January GW Project - Auditing Your Cash Flow
Before we get back to discussing the concept that serve as the foundation of Green Wizardry, Systems Thinking, I have a project for you during the month of January.
After the holidays, I want you to keep track of all of your expenditures for the entire month, from large ones to small ones, paying particular attention to reoccurring expenses like rent, utilities and food but not limited to those. The mid-season months of October in the Fall and April in the Spring are good ones for this, since they both are between the months we use our air conditioning and our heaters. And there are no major holidays in those months to give us large one time expenditures. like Christmas does. Write down each purchase you do, all through the month on a pad of paper or a text document. And most importantly, don't change your habits. If you regularly get a Starbuck's coffee heading into the office, continue to do that. You want a true and complete picture of what you spend in a typical month.
Why are we doing this?
"America's Over Spending Habit"
People in this country have many terrible habits BUT one of the worst is our habit of over spending. That is, the way so many of us have, of not caring whether we can AFFORD that nice, new shiny thing, we so want because everyone else has one, EVEN if we don't have the money to pay for it right now. Instead we whip out the credit card and buy it anyway, telling ourselves we'll pay for it when we get our paycheck. WE DON'T. Instead we rack up larger and larger balances and pay just the minimum payment required.
We do this because we were never taught simple money management skills. Did anyone reading, ever learn how to do a simple checking account ledger, balancing your deposits and withdrawals? I learn how in Home Economic, in my Junior year of high school. Yes, I took Shop Class too, and remember the wooden duck wall art I made there. Boys went to Shop class, Girls to HomeEc, but then many kids enrolled in both. As a guy, you might catch a few friendly taunts from friends at the idea of you in a cooking apron, in HomeEc, but back then, it was one of the many classes our schools had to actually prepare you for being an adult.
That was in the mid 1970s. You won't find such a class in most high school anymore.
Instead you find college prep courses because everyone knows, you must go to college to get a good job now. Never mind the tens of thousands of dollars, if not hundreds of thousands, you or your parents must borrow to pay for that college experience Or even if you will get a job that will pay down that debt when you leave college. The System says "THOU WILL GO!", ignoring the millions of college graduates who can't find a job in the field they majored in. A field that too often some University counselor, or worse, some Internet article hyped as the next high paying job. The problem is that there are thousands upon thousands of similar people, all getting into those so called "hot" fields. Corporate America doesn't want you to train for a job that they can offer you when you get out of college. They want a dozen of you to train for the one job they will offer. That way they don't have to pay you a decent wage.
I'll give you an example in my own Life.
In the mid 90s, I moved to Los Angeles, to work in the movie business. I had friends out there who had good jobs doing special effects and building props. I was good with my hands and knew how to make things and so, they all said "Come to Hollywood." This was right about the time that computer generated imaging first hit the motion picture industry. I happened to luck out and one of my first jobs was with James Cameron's company "Digital Domain", made famous with the "Terminator" franchise and then the blockbuster "Titanic". At that time, people with the skills to program graphics to make the unbelievable real were few, and so they commanded high salaries. The Computer Graphics Department was across the street from the "old School" hands on Prop Department and I can still remember the difference in cars parked in their adjacent parking lots. They had BMWs and Porsches, we had Chevys and Fords.
Thing was, all those high salaries they were getting, meant alot of people went to school to learn their skills. Five years later and they were making the same as we traditional grunts were, and their parking lot had Chevys and Fords too.
"Living Below Your Means"
The point I want to make is that no matter how much you make, if you spend more than you earn then you are always going to be controlled.
Yes, I said "Controlled".
Corporate America wants you in debt. They want you to buy the shiny, useless toys that the Marketing Department helps them advertise even if you don't need it. A worker who has some money saved, who doesn't absolutely need their job to survive is a scary worker to Corporate America, because they can't be forced to work long hours, over and above the 40 that is the norm. Not forced by the company, but forced because the poverty wages that so many Companies want you to think is all that you can get, are not enough to cover the lifestyles that their media PR lap dogs continuously market to you as the only way that real people live.
That a simple lifestyle within your paycheck will hold you up to jokes and shame from your friends. ITS NOT...
In fact, when your peers learn you lead a frugal lifestyle, while they may joke, you can often detect a underlying envy and admiration. That you have money when they do not, even though you work less hours than they do.
Being frugal gives you freedom. Having a life style that gives you money over and beyond your day to day expenses, means you can try new things, you can explore possibilities, and as a Green Wizard, means you can take the time now to learn the skills and knowledge you will need when the next step downward in the Long Descent happens.
So first step, on your way home tomorrow I want you to stop at the store, and buy one of those small spiral notebooks, that you can keep with you during October. Then each time you make a purchase, jot down what you bought and how much you spent. For big purchases, like groceries, save the receipts. Don't try and make yourself look better than you are, that is, if you would normally buy a doughnut and a cup of coffee on the way to work, continue to do that. You want an honest picture of the way you spend your money.
You'll want to break down the things you purchase into some general categories.
These first few are all directly related to Personal Expenses.
Food: I break this category into three sub-categories, Fresh Food, Packaged Food and Fun Food.
Later on, as we discuss Green Wizard skills, we will take some time to discuss Nutrition and your Health. Ideally you want to start eating more fresh vegetables and fruits, and begin cutting back on prepackaged meals. While store bought meals are convenient, they are often loaded with extra sugars and salt. Getting an idea now of how much you spent in each category, can help you realize how much that "convenience" is costing you.
Now as for the third category, "Fun Food", well no one can be a hard core vegan all the time, lol. The occasional pizza or perhaps a bit of sushi one night with friends, isn't a sin. Green Wizards aren't monks. Having the occasional treats, as long as you moderate it, and don't over indulge, can help you stay within your budget.
Household Supplies: Things like cleaning supplies, laundry soaps, and the things you need day to day that are not food.
Personal Care: Bath soaps, shaving supplies and even a hair cut or beauty parlor visit. If you don't own a washer and dryer, then your trips to the local laundry mat should be included.
Health Care: This is things like Health Insurance Payments and if you have them, Prescription Drugs.
Next, we need to look at Home and Housing Expenses.
Housing and Utilities: Mortgage or rent payments, depending on whether you own or rent your dwelling. Home or rental insurance if you have it (you may need to figure out the monthly amount, since many of us pay it every six months).
Then as a sub-category, you want to look at your Utilities. These come in two sorts, "Fixed Per Month" and "Based On Usage". My Internet access, cell phone and even garbage collection are fixed rates for each month, while my Electricity, Water and Natural Gas bills vary on the weather and how much I use them. If you can, try finding one of those "Your Yearly Usage" letters that Utilities often send out to try and get people to conserve. This should give you an average monthly cost from an entire year. Write that down as opposed to this October's bill.
Next we want to look at Transportation Costs.
If you are lucky enough to have moved to a place with good public transportation or someplace within walking distance of work and stores, then this will be a small expense for you. For most of us though, it involves a Automobile and all that it takes to keep it running and can be quite large.
I break down expenses for automobiles in two sub-categories, "Ownership Costs" and "Useage Costs". If you still owe money on a car loan, or have to pay property taxes to your local government, this is an expense that is unaffected by how much you use a vehicle. If you took Greer's advice and traded in that new car for something several years (or decades) older and don't owe a bank for it, good for you. An added bonus is most local governments don't tax clunks much. My tax bill for two cars, one 1991 and the second 1996 was $10.
The biggest Useage expense will of course be Fuel, but it also includes Insurance.
Finally we have a couple of general "catch all" categories.
Entertainment: You could make the case to include your Internet assess expense, which I put in Utilities here. It all depends on whether you feel you use the Internet primarily for work or play. Also if you have a Netflix's or a online gaming subscription list the cost, as well as any habits like a night out with friends for food and drinks.
Pet Supplies: These can be companionship pets like your dog or cat, as well as costs associated with raising chickens in your back yard.
Miscellaneous: What might not easily fit into any of the above categories.
We will come back to this subject in February.