My husband just got a pretty big promotion at work. This is very exciting, because it means that we’ll have more money coming in and therefore we will be better able to pay down our debts and save and so forth. But the really cool thing is that because we have a budget and a plan for how we want to spend and save our money, we’ll be able to take full advantage of the extra money coming in, which might otherwise have gone to waste.
“Fortune Favors the Prepared Mind” ~ Louis Pasteur
Luck
In the grand scheme of things, my husband and I have been pretty lucky, financially. (And otherwise, but this isn’t an “otherwise” blog. ^_^) There have been rough times in our lives, where we had to scrimp and save to do anything, where we had to watch every penny (usually rolling away), where there was never enough, and we sometimes had to decide between buying gas and buying food…
But usually, just when it seems that something’s gotta give, we get a break. My husband gets promoted. I get a steady, full-time job. I get a new client for my VA business. My husband gets promoted again. And so forth.
It would be pretty easy for someone observing our situation to say, “Well, sure you’re doing well, you’ve been lucky.” And there has been luck, but for the most part, there’s been a lot of having a good, strong work-ethic and just showing up.
Showing Up
Woody Allen said that “80% of success is [just] showing up.” And Robert Kiyosaki (I think) said something along the lines of “Luck is just being in the right place at the right time.” You never know where that right place is going to be, or when that right time is going to be, but “right places, right times” happen fairly often, and if you show up and work hard, chances are good that you’ll find yourself smack in the middle of one.
There is no way I can promise you luck. I can’t promise that you’ll be successful in your current job, or that you’ll come up with the next Big Thing that makes you millions. Neither can I promise that you’ll find a partner with a strong work-ethic who loves his job and has higher-ups who recognize and appreciate his efforts. You’ll just have to keep showing up and working hard and keeping an eye out for that “right place” and that “right time.”
What I can do is help you be prepared, one way or the other, for whatever comes your way.
Preparation
This is the thing, the fact that my husband got a promotion and will be bringing home more money is wonderful, but if we were over our heads in debt, his raise wouldn’t matter. Not really. It might make our lives a little easier, but we’d still be struggling to pay our bills each month.
If we didn’t have a budget, and just spent money as it came in, then our spending would increase with his raise, and we would basically be treading water, financially. Still in debt, still not saving enough for retirement, still not saving for emergencies or anything else.
But we do have a budget, so I know exactly where all of our money is going every month, and how much we can put toward debt and how much can go to savings. We’re spending less than we earn, and I intend to keep it that way, which means we’ll have even more to pay off debts and save for long-term goals with this new influx of cash every month.
When Luck Turns
And even when our luck is bad, like the other day when my husband’s paycheck didn’t get deposited in our account when it was supposed to, it wasn’t the end of the world, which is easily could have been.
Then…
Even two years ago, when I didn’t have a good handle on our finances, if money hadn’t come through when I was expecting it, I would not have noticed right away and would have kept spending just like normal. That, of course, would lead to the bane of my (and everyone’s) existence — Overdraft Fees. Because I had been waiting for Ben’s paycheck to pay rent and to make our car payments, I would have had at least three checks bounce ($20 fee each), and another three or four transactions overdraw my account ($30 fee each). That’s a total of at least $150 in fees, if not more.
That’s a huge blow when you’re living from paycheck-to-paycheck, or even if you’re not. Sometimes you can call the bank and get them to refund some of the fees, especially if you’re a good customer and this is a one-time fluke, but rarely will they refund all of them. (Ramit Sehti has two posts on getting bank fees waived: Post 1, Post 2)
Now…
But now, because I keep an eye on our accounts and make sure that everything is running smoothly at least once a week, I knew immediately that the check hadn’t come through, and I was able to manage our spending such that we didn’t bounce any checks or accrue any overdraft fees. I did have to put off paying two of our big payments (the car loans), but only one of them will have a fine on it, if at all, and that fine will be far less than the $36 I would have had to pay if we had overdrawn our account.
The Benefit of Being Prepared
The benefit of being prepared is simply that you are better able to make use of the highs (putting windfalls of cash into savings), and are better able to mitigate the lows (covering surprising absences of cash with said savings), so things run on a much more even keel.
It’s a really great place to be.
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