Rule Four, as I’ve talked about before, is budgeting bliss, your money Mecca.
It’ll let you sleep better.
You’ll be able to handle variable income with ease.
Your bill-paying process will be studied by Harvard Business School students as a case for efficiency and effectiveness.
So let’s not take forever to get there.
I’m just sayin’. You know the solution. You just need to implement it.
Rule Four is a Sprint…Not a Marathon
Speaking as someone that’s been on both sides of the Rule Four Fence, I know what it’s like to not have a buffer, and I know what it’s like to have one in place, sitting there in my checking account all pretty…
It’s worth the work. It’s worth the grind (combing through piles of junk to find stuff you can sell). Sweat (hauling a bunch of junk from the cellar to the garage to sell). Tears (selling aforementioned junk). Bloodshed (Here I’m referencing donating plasma specifically to fund your Buffer).
This is one instance where we’re not talking about maintaining some new habit, we’re just talking about a short-term sprint to get to a new place, and stay there. When you arrive, the extra effort is no longer necessary. You’ve arrived.
It’s akin to sprinting on a treadmill, then having the treadmill come to a complete stop. You don’t even need to walk anymore. As long as you just stand there and manage the current money inflows well (and you will, because you’re using Rules One, Two, and Three), you can literally just stand there maintaining the status quo.
The Nitty-Gritty Details
Let’s say you earn $4,000 per month net. Let’s say your expenses pre-YNAB were $3,998, give or take. Now you’ve implemented Rule One, so every dollar is accounted for and has a mission — a purpose. Over the course of a few days and weeks, you find your dollars are going further because dollars with a purpose are never wasted.
(Be careful when you read the word ‘wasted.’ My spending $100+ for some tiny fractional plates for lifting that allow me to add weight in increments of 1/2 pound would be, in your eyes, a total waste of money. And your purchase of US Weekly for $3.99 last Tuesday would, in my eyes, be seen as wasteful. We both have our vices. Mine just adds lean slabs of beef to my deltoids, while yours adds mental flubber to your noggin. Not judgin’, just saying’… 😉
Because you’re operating under Rule One, and managing your cash flow obligations, with knowledge of your True Expenses via Rule Two, you’ve “found” some money you wouldn’t otherwise have had. Your expenses are settling in at about $3,600.
We’re looking at a surplus of $400 per month.
Now, most of you would think that in order to get to your Buffer, you need to save $4,000, so you can live on that money for one month, while earning money to live on for the next month. No no! You just need to save enough for the expenses in that month. You need to be able to get by on that $3,600 you would have saved, and then the $4,000 you’d earn that month would be available for the next month. And you’d have your Buffer.
In other words, with a $400 surplus each month, and a savings target of $3,600, you’ll have your Buffer in nine months. Not good enough mi Amigo.
Breathe….Suck in…Cinch the Belt…And Last a Month
Because wait a minute. If your average expenses have settled down to about $3,600 per month, couldn’t you just kind of be a little bit crazy for one month in order to break the paycheck to paycheck cycle? Couldn’t you look at your average expenses and delay them for a bit, or just forego them for 30 short days? Consider some items you could strike out:
Gas Money to Go Places You Don’t Have to Go
Miscellaneous Stuff that’s totally Impulse
Those are just a few ideas.
Consider eating really, really cheap for one month (and losing some weight as well). Look in your pantry and just eat the canned stuff in there. Sure, it’s not going to taste that great, but again, you’re just doing this for 30 days. You can do anything for 30 short days.
Because what I’m proposing is that you could do a short-term spending fast, and get your savings target down to $3,000. Maybe even $2,800. You put the squeeze on everything for one month, where you only have to outflow $2,800 and bam — you’re there two months faster — in seven months.
Money Doing What It’s Told. Belt Cinched. Waistline (Literally) Smaller. Now Increase Your Inflows.
Now getting the Buffer in seven months isn’t too shabby, but you’d be about three months later than average and, just like the children of Lake Wobegon, you are above average.
Let’s see you come in south of four months. Let’s see you crush it, and get there in two months. Two months of increased inflows, one month of serious belt-cinching.
Increased inflows are a piece of cake. Consider doing any number of these (or all of them):
If your job allows it, put in as many hours as you possibly can until you reach your predetermined Buffer amount. Remember, this is a temporary fix for a long-lasting solution. You may see a bit less of your family for a short time–that’s okay. What you’re doing for your family in terms of getting your finances in order has a much more profound and far-reaching impact than the few hours of togetherness that you’ll sacrifice.
Get a part-time job.
Get a part-time job. You can make a thousand bucks a month delivering pizzas. Do that for three or four months and you’ll have your Buffer. Be conscientious and have a smile on your face (more tips)! Investigate possible temp jobs, graveyard shifts, UPS, etc.
Have a garage sale.
Have a garage sale. That’s right. Sell everything you forgot you had. People sometimes make enough from their garage sale to save some major money toward their Buffer. An average yard sale makes between $500 and $800.
Like a garage sale, but with a wider audience. If you don’t know how to ebay, ask the person next to you. They’ll most likely know how and will be able to help you.
Sell. Sell. Sell.
My wife and I cleaned out our bookcase the other day and made $100+ selling books on Amazon. (There’s nothing simpler. Set up your account and sell your books in a matter of minutes, and price yours $1 lower than the lowest price. That book will move. We had sold all of them in a matter of two days.)
Short-Term Work, Long-Lasting Benefits
Your intensity is the key here. Get to it!