How Not to Rob Peter to Pay Paul
A friend of mine asked me the other day, "How do I NOT borrow from tomorrow to take care of today?" My mind began to come up with several techniques one could use to better handle their finances. I started to think of techniques ranging from:
1. The envelop method in which you take several envelopes and write the name of each expense on an individual envelop. Then as monies come in from your job or business you place the percentage that expense requires, from the total brought in that day/week, into that envelop.
2. The 20% method in which 20% of EVERY dollar you make goes into a Personal or Family Development Fund. That fund is broken down into sub-categories: Emergency, Investments, Entertainment, etc..., that you split that 20% amongst. Of course you may find that the other 80% is not enough to cover your current lifestyle, but it just means you'll need to make a SHIFT in your lifestyle to accomodate the new system.
3. Creating another business that brings in extra income. Though tedious and strict attention must be paid to the business systems, it can be quite lucrative. For example, something simple like a business turning old Photo Albums into digital photos. Thats a business you can start with a $300 computer and a $80 4-in-1 printer/scanner. Charge people $5.00 per photo or less if its a whole book, say $300 for the whole album. It may take some time to do and become proficient at, but thats $300 extra in a week easy with maybe 3 days work at 3 hrs. a day.
4. Cut back a little with every purchase that is not a bill and place that money into a "Do Not Rob Peter to Pay Paul" envelop. When you buy food at the grocery store just get one item less and remember to place that money into that envelop. When you are out for entertianment, just do one thing less. Instead of the $15 steak get the $11 spaghetti. Then remember to place that extra $4 in that envelop.
All of the above sound good and are good, but being a firm believer that everything BEGINS WITH YOUR THINKING, I decided to write this article from the perspective of the Mental SHIFT that's required for any of the above to happen. I'll be brief since I've already taken up enough time with the above.
To stay consistent at any of the above you have to SHIFT your thinking. You have to STOP, take sometime out and THINK in detail about the person you really desire and need to BE. Then from that moment on act, with no doubt, as though you are that person. Part of it envolves you repeating to yourself, "I DON'T ROB PETER TO PAY PAUL. THAT'S NOT ONE OF MY PROBLEMS". Say it all day (to yourself) for the next 2 days and you'll find that you won't have to say it any longer. It'll popup in your mind the minute the thought of robbing Peter comes up.
The above strikes a balance between mental discipline and techniques. The more mental discipline you have, the less techniques or systems you'll need to be successful. If you find that mental discipline is just not and will not be your cup of tea, then you'll need to implement several techniques and systems to ensure your success. Either way, there is always a solution.
Now stop being afraid of Paul and leave Peter alone.
Always be found in Joy in Yourself.
Tony Stewart
Author
"Shift: Stop Think and Be without doubt"
www.stopthinkandbe.com
1. The envelop method in which you take several envelopes and write the name of each expense on an individual envelop. Then as monies come in from your job or business you place the percentage that expense requires, from the total brought in that day/week, into that envelop.
2. The 20% method in which 20% of EVERY dollar you make goes into a Personal or Family Development Fund. That fund is broken down into sub-categories: Emergency, Investments, Entertainment, etc..., that you split that 20% amongst. Of course you may find that the other 80% is not enough to cover your current lifestyle, but it just means you'll need to make a SHIFT in your lifestyle to accomodate the new system.
3. Creating another business that brings in extra income. Though tedious and strict attention must be paid to the business systems, it can be quite lucrative. For example, something simple like a business turning old Photo Albums into digital photos. Thats a business you can start with a $300 computer and a $80 4-in-1 printer/scanner. Charge people $5.00 per photo or less if its a whole book, say $300 for the whole album. It may take some time to do and become proficient at, but thats $300 extra in a week easy with maybe 3 days work at 3 hrs. a day.
4. Cut back a little with every purchase that is not a bill and place that money into a "Do Not Rob Peter to Pay Paul" envelop. When you buy food at the grocery store just get one item less and remember to place that money into that envelop. When you are out for entertianment, just do one thing less. Instead of the $15 steak get the $11 spaghetti. Then remember to place that extra $4 in that envelop.
All of the above sound good and are good, but being a firm believer that everything BEGINS WITH YOUR THINKING, I decided to write this article from the perspective of the Mental SHIFT that's required for any of the above to happen. I'll be brief since I've already taken up enough time with the above.
To stay consistent at any of the above you have to SHIFT your thinking. You have to STOP, take sometime out and THINK in detail about the person you really desire and need to BE. Then from that moment on act, with no doubt, as though you are that person. Part of it envolves you repeating to yourself, "I DON'T ROB PETER TO PAY PAUL. THAT'S NOT ONE OF MY PROBLEMS". Say it all day (to yourself) for the next 2 days and you'll find that you won't have to say it any longer. It'll popup in your mind the minute the thought of robbing Peter comes up.
The above strikes a balance between mental discipline and techniques. The more mental discipline you have, the less techniques or systems you'll need to be successful. If you find that mental discipline is just not and will not be your cup of tea, then you'll need to implement several techniques and systems to ensure your success. Either way, there is always a solution.
Now stop being afraid of Paul and leave Peter alone.
Always be found in Joy in Yourself.
Tony Stewart
Author
"Shift: Stop Think and Be without doubt"
www.stopthinkandbe.com
Below is the formula that I applied and used to help get the financial situation under control. It can also be applied to paying off debt. It only works if the person implements it in their financial life.
Remember to pay yourself first. 10% of the net MUST go into the bank savings acct- (once you realize how much money your dealing with, open a high interest bearing savings account. Ex. ING Direct, HSBC Direct) and forget about it. This is not fall back on money. At the end of each night put all change in a jar, namely one that is out of sight (placed in a closet or something)
Step 1:
Simply add all of the required expenses
Step 2:
Take the total amount and divide by the number of pay checks
Step 3:
The amount received after the division is the amount that must be taking out of each pay.
Note: If it is a two income household, then the amount received should be divided by two
Ex. $2100/4 checks = $525/2= $262.50 (this would be the amount each person would have to set aside from each pay.
If paid bi-weekly divide the monthly expenses by 2
Step 4:
Put this amount aside (in an envelope marked STRICTLY FOR BILLS in RED ink ) and as the bills come in pay them on the day the bill was received
Note: Do not assume that because the due date says the 26th and it is only the 12th that you have until the 26th to pay. Pay it right then.
When done correctly, all bills will be paid before they are due and on time. It will become a pattern to stay on track.
When applying to eliminate debt. Add all together or pick the largest amount and divide that by the amount of time of which you want it paid off. Ex. If it can be done in 6 months then divide by 6.