordinary money that also came in between December 2019 and May 2020. This included our state and federal tax returns, the federal stimulus check ($3,400 for our family of four), and a check for some contract work Kate did. The thing is, with the exception of the stimulus check, we’ve  received this kind of periodic income before. But in the past, the money’s been spoken for before we even get the checks in the mail. This time we were able to put that money in savings, set it aside for the downpayment on our house, and use it pay off our line of credit.

To that last point: on December 6, we had three types of consumer debt:

• A car loan for my Honda Element

• A line of credit

• A car loan for our Toyota minivan

We’ve had additional consumer debt in the past, but we’ve whittled away at it over the years, debt snowball-style. Since signing up for the Real Money Budgeting course, we paid off the Honda (about $1,000) and paid off the line of credit ($3,900). In fact, Wells Fargo owes us 16 cents. I can’t tell you what a relief it is to have the line of credit over and done with. We’d had it for years, usually making minimum payments on it while we took care of other priorities. Now that we’ve paid off the other two, we can aggressively pay down the Toyota.

Five months after fearing that our financial ship was capsizing, and that we were bailing water in vain, we suddenly feel in control with the wind in our sails. How do we account for the difference? First, we found the leaks. Then we lightened and shifted our load.

1. We found the leaks.

One of the first steps in the Real Money Budgeting Method is to find out where your money is actually going. When we did an analysis, we found a shocking number of regular expenses that weren’t actually in our budget. Most of these were small, but all those little holes added up, and they were causing our finances to sink.

We also identified the areas of life in which we were most likely to overspend. The catch-all HOUSEHOLD MISC line item didn’t cut it. Now we had the data for where the money was being spent, and we could plan accordingly. 

2. We lightened and shifted our load.

Once we knew where our money was going, we could start telling it where we wanted it to go. (This is language Kate and I have adopted from the Real Money course.) We cut a bunch of random monthly expenses, cancelled subscriptions, found ways to share costs with friends and housemates, and more. Most of the cuts we assumed would be painful haven’t been missed at all. And a few of those random expenses we decided to keep, incorporating them into our monthly budget.

Something that made a massive difference for us is that Kate and I have separate “envelope accounts” for our personal spending. This is something we learned from Bob, too. This allows us to track our personal spending, but it does more than that. It gives us autonomy. Neither of us likes to be micromanaged. Nor do we want to micromanage the other, or be the gatekeeper for every personal purchase. Before, we had a rule that we needed to talk about every purchase over $20. Not anymore. If I want to buy the latest Blackwing special edition pencil—that’s up to me. And if I blow half my spending money on books before the end of the first week—well, that’s on me too, and I’ve set myself up for some belt-tightening the rest of the month.

I can’t overstate what a difference-maker this has been for us, not just financially but relationally.

The Real Money Budgeting Course: Pros and Cons

Here are some of the pros and cons Kate and I came up with as we thought about our experience with Real Money Budgeting Course and Method. Some of this is a summary of what I described in more detail above. 

1. PROS

The System

With the Real Money Budgeting Method, all your money is in its proper place. Your expenses—and the funds to pay for them—are kept in discreet, digital buckets. This makes it easy to see and easy to track.

The Course

As I said above, Bob is a gifted teacher and a humble. The course is only as long as it needs to be, and Bob walks you through the Real Money Budgeting approach step by step.

The Cost

At just $77, this course is not only a bargain, it feels like a gift. Everyone’s results will be different, but in our case, the return on investment has been astronomical. (Note: I just double-checked, and the price is still $77, but it will go up on June 15.)

The Flexibility

We didn’t do everything exactly the way Bob said. Maybe if we had, we’d be even further along than we are now. Still, some of the ways in which we diverged from his instructions felt right for us, and I’m glad we could adapt to our own circumstances.

For example, Bob suggests making your “envelope accounts” of the savings variety, but Kate and I did checking accounts instead. The reason? In normal times, federal law prohibits Americans from making more than six withdrawals per month from a savings account (this has been suspended during the COVID-19 crisis). Kate and I wanted to reconcile accounts—moving money from “envelope accounts” to Budget—more than six times a month.

In retrospect, we would have been fine—from a spending standpoint—transferring money less often. But from a relational standpoint, we wanted to check in more frequently. We wanted near-daily engagement with our budget. For a while, we did this three or four times a week, and always together. Now we do it perhaps once a week. The downside of using checking instead of saving is that we lose out on some interest.

The Bonuses

As of this writing, the Real Money Budgeting Course comes with a ton of bonus items. These include budget case studies, videos on how to save money on purchases, a long FAQ video, and more.

2. CONS

It’s honestly hard to think of a “con.” One thing that came to mind for us is the little bit of time and effort it took for us to set up our accounts at the bank, but that’s because we set up our accounts in person rather than online. But even that little inconvenience was, for us, infinitely worth it.

The Bottom-Line

At the community building organization where I work, we talk about the power of low-risk investments to build cities that are stronger and more financially resilient. At just $77 for the Real Money Budgeting Course, the risk is low but the potential gain is great. That said, if you take the course and stick with the plan, I’m confident the investment will be worth it.

If you want to get control of your finances, if you want your budget to reflect your priorities and deepest values, if you want personal finance to be not a point of stress in your relationship but a place of growth and happiness and even joy, I encourage you to try the Real Money Budgeting Method.

Final Note: On Writing about Money During a Financial Crisis

There were two reasons I almost didn’t write and publish this review. One you already know: I’m squeamish about talking about personal finances. Even now that we’re moving in the right direction.

The other reason is because I’m writing this at a time when the world has been turned upside-down by the coronavirus. Tens of millions of Americans have lost their jobs. We’ve entered what is likely to be the greatest financial crisis since the Great Depression. Why would I write a blog post about how well “Kate and John” are finally doing, when so very many people—including friends and family—have lost their jobs…or fear they soon will?

I decided to write this post anyway because if there’s ever been a time to have a simple, easy-to-mange budget plan, this is that time. Now more than ever, it’s important to know exactly where our money is going.

Our Monthly Budget Spreadsheet

Disclosure: If you sign up for the Real Money Budgeting course through any of the links above, I will receive a small affiliate commission, at no extra cost to you. This is something I’m struggling with, and so I want to talk a little about it. About a month ago, I contacted Bob directly and told him how much the course had meant to us and that I was going to be writing about it on my blog. It wasn’t until later, when Bob and I were doing the video chat excerpted above, that I found out there was also an affiliate program for the course. I’ll be happy if any commissions come in to offset the cost of Squarespace hosting, and I’ll never recommend something I don’t love. That said, the thing I care most about is that you check out this course if you think it might be right for you and your family. Here is a direct link to enroll without my affiliate code attached.