The Envelope System Saved This Couple $21k — and Some Major Headaches

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Dave Ramsey envelope system

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There are two pockets in Scott Grierson’s wallet. The front is for money he can spend.

The back is for money he just earned from work. As soon as he finishes work, this cash goes into an envelope, in a drawer, in his home office.

“It has a name, it has a purpose,” says Scott, a self-employed math tutor. “If your money doesn’t have a purpose, it’s easy to spend it on a whim.”

That’s why Scott and his wife Luby gave all their money a purpose via a personalized version of Dave Ramsey’s envelope system. In four years, the Griersons accomplished the following:

  • Paid $5,800 of school tuition and expenses without resorting to student loans
  • Built a $15,000 emergency fund
  • Saved $6,000 in cash
  • Invested in four mutual funds to save for a future home down payment

Here’s how they used the envelope system to their benefit so you can follow in their footsteps.

How the Griersons got started

After Luby listened to a podcast describing the envelope method, she told her husband about it. Having never budgeted, Scott knew his days of running up a tab at the bar were numbered.

Following the envelope method’s formula, they estimated their weekly spending on groceries, bills, and nonessentials like new clothes. They lumped those latter categories into one envelope called entertainment. Then, they earmarked $100 for groceries and $350 for entertainment.

“The system is supposed to make you mindful of your spending money,” Scott says. “I think we had too much money to be mindful of it. It was, ‘We still have $100, I should buy this!’”

Little by little, they readjusted the amounts to ensure they weren’t giving themselves too little or too much to spend each week. When money is left over at the end of a week, it goes into savings instead of fattening the envelope. The envelope is then refilled with new income.

The small weekly savings help fund big goals. The couple saved $5,000 this way in 2016 before hitting the pause button on a savings goal for 2017. They welcomed their daughter into the world earlier this year.

Modified envelope system

Image credit: Scott Grierson

4 ways they edited the envelope system to work for them

Having a child and a fluctuating income has forced Scott and Luby to edit the envelope system for their use.

The Griersons broke a Ramsey rule by creating one entertainment envelope instead of dedicating envelopes to all the smaller nonessentials, like clothing, technology, and dining out.

“We thought it was overwhelming the way [it was] designed, so we simplified to make it work for us,” Scott says.

Here are four more ways they make the method work best for them.

1. Shifting money between envelopes

The envelope method stresses the importance of keeping each envelope separate from the others. You’re not being disciplined in your spending, for example, if you need to borrow from your restaurants’ envelope to pay for more clothes. It’s like robbing Peter to pay Paul, the thinking goes.

At least once a month, however, Scott says he and his wife run out of grocery money while the entertainment envelope bursts at the seams. But they don’t feel bad about borrowing from entertainment to buy more food.

“But we never use grocery money to buy shoes,” Scott says.

Becoming parents has also naturally adjusted their spending. They used to spend $40 to $50 at the bar after playing volleyball with their friends. Not anymore.

“A beer becomes a onesie,” Scott says. “You just can’t do as much [as parents], so it’s easier to not spend money.”

2. Holding weekly, monthly meetings

The envelope method advises its users to call emergency meetings when spending over budget. The Griersons decided they’d hold 10-minute weekly meetings to discuss everyday spending. They always talk before shelling out $100 or more, for example. Or, they’ll talk about skipping a dinner during a week that they buy $70 worth of baby formula.

The couple’s longer monthly conversations focus on longer-term savings goals. They have an annual goal of saving $2,000 for their Christmas and New Year’s plans.

“We treat every upcoming expense as debt,” Scott says. “We’re always paying off everything before we spend it. That way, we live within our means.”

There’s also a plan for the unexpected. One of their current goals, for example, is to replenish a five-month emergency fund that was depleted, in part, by an unforeseen trip to visit family.

Communication is key. Scott says the system only works because he and his wife both believe in it.

“I don’t think we’ve had a money argument in four years of doing this,” he says. “It brings a sense of calm and peace to you because you no longer have to worry.”

3. Filling envelopes with inconsistent income

The envelope method was built for salaried professionals like Luby, a physical therapist assistant. She earns the same amount of money with each paycheck.

Scott, on the other hand, runs a small, mostly cash business, tutoring children in their homes and delivering math education on his YouTube channel. During the summer months, he might only earn $200 to $500 in a given week. In the fall, he could bring in anywhere between $800 and $1,200.

“My money is so scattered that if [we] didn’t have a plan, we’d be screwed,” Scott says.

Fearful of taking on debt, planning allows Scott to spread his volatile earnings over a year. He uses his cash to fund the envelopes — hence the two pockets in his wallet — and contribute to big savings goals. Luby, meanwhile, takes care of the apartment rent and monthly bills with her consistent paycheck.

As a private contractor, Scott also uses the envelope method to create a separate savings goal: having the money on hand to pay his taxes in April.

4. Adding credit cards to the mix

The envelope system leaves no room for credit cards. Scott, who earns much of his tutoring income in cash, agrees.

“Let’s say your clothes budget is up to $300,” he says. “You can go to Amazon and buy $300 of clothes in one click. There was no resistance to spending the money. But if I go to Old Navy and physically pull $300 out of my pocket, it’ll make me think twice about what I’m buying.”

So why does the Grierson household have four credit cards? To build the credit needed to buy a home.

Two years ago, Scott couldn’t even qualify for a credit card. Luby made him an authorized user on her cards. After making timely payments on the couple’s cable, electric, and gas bills, credit card offers started arriving in the mail.

In 18 months, Scott increased his credit score from 640 to 758, besting Luby’s. And two months ago, the couple was preapproved for a home mortgage.

Not letting a budget get in the way of a good time

Scott knows what you’re thinking. No, he and his wife aren’t hermits. Since using the envelope system, they have vacationed to Europe twice. They also spent a month in Florida, where they married. In addition to paying for about half of their $25,000 wedding, they’ve also footed the bill for having their first child.

And, no, you don’t have to be a math teacher like Scott to make this work. The whole thing was actually Luby’s idea in the beginning.

“I certainly enjoy looking at the numbers, and that makes the system appealing to me,” says Scott. “But whether you’re a math teacher or not, you have to be able to handle your finances, right?”

Tweaking the envelope system for your money

Consider creating a budget or using an alternative strategy or tool to monitor your finances. You can begin by building a $1,000 emergency fund, as the Griersons did four years ago.

From there, figure out how much you spend on groceries and everything else. Scott recommends tracking your spending for two weeks and then dividing by two to find your weekly average in each category. Then, zero in on where you can make cuts.

“For us, it’s going out Friday night, not going out Tuesday night, Friday night, and Saturday night,” Scott says. “That’s because if you’re doing this system, you probably have some kind of financial goal, whether it’s getting out of debt or buying a house or whatever it is.

“If that goal is important to you,” he added, “you’ve got to be willing to make a sacrifice.”

Don’t worry about the smaller details of the system. If you never use cash, for example, use the debit card in your wallet and a spreadsheet on your computer. Edit the envelope system to your benefit and you can accomplish your own financial goals, too.

Interested in refinancing student loans?

Here are the top 8 lenders of 2020!
LenderVariable APREligible Degrees 
Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of December 13, 2019, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 12/13/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit, email us at, or call 888-601-2801 for more information on our student loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 3.46% APR (with AutoPay) to 7.61% APR (without AutoPay). Variable rates currently from 2.31% APR (with AutoPay) to 7.61% (without AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.31% APR assumes current 1 month LIBOR rate of 2.31% plus 0.75% margin minus 0.25% for AutoPay. If approved for a loan, the fixed or variable interest rate offered will depend on your credit history and the term of the loan and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

3 Important Disclosures for Figure.

Figure Disclosures

Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.

4 Important Disclosures for College Ave.

College Ave Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

1College Ave Refi Education loans are not currently available to residents of Maine.

2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.

4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 1/1/2020. Variable interest rates may increase after consummation.

5 Important Disclosures for Laurel Road.

Laurel Road Disclosures

Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.


There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.


For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
For eligible Associates degrees in the healthcare field (see Eligibility & Eligible Loans section below), Lender will refinance up to $50,000 in loans for non-ParentPlus refinance loans. Note, parents who are refinancing loans taken out on behalf of a child who has obtained an associates degrees in an eligible healthcare field are not subject to the $50,000 loan maximum, refer to for more information about refinancing ParentPlus loans.


Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).

Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.

All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to for applicable terms and conditions.

For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.


The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.


The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.


After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.

We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.

We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.

If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.


This information is current as of November 8, 2019 and is subject to change.

6 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.

7 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.76% effective November 10, 2019.

8 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 12/019/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.

1.99% – 6.89%1Undergrad
& Graduate

Visit Earnest

2.31% – 7.36%2Undergrad
& Graduate

Visit SoFi

2.06% – 6.81%3Undergrad
& Graduate

Visit Figure

2.62% – 6.12%4Undergrad
& Graduate

Visit College Ave

2.29% – 6.65%5Undergrad
& Graduate

Visit Laurel Road

1.99% – 7.06%6Undergrad
& Graduate

Visit Splash

1.81% – 6.29%7Undergrad
& Graduate

Visit CommonBond

1.90% – 8.59%8Undergrad
& Graduate

Visit Lendkey

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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