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Karate Guess So
“Walk on road, hm? Walk left side, safe. Walk right side, safe. Walk middle, sooner or later, [makes squish gesture] get squish just like grape. Here, karate, same thing. Either you karate do “yes”, or karate do “no”. You karate do “guess so”, [makes squish gesture] just like grape. Understand?” -Mr. Miyagi
It occurred to me that lately, I’ve changed my day-to-day cash flow plans a couple of times.
A year ago, I was running on a fairly strict cash-only plan.
A month ago, I was running on a strict budget, but doing it entirely out of my checking account.
Now, I’m loosening the budget reins, and moving all of my payments and day-to-day spending to a credit card, including a new balance that I can’t immediately pay off.
The thing is, changing plans too often scares me. Like the quote at the beginning of this post, I start worrying about being squished like a grape.
The simple fact is that any plan will work.
If you want to get out of debt, just pick a plan and run with it. If that means you follow Dave Ramsey and do the low-balance-first debt snowball, good for you. Do it. If you follow Suze Ormann and do a high-interest first repayment plan, great. Do it. If you follow Bach and pay based on a complicated DOLP formula to repay in the quickest manner, wonderful! Do it!
Just don’t switch plans every month. If you do that, you’ll lose momentum and motivation. Squish like grape! Just pick a plan and go. It really, truly does not matter which plan you are following as long as you are following through.
This applies to other parts of your life, too. For example, there are a thousand fad diets out there. Here’s a secret: they all work. Every single one of them, whether it’s Weight Watchers, slow carb, or the beer-only diet. The only thing that matters is that you stick to the diet. If you manage that, you will lose weight on any diet out there. Except for the jelly bean and lard diet. That one will make you extra soft.
Another secret: the productivity gurus are right. Every single one of them. David Allen, Stephen Covey, Steve Pavlina, and the rest. They all have the One True Secret to getting the most out of your day. Really. Pick a guru and go! But don’t try to Get Things Done in the morning and do 7 Habits at night. Changing systems, changing plans, changing your mind will make you sabotage yourself.
The real secret to accomplishing great things, whether it’s paying off $100,000 of debt, dropping 40 pounds in 3 months, or tripling your productivity is to do it. Just get started and, once you’ve started, don’t stop. If you keep going and stay consistent, you’ll accomplish more than anyone who hops from system to system every few weeks.
The Things That Bring You Here
I’ve been walking though my analytics data. That is the Big Brother software I use to know everything about each one of my dear readers. It’s all part of my master plan to rule the world. Muwahaha!
Some of the results are interesting.
The single most-used search term to find this site is “slow carb diet“, which is great, because I really enjoyed writing that post. I’ve been slacking on the diet lately, but I’m still down more than 30 pounds. I’m currently ranked #3 in Google for this term. If I move up 2 more spots, I’ll outrank Tim Ferriss for his own product. If I aggregated all of the “slow carb” variations, this post probably accounts for more than half of my traffic from Google.
Many of you come here by searching for “how to have a perfect life“. I’ll do everything I can to help you achieve that, but it’s going to take work on your part. There are no shortcuts.
“Beat the Check” is another popular search term, but a very bad game to play. It’s almost impossible to win it, since the Check 21 Act of 2004.
It’s interesting that “trained husband” brings a few of you each month. My question: are you shopping, or exploring a new fetish? Don’t be shy.
I’m a bit amazed that “zombie wheels” is something people actually search for, but 140 people hit Google looking for that term every month, and a few of them make it over here.
“How to stretch a meal“, “things you should buy online“, and “unsecured loan advice” are some of the top personal finance terms bringing you all in, though “how to make a bunker” and its variation are popular, too.
“Hoe can you force your wife” is a bit disturbing. Most of the results are naturally for sex. I can’t help but hope that I’ve either really disappointed this visitor, or convinced him that force is a bad idea.
“How much did a pound of gold weigh in 1854?” is a search that makes me giggle. To the best of my knowledge, the troy scale has been used to weigh gold for a lot longer than that.
That was a fun little stroll through my statistics. Hopefully the fact that I used “fetish” and “sex” in a post will draw more crazy search terms.
How did you find me? Inquiring minds want to know, so please tell me in the comments.
Budgeting tips – sticking to your budget
If you are looking to get out of debt, or you are currently debt-free and want to stay that way, then it is important that you get a grip of your financial situation and live within your means.
A good way to do this is to create a budget as this gives you a clear indication of how much money is coming in, how much is going out and also highlights any areas where you may need to make cut backs should you be falling short each month.
Once you have sorted out the figures and made necessary amendments, for example paying bills by direct debit in order to make savings or cutting existing debts by carrying out a balance transfer to a lower rate credit card, it is time to start focussing on the lifestyle changes.
As you will find, it is one thing to create a budget and quite another to stick to it, but by adhering to the following steps and exercising a certain amount of will power, you should be able to ensure that you live within your means and resist the urge to reach for that credit card.
Keep focussed
Before you start to look at how you can stick to your budget you need to clarify why you need to stick to your budget!
A budget can initially seem like something that has been devised with the sole intention of stopping you having fun and buying or doing the things that you want. So it is important to remember that, though some cutbacks may be necessary in the short term, a budget is a long-term strategy that will allow you to take control of your finances and, all being well, live a happy life that is free from the worry of excessive debt.
Change your habits
Unfortunately, a successful budget can require a change in lifestyle and this can be one of the most difficult things to adhere to.
For example, if you have previously enjoyed eating out regularly then you may have to make cut backs in this area to ensure that you are living within your means. But, instead of seeing this as a negative, try to focus on the positives and remember the reasons why you are budgeting.
And a change in habits doesn’t necessarily mean that you have to cut back on your enjoyment of life and it may actually open your eyes to other pursuits you may not have previously considered.
For example, instead of eating out try preparing a meal at home and turn your dining room into a restaurant. This means that you can still have the fine dining experience but at a fraction of the price and without the worry of making a reservation!
Shop smarter
Lists figure heavily when creating a personal budget and list-making is a habit that you should get used to when trying to stick to your budget.
When budgeting it is vitally important to avoid impulse buying and a great way to do this is to always make a list of things you need before you go shopping.
This means that you will have a clear idea of what you need and you will be less inclined to make random purchases that may just turn out to be an unnecessary drain on your finances. It’s also worth mentioning at this point that you should always differentiate and prioritise the things you need over the things you simply want.
If you are unsure how to make the distinction then put off making the purchase for a couple of days and then reconsider if you actually need it. This cooling off period will often convince you that you can do without it and save you money.
In addition, savings can be made on your shopping by simply swapping big name brands for supermarket own varieties, using discount coupons and looking for any special offers.
Overall, it is important to be fully focussed and committed to your budget plan and to be aware that a change in finances may require a change in lifestyle. But a few short term changes may well add up to better finances in the long term.
Article written by Les Roberts, budget reporter at Moneysupermarket.com.
Make a Budget
- Image by r.lovewell via Flickr
In the past, I’ve gone through a detailed series of budget lessons demonstrating how to make a budget and showing my personal budget spreadsheet template. If you weren’t here to see them develop, you probably haven’t seen them at all. I’ve never built an actual index for those posts.
This is the master index of my budget planning resources. As I develop more, this will grow.
Budget Lesson #1 – In this lesson, I go over how we handle discretionary income and I explain our modified envelope system. The discretionary budget contains things like our grocery bill, or the clothes we buy. We have near-total discretion over what is purchased, hence the name.
Budget Lesson #2 – Lesson #2 contains the details of our monthly bills. These are the ones that are consistent, predictable, and actually due each month. Most people take these for granted as the bills they have to pay, but it’s not true. You can get almost all of your regular bills reduced just by asking. You would also be surprised what you can do without, when properly motivated.
Budget Lesson #3 – This is where I explain how we deal with the non-monthly bills. That is, the bills that have to be paid, but are not due on a monthly basis. I also share the personal budget spreadsheet template I developed. I am working on a few sample templates to match various imaginary scenarios. If you’d like to be an anonymous case study, and get free help setting up a budget, let me know, please.
Budget Lesson #4 – In this lesson, I describe our “set-aside” funds for things that will need to be paid eventually, but not on a set schedule. Sometimes, they are never actually due. We set aside money for the parties we throw, for car repairs and for a number of other things. A few of these items are outright optional, but they are part of what makes life fun. You can’t make a budget without including some of the extras.
Budget Lesson #5 – This is the companion piece to lesson 2. Learn how I’ve reduced–or attempted to reduce–each of these bills. For the better part of two years, I called Dish Network every few months to ask for a discount. For almost 2 years, it was granted. Then one, day, they told me they were putting a note on our account to keep us from getting any more discounts, so I canceled. 100% discounts help us save more.
Budget Lesson #6 – This is the reduction companion to lesson 3. These bills are harder to reduce. Have you ever successfully gotten your property taxes lowered?
Budget Lesson #7 – This is the reduction companion to lesson 4. Notice a pattern, yet?
Budget Lesson #8 – Here, completely out of order, is the reduction companion to lesson 1. Watch as I magically reduce–or rationalize–our discretionary budget.
So, dear readers, what part of budgeting should I address next?
Overbanked
Last week, when I mentioned that I lost my phone, there was some interest in my self-insurance warranty plan.
The truth is, that’s just one of 14 savings accounts I keep. I find it’s simpler to keep track of my savings goals by moving the money to separate accounts than to track everything in a spreadsheet. This lets me tell how I’m doing at a glance.
I have one account each at two major traditional banks. These savings accounts exist to provide a target for an automatic transfer that eliminates fees on the associated checking accounts. Whenever much money accumulates here, I sweep it out and throw it at my credit card.
I also have 12 accounts at INGDirect. I chose ING because they are extremely convenient and, at least at the time, had a competitive interest rate. Different countries have different banking options.
Here are the rest my accounts:
- Emergency fund. I deposit $25 every month. I also keep part of my emergency fund in a CD that’s also at ING.
- Property tax fund. Every month, I deposit a bit more than a twelfth of my annual property tax bill. When the time comes to pay, I just transfer the money from my account to the tax assessor. It works well.
- College fund. Yes, this is a straight savings account. Right now, I’m focused on debt, not college. When my debt is gone I’ll ramp this up. I started this just to get started. From here, it’s a few seconds of work to increase the amount I contribute, which is currently $10 per month.
- Warranty fund. Instead of buying warranties, or going into a panic when something breaks, I deposit $50 into this account every month. When something breaks, I take the money out of this account(assuming I have enough) and use it to replace or repair whatever is missing. $50 isn’t a lot to contribute, if you have things breaking every week. I go several months without touching this money, and it’s always been enough to cover what we need.
- Vacation fund. This is pure fun money. I sock away a bit out of every check, and occasionally when other money comes in. Then, we plan our vacation around how much money we have here and how many points we have saved on our credit card. Vacations seem like a luxury when we’ve got debt, but I work so much and miss so much of my kids, day to day, that I consider this a necessity. It’s a week of downtime with my family, doing something they will remember. It’s worth it, several times over.
- Braces fund. So far, we know that two of our kids are going to end up in braces. One of them will probably be this year. We had more in this account, but stole some to cover our vision therapy bill. When our insurance reimbursement finally comes back, that will go straight into this account.
- Camera fund. My wife really wants a prosumer-level camera, so I started an account to save for it. If we go over budget, this is the first account we raid, since this is purely a luxury.
- Personal goal accounts. We each have a goal account set up for things that don’t affect the family. As a practical matter, I save to go to FINCON and a hunting trip with my Dad and my brother, while my wife saves for a couple of scrapbooking retreats each year. These accounts are funded solely from extra money and don’t have an automatic deposit.
- Car fund. This started as a car repair fund, with a $50 deposit each month. When my car was finally paid off last year, I took half of my car payment and redirected it into this account, to help us pay cash for our next car. Last month, I stole some money from this account to play stockbroker. It wasn’t a lot of money, but I’ve gotten a 25% return over the last 6 weeks.
- Internet. This is just a convenient account to catch money that gets paid from things like my Amazon affiliate account.
- Held for tax. The name should be self-explanatory. When I get paid from any of my side hustles, I set aside about 25% to cover any tax bill I may be missing. After I file my taxes, I shoot any leftover money out to my other savings goals or my credit card, as appropriate.
I also have a couple of monthly line items in Quicken that I haven’t broken into separate accounts, just to provide an overdraft buffer, like our gift budget.
That’s proof that I am over-banked. How about you? How do you track your savings goals?
