How Do I Pay Off Debt and Save At the Same Time?

Rachel: First of all, that’s amazing that you’re using the envelope system and getting out of debt at the same time. It sounds like you’re really on top of things with your money.

With the envelope system, you’re simply putting cash into envelopes to use for certain budget categories—like food and clothing. Now, it may feel like you’re not paying a lot on your debt because you’re actually seeing the cash leave your hand. That’s one of the perks of the envelope system because it causes you to spend less money.

Now if you’ve budgeted a reasonable amount for food, and you’re cashing it out and putting it into your envelopes, that’s fine. Keep at it.

The problem here could be that you’ve simply overbudgeted for food or in some other category when you could actually live on less.

So with food as an example, maybe you’ve cashed out a good bit toward eating out. But if you’re getting out of debt, then you don’t need to be eating out much, if at all. Cut back in that category, and put the extra cash toward paying off debt.

I think you’re doing a great job with your money. Keep focusing on your debt and using the envelope system, and you’ll be out of debt in no time!

Rachel Cruze Growing up as Dave Ramsey's kid, Rachel Cruze learned the basic principles of money at an early age. She travels across the country teaching those same principles, in a personal and passionate message of money and hope, to teens and young adults. To find out more about Rachel, visit www.daveramsey.com/speakers or follow her on Twitter at @RachelCruze.