Today we talk about spigot control. For those of you that don’t know, a spigot is a small wooden peg usually at the bottom of a cask (a name for barrel). We are going to use the analogy of the barrel to describe where your vast financial cash income resources are poured into regularly. We are going to open the bottom spigot carefully to pay the bills. Remember I said I would get to filling the barrel later. I elected to start with letting money out through the spigot first.
I also pick the cask as the holder of your money. I figure a cask was originally used to hold alcoholic beverages and if everything turns to shit, we could use it for the original purpose and get drunk.
PLAN YOUR EXPENDITURES OUT 3 MONTHS. The majority of your expenditures are on a monthly basis and you can predict very close, the total of most expenditures. I am not going to tell you how to develop a format because Paul will put it on the computer (he doesn’t know how to use a pencil), Chris will probably go to an evelope system and who the hell knows how Margaret will do it. I will tell you how I do it, then you can design your own system.
I actually plan out each month with two parts. I did it that way because I got paid with two pay checks each month and I could match up my paychecks with expenses. Each month is divided into expenses paid from the 1st to the 15th and then from the 16th to the 31st. No wise ass remarks about what if the month is only 28 or 30 days long. YOUR NEED TO KNOW EXACTLY WHEN EACH BILL COMES DUE EACH MONTH. If it comes due in the first half of the month, that is where I log it, and the same with the second half obligations. ALWAYS PAY YOUR BILLS 5 DAYS BEFORE DUE. Don’t play the “postmark game” or wait until the last minute. Examples of monthly expenses are phone bills, cable bills, natural gas bills, electric bills, and yes credit card bills. Some bills vary monthly such as electricity (unless you budget even payments) so you should plan based on what you know. I actually BUDGET AN AMOUNT OF DISCRETIONARY MONEY that your mother and I put in our wallet in each one-half monthly period. It is ours individually. No questions asked. If it isn’t spent it belongs to us. I can tell you it is never enough but it is yours. Piss it away if you want.
With the ninety day budget, you can lay into the correct time period, quarterly and annual costs. For me, quarterly includes auto insurance, Appleton water and sewer, and newspapers. Annual expenses are usually few but a magazine subscription or a donation because you tithe to the church (ha-ha, I can’t stop laughing) or property taxes are examples.
NEVER LET A PAYMENT BE TAKEN AUTOMATICALLY FROM YOUR CASK. Because you don’t always know the amounts to be taken such as from a phone company, don’t give anyone automatic access to your cask. Never, never, never. If you want to pay electronically, okay. It is your wooden cask and nobody touches it without your permission.
IF YOU MUST USE YOUR CREDIT CARD, immediately log the receipt amount into the time period when you know it must be paid. That way you always know your status on the card and you also can match the period ending statement. I know it is a pain in the ass. You want to get rich. HERE IS ANOTHER KEY. Always know what your expense obligation is and control it.
Your assignment (only if you don’t already have a budget) is to put together you 3 month projection of expenses. This almost sounds like Mission Impossible, your assignment if you chose, is to do a budget. Item by Item. Month by month. Do it! Ask me questions. This is one important exercise.
I know this is boring stuff. Making money is boring.
Also inspect you barrel. Make sure that it doesn’t have any leaks. YOU DON’T WANT YOUR BARREL TO HAVE A HOLE IN IT.
Love,
Dad (Just Chas.)