How do I announce our engagement? Do I have to mail announcements out?

Most people announce their engagement in a family gathering;Christmas for example.or at a party.

Forget about all that junk.

Just mail invitations to the guests when it's time for the wedding, they'll take a hint :-)

Save the date cards will act as engagment announcements as well as "test drive" the addresses. You MiL is the one who is out of date...

most people don't send out engagement announcements. They tell their family, then their friends, as they choose the bridal party, and announce in the newspaper. The bridal shower is for the bride's friends. Both families contribute to the guest list and the wedding invitations go out. The RSVP's confirm the guest list.
If your mother=in=law to be insists on engagement announcements, gather the guest list from your side of the wedding party. Give your family two weeks notice, as it is "family" tradition with his side.
Set aside a day with her for tea, and bring along your guest list. You can then compare guest lists, don't hand yours over to her, just suggest you compare guest lists.
She will want to know the design of the engagment announcements. Because it is a new tradition to you, (tell her it is, she knows it is a new tradition to you) ask if she will accompany you for input and help you choose this most important tradition. Don't slight her here, for this is her one request. Go in and browse together and then choose.
Soon, get your mother=in=law cooing over her engagement announcements, don't frown or laugh at her tradition, smile sweetly, and be happy your family allowed her this tradition, as you will soon be sharing grandchildtren.
Maybe bring some bakery things for the tea and the proposed shopping for the engagement announcements.
Etiquette is important to her, and find out her family traditions.

no engagements announcements are needed -only the wedding invitations

No dont send out engagement announcements. Just call your close friends and relatives and tell them.

When you set the wedding date (example say your wedding will be Dec 15 2007) send out "Save the Date" notices by mail to all immediate family and close friends only you plan to invite. Send those out on nice cards/ postcards (printsmadeeasy.com) you design yourself, or just nice printer paper (colored paper).
Send those out say by july or august, if your wedding is in Dec 2007.

On save the dates it looks like this:

Save the Date!

Wedding of
Joe Small
to
Lisa Winters

December 15, 2007
at (name of Church)

Its family and friends i think word of mouth is just fine im sure your moms told their moms then sister etc.. i wouldnt worry about it!! Just send out save the date to whoeever has to travel so they can be aware of the future wedding and then invitations to everyone a few weeks before the big day!

i think engagement announcements and save the dates would be redundant.

we sent out save the dates because our wedding will be right after the holidays and is out of town for most people. if everyone is local, i would skip them both.

just like put you and your fiance baby picture on the invites.

You don't have to send out engagement announcements. But the new thing that everyone seems to do now before the wedding invitations is a Save The Date card, it is a simple/casual card that just lets everyone know plenty ahead of time when the wedding date is, so they can save the date for your special day. The Save the Date card normally only has the date of the wedding on it and not the time or location. So they can save the date and then later you send out your formal invitations. For example:

John Smith and Mary James
Are getting married
April 18, 2008
Please save the date!
Invitation to follow

Engagement announcement cards aren't necessary, especially if you're sending Save the Dates. The newspaper announcement and word of mouth is plenty of notice.

If your future mother in law stays adamant about sending engagement annoucements perhaps she should foot the bill for them.

Thats not even an old custom! I bet your future MIL is my age!
We had annoucements BUT they were for people who we knew but did not invite to the wedding! They were mailed the week after the ceremony. People who eloped sent them as well.

Maybe if you were having an engagement party I could see it!

She may be very formal in her thinking but ultimately it's up to YOU, not her. In my mind, the only reason to send out an engagement announcement is if you're going to have an engagement PARTY. Yes, people have engagement parties but they are normally hosted by people close to you - not family. It's just another, egregious way for a couple to unabashedly ask for presents. I think it's kind of silly.

"Save the date" cards are a good idea if you'd like to alert people to the date. These are done quite often and are very cute. You can do them in the form of a magnet that people can keep on their fridge. It doesn't HAVE to be something formal but they do usually go with the theme (colors) of the wedding and usually match the invitations. It's up to you though. If you'd like people to "save the date" on their calendars, then a save the date card should go out 6 months prior to the wedding.

I must have an old book too because I think save the date cards are tacky. I think an announcement of your engagement in the local paper and perhaps a phone call to out of town relatives is the way to go. Test drive the addresses??? I don' t get this. If the wedding invitations go out six weeks before the wedding (like they should) that's plenty enough notice to save the date.