Wednesday, 25 October 2017

Westlock’s Fiscal Directives

Okay, it was a busy day yesterday and I am still kept busy today, so much for a lazing around vacation.

With regards to paying off the Wanda Loan and what was left over let me say this. After all is said and done, I will have $29.87 in the account. That will have to last me until I get paid on the 7th.

I will be okay, as I make sure that I have enough to function without touching the bank account. This is just one of the secrets of my success. I shall now share a few more.

Now that I have paid off the last of my debts, I will now focus on savings and wealth building. 

In order to do that I have come up with 11 rules or “directives” which will help guild me as I move forward. I want to balance savings with spending a bit on things I want.

The lower the number of a directive, the higher its importance, or ranking you might say, on this list. 

So you should start at the top and work your way down fulfilling each directive, one after the other as you go down the list. 

Do this each payday, or as you build your budget of face financial decisions.

Here goes: 

1)  It is desired, but not required, that all Budgets balance.

This means that for each payperiod your total: Debts, Expenses and Savings should not exceed your total Income for that pay period. 

You can spend more than you bring in, but this should be a rarity which is thought through first and done for a very good reason. 

2)  Pay all Bills and Debt Service Payments.

These are the things that you have to pay, the bills that you have a contractual obligation to pay and you are usually expected to pay the full balance. 

EG: the power bill, rent, or a car payment.

3)  Whist it is not required, it is strongly desired that the outstanding balances of all credit cards be paid off in full, each and every payday.

This is for those folks who have been able to pay their credit cards down to nothing (such as me). 

This allows me to still use my credit cards but ensures that they will never get out of control. 

Yet it is worded in such a way that I can carry a balance on a credit card if I need to. Once again this should only be done for a short term and after careful consideration.

4)  Fund Operational Expenses.

Operational Expenses are the ones that you need to pay so you can go about and do what you need to do. 

If you drive, then you need gasoline. If you take the bus, then you need a bus pass. Don’t forget about food, you need to eat. 

Make sure you set aside enough in your budget so you can go about your business and do what you need to do. 

Not only that, but make sure that you can last until you get paid/get money again.

5)  Enact Special Project Spending (if desired).

Special Project Spending is a one-time, thing that you want to spend money on. 

This is usually something big, such as me buying a new mattress that I have needed for the past 2 years (I’m practically sleeping on plywood).

For those who are in debt, this is where you would put all the extra cash you have freed up in your budget towards debt elimination.

6)  Budgetary Deficits may be paid for with funds from either the Main or Mid-Term Accounts.

This means that I can run a deficit if I choose to. For small deficits, I can just dip into my Personal Overdraft (as in go below $1000.00 in my Main Account. 

For larger deficits such as buying that mattress or buying a new phone, those I could transfer cash out of my Mid-Term Account, so as to stay out of my Personal Overdraft.

7)  Top up the Main Account to $1000.00.

This is where that Personal Overdraft comes in. This means that if I dip into Personal Overdraft, I need to put it back, preferably the following payday.

For those of you working on debt elimination, I would recommend working on this first. 

As in get your hiney out of your actual overdraft and then put $1000.00 in your checking account and teach yourself that $1000.00 is really $0.00.

8)  Top up the Mid-Term Account to [two years of living expenses].

This is me building up my Mid-Term Account to be my own personal line of credit, as it were. 

As I have said I want to have enough in there for me to live on for two years, if need be. This will also serve me well if and when any financial emergencies come up. 

One key thing to remember if you are on a path towards debt elimination is to first stop relying on debt! 

Why bother to try to pay down your debt if you just keep racking it up? Plug all holes in your fiscal boat first before starting to bail the water out.

9)  Funds over [two years of living expenses] in the Mid-Term Account (in multiples of $10.00) must go into the Main Account.

This means that since my Mid-Term Account is a savings account it will earn interest (at some point). That interest in multiples of $10.00 will be transferred to the Main Account to serve as a modicum of income. 

10)  All Budgetary Surpluses (in multiples of $100.00) must go into the Long-Term Account.

This is where saving for the long-term comes in. Another name for the Long-Term Account is the Dream Account. This is where I put my money in order to one day fund my dreams. 

The Long-Term Account is an investment account that takes about two days to get cash out of it, so I had better plan ahead and really want to spend it. For me it is a TFSA investment account.

11)  Unless absolutely necessary, funds in the Long-Term Account must stay in the Long-Term Account.

This means that unless there is a major fiscal emergency, or I am actually enacting my dream (such as buying land) any cash that goes into the Long-Term Account should stay in that account!

There you have it, my fiscal directives, feel free to copy them down and even modify them to suit your own needs.

As always: Keep your head up, your attitude positive, and keep moving forward!


PS: if you want a copy of the directives for yourself, here they are:


Westlock’s Fiscal Directives

1)  It is desired, but not required, that all Budgets balance.

2)  Pay all Bills and Debt Service Payments.

3)  Whist it is not required, it is strongly desired that the outstanding balances of all credit cards be paid off in full, each and every payday.

4)  Fund Operational Expenses.

5)  Enact Special Project Spending (if desired).

6)  Budgetary Deficits may be paid for with funds from either the Main or Mid-Term Accounts.

7)  Top up the Main Account to $1000.00.

8)  Top up the Mid-Term Account to $15,000.00.

9)  Funds over $15,000.00 in the Mid-Term Account (in multiples of $10.00) must go into the Main Account.

10)  All Budgetary Surpluses (in multiples of $100.00) must go into the Long-Term Account.

11)  Unless absolutely necessary, funds in the Long-Term Account must stay in the Long-Term Account.

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