‘Spendvelopes’ My Money Saving Debt Burning System

by Ian O'Brien

How To Save Money with SpendvelopesOk yep, I made up the word ‘spendvelopes’ but bear with me: stupid name, great system (also, making up your own words is totally fine).

So, debt is rubbish. I don’t need to tell you that, we all hate debt and until last year I too had a dirty secret I just wasn’t addressing. I had been in debt for the past 5 years, to the tune of £3K, originally stemming from an amazing two years traveling around Canada and Mexico. Since then I’ve bounced the debt between two credit cards (to stop myself paying interest) and just kinda left it at that. Pretty dumb I know.

Over the last year I’ve implemented a money saving system I call ‘spendvelopes’, it has allowed me to rinse through my debt in around six months, with very little cost, effort, hassle or maintenance. it’s pretty cool.

How to use the ‘spendvelopes’ system

Setting it up:

  1. Make a list of all of your debt. It might be in a variety of places, make sure you include absolutely all of it especially your overdraft.
  2. Write down your monthly living costs. Be realistic, remember to include rent/mortgage payments, groceries/food, gas, electricity, travel costs, insurance etc.
  3.  Add another 10% on to you monthly living expenses this is your buffer for emergencies, don’t fritter it away.
  4. Deduct the total about of your costs from the amount you are paid each month. The result is your money to play with (kind of). From this amount decide how much you want to allow yourself to spend and what you are prepared to save monthly. I recommend saving at least 15% of your monthly salary. Don’t make your personally spending amount unrealistic, I allow an amount for books, coffees, treats, Socialising/eating/drinking out with friends and the cinema. the rest is to pay off my debt.
  5. Automate all of you bill payments to come out of your bank account after you are paid monthly. If you are paid every two weeks try splitting your bills evenly between both monthly payment dates.
  6. Next automate a payment from you account to pay off the amount of debt you have calculated you can pay off monthly.

Ok that’s all of the setting up done, now to reap the rewards and use this simple system.

Using Spendvelopes:

  1. Each month withdraw the amount you’ve calculated for your fun spending from your bank and put keep it at home in one or more labelled ‘spendvelopes’. I used to have multiple ones for different things like ‘books’ and ‘going out/entertainment’. Now I’ve simplified it down to one spendvelope and when that money is done, it’s done.
  2. Pay for all of your personal expenses in cash from your spendvelopes, this is important. Do not touch your bank account or debit cards and If you do, put the money from the relevant spendvelope straight back into your account.

Ok that’s it, simple I know but trust me it works a treat. There is no regular boring budgeting or anything like that, just an initial calculation. Although, I like to reassess and check everything is running smoothly every now and again.


You may have noticed I haven’t mentioned big stuff like holidays, that’s the next stage of the system. When I’m in debt I’ve decided not to spend any money on big stuff like holidays so I can burn through my debt quicker. When you’re debt is clear you can direct the money you we’re using to pay of debt into a savings account.

If you can try to save at least 20% of your monthly income, 10% can be saved for cool stuff like  holidays and MacBooks and the other 10% to build up real long-term savings, keep it in a hight interest account.