this week, i made the following payments, progress, and a few setbacks..

bad news

• i incurred library fines of 1.70 up to this week from recent overdue books :/
• i inadvertently made 2 payments for my school loans this month — oops! first, my automated payment of 330 went through. a few days later, 307.25 was paid from the same checking account. i had manually scheduled the first one, and had also signed up for the ‘electronic debit account’ feature recently. i forgot to delete the manually scheduled one :/
• as a result, my checking account went into overdraft, and i am charged a few cents for that
• to compensate for the 300-400 disparity, i took the emergency fund of 1354.19 and moved it into my checking account   incidentally, i am planning to move the e-fund to the everbank account soon
• i spent $2 this week on coffee out at the cafe because i didn’t have coffee (time) one morning

good news!

• $6500 balance from my credit one account was finally transferred to my jo-ann’s 0% interest on balance transfers for 6 cycles account
• as the actual amount at the time of the transfer in my creditone account was less than 6500, i should be getting a $50 credit or so soon
• soon after, i paid $1000 towards that balance transfer
• the school loans department e-mailed me and let me know that i might be able to get a refund for one of the 2 payments this month.  i had asked them if they could just apply the second payment as a payment made for next month, but i guess they don’t do that?
• i didn’t dine out even once this week!  hooray!

not-sure-which-category news

• the SO made me buy a pair of new walking-yet-fashionable flat shoes that were on sale.  he made me, he did!!  i paid about $40.  (he has better fashion sense than me, and tells me often that i don’t have enough shoes.  he owns more shoes than me
• i used the jo-ann’s gift card one of my best friends gave me as a birthday present a few weeks ago, and bought about $19 worth of one crocheting book, and 2 balls of black yarn.  (normally, i am content with borrowing books from the library.  however, this book is more of a reference book that can be used repeatedly over time.)

debt progress report

• now my joann’s balance transfer is down to $5,500
• college loans is now at 9,650.55
• little brother money is 2,200 still (still waiting for bank account info again!)

current total debt: $17,350.55

goal by april 2009: $9650.55

welcome to the second edition of Friday Cures at FWP.

last time we discussed paying yourself first, a lesson from the richest man in babylon. today’s ‘cure for a lean purse’ is on controlling one’s expenditures.

“..control thy expenditures for definite and gratifying purposes.”

-the richest man in babylon

human limits

arkad teaches his students about the reality of having more desires than one can realistically satisfy. there are but a rare few, if any, who can satisfy everything. the reason for this is that there are limits on certain resources in our lives, such as time, strength, zest, distance, and even what we can eat.

this appears to make sense. for instance, on time. there are only 24 hours in a day, and we ideally spend 8 hours of that sleeping. we have 16 hours left. we might spend 8 hours daily working. we now have 8 hours left. we account for time spent commuting (an hour?), getting ready for or decompressing from work (2 hours?), preparing and eating meals (2 hours?), and we are left with possibly 3 hours left in a day to tend to our hobbies, take a class, watch tv, pay our bills, see a movie, catch up with a friend, etc.

i could have a dozen interests i’d like to continue cultivating, or pursue: crocheting, blogging, reading personal finance and other self-help books, take a martial arts class, work on web programming freelancing, exercise, and much more. however, i only have 3 hours in my day left to do any combination of these things, it seems. it wouldn’t make sense, nor would it be plausible (without sacrificing other time commitments) to satisfy all my desires. there is a limit on my time.

necessary versus possible

arkad advises that we must not confuse our necessary expenses with our ‘desires’!

one way that we can do this, is to write down all the desires that we might have today. then categorize them, separating the ‘necessary’ from the ‘possible’ from the 90% left from our net income. whatever else that one can not allot funds for from the 90%, let it go. maybe at another point in the future, but not right now. don’t feel bad about them, just accept that one can not gratify all desires. and that’s the way things go.

above all else you must not touch that 10% you paid yourself first! you must see how you can make do with the 90% that is left over.

in following along with the exercise, we might quickly jot down our own ‘necessary’ versus ‘possible’ desires (expenses) that might compete for 90% of our income. mine would look like this:

the specifics for ‘necessary’ will generally include food-clothing-shelter, but will vary from person to person beyond that. i included fuel, vehicle maintenance, and insurance, due to the fact that i must get to work in some practical manner to work so that i can earn income to begin with. theoretically i could use public transit, but after exploring this route, determined that it would take me 2+/- hours or so (instead of 25 minutes) to go to work.

so i know that i can afford all the items in my ‘necessary’ list. i can also afford many of the items in the ‘possible’ list, such as occasionally dining out, internet service, cell phone service, and crochet supplies. but i can not cover items such as a new computer or motorcycle with 90% of my current income. so i accept this for now, let those desires go, and move on.

budgets

one might argue at this point that s/he does not want to be restrained by a budget, perceiving budget as a form of enslavement. arkad addresses this concern brought up by one of his students in the parable.

arkad disagrees strongly, reminding us that the purpose of a budget is to help our purses to ‘fatten’, not harm us. it will help us to have the necessities and any desires that can be acquired on the 90% funds available.

“the purpose of a budget is.. to enable thee to realize thy most cherished desires by defending them from thy casual wishes.“

i think it is often much easier for us to complain about what’s inconvenient, rather than to try to look beyond that and see what might be for our own good. possibly because we want control over facets of our lives, and having a budget feels as though something else is controlling us. we also know that something can be acquired with funds outside of our own 90% (ie, credit cards, loans, etc.). knowing this, it might feel strange to convince yourself otherwise, to stick to a budget. when we look beyond our present desires and focus on our future well-being instead, we can see that a budget in fact would exist to help rather than hinder us. it can be a matter of perspective or attitude, i believe. we can choose which attitude to take.

moving forward then, we can better control our expenditures by separating the ‘necessary’ from the ‘possible’, letting go of what can not be acquired with 90% of our incomes, and perceiving budgets more as friend rather than foe. why not defend ourselves from our ‘casual wishes’, and protect our ‘most cherished desires’?

arkad says,

‘Budget thy expenses that thou mayest have coins to pay for thy necessities, to pay for thy enjoyments and to gratify thy worthwhile desires without spending more than nine-tenths of thy earnings.’

in other words, buy what you need and then want while you can stay within 90% of your net income.

what do you think?

what are your ‘necessary’ and ‘possible’ desires or expenses?

how do you perceive budgets?

do you acknowledge limits on your resources?

how do you control your expenditures?

last week i posted my review of the classic personal money management book, the richest man in babylon by george s. clason. i covered the richest man arkad’s 7 recommended ‘cures’ for ‘a lean purse’.

i thought it would be fun and enlightening for myself (and hopefully also for you, the reader!) to go over each of his cures over the next several weeks while addressing the following questions:

Continue Reading »