Two lessons can be learned from the current banking crisis. And remember, the odds of you getting a personal bailout? Pretty slim.

Lesson One: Don’t be greedy

The banks became very greedy. They rode the housing boom all the way up, and all the way (are we all the way yet?) back down — and then some. They started lending money to people that couldn’t afford the loan. The banks just wanted a piece of the action.

The same thing can happen with us. We see “everyone else” around us doing something (freshening up the landscaping, buying a new big screen TV, driving around in a new car, investing in real estate, etc.) and we automatically thing we should be doing it as well regardless of our gut instinct, or our personal situation, goals…

It’s so HARD in the moment to be able to withstand the pressure though! Operating with a written budget helps mitigate that pressure by presenting you with a much needed reality check when unrealistic things start looking a bit too enticing. Trust your budget and your monthly budget meeting, where your true values and goals present themselves.

Lesson Two: Keep some cash on hand

Dave Ramsey said it best (though he was writing specifically about small businesses surviving):

When you have no cash, you freakin’ go broke. You must keep some cash on hand, no matter what kind of business you have. Give yourself some wiggle room where you can take a hit and still be standing.

In your personal finances this is key! Your one-month buffer is your first step, where you’re given both a psychological boost and a real cushion. Once your buffer is saved, begin attacking your debt so you can free up those required minimum payments and increase your monthly cash flow. With the debt gone, start socking away some money for your life’s emergencies.

Having some cushion will enable you to be in the right state of mind when disaster strikes — you’ll then be able to make the right decision, instead of one based on panic and sheep instincts.

A few weeks ago my MacBook lost its charge. I plugged in the adapter, and the green light didn’t come on telling me it was getting charged. I disconnected, reconnected, (no, I didn’t blow into the adapter — though that always worked for Duck Hunt) but didn’t have any success. Then one time I did actually get the light to come on and I left it for a few hours. When I came back, I tried to fire up the computer and

Nothing.

I disconnected the adapter and the green light was still glowing (?).

I didn’t buy Apple’s AppleCare or whatever you call it.

Anyway, so I took it into an Apple store and they ran a diagnostic. The motherboard failed. It’ll cost $850 + labor to have a new motherboard installed. I brought in an external hard drive and they said they backed up the entire hard drive. In the meantime, I bought a new Dell laptop for $700.

Our budget file, it’s called Mecham’s Budget.ynab, is on that external hard drive — I’m hoping. We were running Windows on the Mac with Parallels and I’m hoping against hope that they got everything off the hard drive and not just the Mac OS docs. Tonight I’ll plug in the hard drive and see exactly what we have left.

If they didn’t…if we lost our budget…that’d be said. I think we have data in there from 2005.

So we didn’t budget for September because of this whole computer issue. As a result, we’ve declared a moratorium on spending. Well, not really. But darn close. Things will be fine. Over the past five years the budget has trained us to not spend money unnecessarily (for the most part), so I’m not completely freaked out by the fact that we’re operating without a map, rudder, compass…PLAN.

Right now in our checking account there’s this pile of money. I’m staring at it and I’m wondering what it’s all supposed to do. I know we had some money set aside for furniture — a couple hundred dollars I think… I know we’ve been putting $25 per month in the furniture fund…I think $100 in the car repairs fund… but I have no idea on exact numbers. Tithing? Eh..we pay it monthly, but I really leaned on the budget to tell me what the exact amount was supposed to be. Did we already handle August? I can’t remember.

What is the point of that pile of money in the checking account? I feel lost.

If the budget is lost forever, then we’ll just have to do what everyone does when they first start. Take that pile of money and start deciding what it should be doing. We’ll just have to develop a fresh PLAN.

What about all of that historical data? It didn’t really serve much of a purpose except for the geek inside of me to be able to see what we had spent on groceries in July of 2006. The important stuff hasn’t happened yet. The important part of budgeting is what you will do, not what you have done.

I suppose the key is to dig down into the details (license and registration, once per year at $115 a pop, so $9.58 in that category every month) with your finances. You think through things hard once per month, with everything in front of you, with your attention focused — you don’t multitask.

If you’re in a forest, and a disaster strikes, but you’ve been budgeting, did the disaster really happen?

I’ve been teaching people to budget for years now (we went live four years ago this month) and I finally figured it out. It’s taken a while, I know. But I finally figured out what keeps people from budgeting.

I suppose I’ll just write about it tomorrow.