Debt Elimination Success Seminar
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Section 1
A Look at Debt
History of Debt
Credit Card History
Current State of Debt
How You Got Into Debt
Good Debt Bad Debt
Business vs. Personal Debt
Section 2 Dealing With Your Money
The Two Step Plan
Doing The Two-Step
Step One
Step Two
The Paths Out of Debt
1- Create a Debt Payment Plan
2- Neogtiate Better Rates & Terms
a.Consolidation Loans
b.Consumer Credit Counseling Services
3- Negotiate Lump-Sum Settlements
4- Bankruptcy
5- The Easy Way
6- Win $1,000,000
Living Debt-Free
Manage Your Money
Make More Money
Save Money
SameMoney-MoreFun
Stay Debt-Free
You as a Business
Section 3 Dealing With Your Creditors
Alerts/Scams
The Credit Industry
Credit Industry
The Fine Print
The Secondary Debt Market
The Debt Collection Process
Original Creditor
The Charge-Off
Collection Agency
Legal Problems
Dirty Creditor Tricks
Dealing with Debt Collectors
Dealing with Debt Collectors
Statute of Limitations
Cease and Desist Letter
Section 4
The Credit Report
The Credit Report
Credit Score
Credit Repair
Section 5
Dealing With Yourself
The Critical Factor
The Art of Prosperity
The End of Failure
Prosperity Coaching
Section 6
Kids and Money
Kids and Money
How to Pay for College
Section 7
Debt Information
Bookstore
Debt Facts
Radio Show
Resources
About Us
Privacy Policy
Site Map
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Host: Tom Allen
Guest: Steve Smith
Segment 2 - How Mvelopes Works
Tom: I’m Tom Allen and I hate debt! I invite you to make the decision today to join with me in living a debt-free and prosperous life. Almost everyone could get out of debt on their own if they simply used the principles of simple money management. And here to make simple money management, well, simple is Steve Smith from Mvelopes, the computerized version of common sense financial management. Steve, lets just start at the beginning. What is Mvelopes based on and how does it work?
Steve: Mvelopes is the electronic and automatic version of the traditional cash-based envelope budgeting system.
Tom: Just like grandma used to use.
Steve: Just like she used to use and you talk about it a lot. And, you know, the basics behind that system they are very straightforward. People used to take their paycheck and cash it and bring home a stack of cash and sit together with their spouse at the table and, you know, kind of pull out a sheet of paper and determine all the areas that they needed to spend money in. Usually you could break those down into two places. One type of spending is spending that takes place every month for groceries or clothing or your house payment or rent or whatever the case is, fuel for the car. The other is a category of spending where, you know, the spending takes place periodically. These would be things like family vacations or holiday gift purchases or property tax payment or a periodic insurance premium or, you know, house maintenance or auto maintenance, those kind of things.
Tom: Sure. Haircuts maybe. You don’t get a haircut every month but you get ‘em on a regular basis.
Steve: Yeah. And then they would actually determine how much cash they wanted to put into each of those areas. They’d take out a stack of envelopes, hence the name, and write the different categories of spending on those envelopes and then actually fund the envelope if you will, or stick cash into the envelope. And then the key is they would spend from that envelope. So if they wanted to buy groceries they’d pick up the grocery envelope and take that to the grocery store. And the key to this and the reason it works so well is they had some very critical information, information that’s hard for us to get our arms around today. That is they knew exactly how much they had left to spend and how long it would be before they could put more cash into that envelope. And so the monthly spending envelopes, that worked very well and they could make more informed spending decisions. On the periodic spending what would happen is they would just put cash away every month for a spending requirement that would be coming sometime in the future and the money would be there for them when they needed it. One of the things we do today, just to digress a little bit, is we tend to spend to the balance in a checking account. You know, as long as there is a positive balance there we spend money. So we spend to this kind of total amount remaining rather than understanding how much is left in any specific area of spending. And so we spend without really understanding the impact that that spending will have in another area in our financial life.
Tom: That’s interesting. I think that may just be a human condition that we want to spend until it’s all gone. The interesting thing about using the envelope and now the Mvelopes system is that within any given category you basically can spend until it’s done. If you have a clothing category and there’s money in it and you want to buy clothes you can go spend all of that money on clothes but when you do you won’t have spent all of your money. You’ll still have grocery money. You’ll have phone bill money. You’ll have money for all of the other things that you want to spend money on even though you’ve kind of filled that unconscious need to spend it all.
Steve: Well there’s nothing wrong with spending. I like spending. The issue here is spending more money than you have or impacting other areas of your life that you need to care of.
Tom: Yes.
Steve: Quite frankly this is the psychology we were talking about in the previous segment. Being able to go to the department store or some favorite store and make a purchase, something that you’ve wanted to buy and you buy because you know that you’ve set the money aside to do, that is a great thing.
Tom: It really is.
Steve: It’s a great feeling. But, you know, the converse of that is going there and making the purchase and having this sinking feeling in your stomach knowing that, you know, you probably don’t have enough money set aside for that and somehow you know its gonna come back to haunt you in the future. So, you know, that’s the essence behind the traditional envelopes system. And what we did with Mvelopes Personal is that because we’re moving into much more of a cashless society it’s very difficult to manage your personal financial life on cash and so we basically duplicated that concept but in an electronic form. We made it available on the Internet so that you can access this system. All you do is log in. You create spending accounts that we call envelopes. You set up a spending plan based upon your income. You determine how much you want to set aside in each of those spending accounts on a monthly basis. You have both monthly spending accounts and periodic spending accounts that you can accrue money forward on for future spending. And then as you spend Mvelopes tracks all of your spending as it happens because this system ties to about 6,000 financial institutions and credit card companies and retrieves all of your transactions automatically. So those transactions come in and you assign them to the appropriate spending account just the same way that you would pull cash from an envelope and use it for a purchase. And you always know how much is left in each spending account. You’re able to save money for future spending requirements. You’re able to make sure that future spending requirements are taken care of out of your monthly cash flow so you don’t overspend. And it places you in that same psychology of proactive decision-making and spending management that we talked about just a few minutes ago. So, that’s the reason it works very, very well in today’s world and still allows you to maintain spending management using all of these tried and tested principles that have worked so well for people over the years.
Tom: Well, speaking of working so well, when I got serious about getting out of debt I used the old fashioned version. I didn’t have the Mvelopes computerized version yet. But I want to make sure everyone understands this. No matter what path out of debt you choose, if you need to declare bankruptcy, if you need to go through a negotiation company or use a consolidated credit counseling service, or if you’re just doing it on your own, everyone needs to have good money management. And, well to be real honest, I had just moved out of Las Vegas, and I talk about this at Ihatedebt.com, so I had all these coin cups that they have at the slot machines, souvenir coin cups, and I used those to separate my money. I kept track of everything with pencil and paper and it worked beautifully. But it was a lot of pencil and paperwork.
Steve: Right.
Tom: Now having the Mvelopes system makes everything computerized. It’s all in one spot. It’s very easy to use. And if I was going to do it all over again today I would and I do because its not only for getting out of debt it’s for managing your money so that you have a wise spending plan. And that’s the first goal in creating wealth.
Steve: Yeah. You know, I tell people in the book “Money for Life” that it really doesn’t matter. You need to use something. Now you can choose to use the traditional envelopes system, or you can use Mvelopes personal, or you can do paper and pencil, or you can use some other system. You have to use something. We really get in trouble when we kind of convince ourselves that we can manage all of this in a fairly complex world without using a tool of some kind to manage our spending. But if you really believe in some of these age old principles of setting aside money first and being able to appropriately save money for future spending requirements the Mvelope concepts are some of the very best concepts available for people to use successfully.
Tom: And if you’re looking to find more information go to Ihatedebt.com. You’ll find a number of banner and text links that will take you to Mvelopes. Or you can simply type in Ihatedebt.com/Mvelopes. You’ll get all of the information, it’s right there at your fingertips. You’ll be able to put together your own spending plan. And what we’re going to talk about in our next segment, you’ll also be able to put together your own personalized getting out of debt plan. And of course the exciting part is once you get out of debt you can then start to put together your wealth creation plan. Steve Smith from Mvelopes will be right back to talk to us more about this. Stay tuned. For more information on getting and staying out of debt visit Ihatedebt.com. I’m Tom Allen and I hate debt!
Read the transcript of Steve's next segment Your Personal Getting Out of Debt Plan
Steve Smith How Mvelopes Works
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Or you can mail in your contribution.