The Dollar Stretcher blog will explore people and money.
Read an interesting story the other day in Charisma. It was about a man who needed to cut a lot of 2x4s to a 6' length. He wasn’t an experienced carpenter, but figured that anyone should be able to cut a straight line.
So he pulled out his tape measure and marked the 6’ spot. Drew his line across the 2x4 and cut it. Good job! Then he took the 2nd board and put it on the saw horses. Instead of using the tape measure he figured he'd simplify things by just using the first 6 footer as a guide. So he put it on top of the second 2x4 and marked it. Another straight cut completed!
Figuring that he had it down pat he took the 2nd board and used it to mark the 3rd. And on it went until he had them all cut. But then something interesting happened. He noticed that the last board was a few inches longer than the first board. Baffled as to how that could happen he called a friend who was into woodworking. Turns out that each board was longer by the width of the pencil mark he was cutting on. Added all together it totaled a few inches!
What does that have to do with our finances? I've noticed that something similar can happen to our family budget. Seems like many of our expenditures rise just a little bit each year. Some of it's understandable. For instance most of us are spending more on groceries this year no matter how careful we are. But some things just creep up a little bit at a time. Compared to last year it doesn't seem significant. But if we compare it to 5 or 10 years ago, that's a different story. Our expenses are a couple of inches too long!
One way to counteract that is to use a tool that's sometimes employed in business. It's commonly called "zero based" budgeting. In a zero based budget each category doesn't start with last year's amount. Each one starts at zero. So every dollar you spend needs to be justified. There's no assumption that what you spent last year was the right amount. Everything is on the table. In most categories you'll find that last year's budgeted amount was fine. But you might find an area or two where you have opportunities to save that you weren't aware of.
It's a good idea to do a zero based budget every 4 or 5 years. Or any time that you find yourself in financial peril. Who knows? You might find a long 2x4 in the process!
Keep on Stretching those Dollars!
Gary
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About Gary
For more than 25 years, Gary Foreman has worked to manage money effectively. Prior to starting The Dollar Stretcher, he was a financial planner and purchasing manager.
While helping clients manage their hard earned money as a financial planner, he applied commonsense, time-tested techniques during the turbulent 1980’s. The experience convinced him that you didn’t need to hit the lottery to accumulate significant wealth.
Following that, Gary had an opportunity to learn more about how to get the best value for a dollar spent in the corporate world. As the Purchasing Manager for a computer manufacturer, he was responsible for supervising over $10 million in annual purchases.
Gary began The Dollar Stretcher website <www.TheDollarStretcher.com> and newsletters in April 1996. Over 300,000 readers benefit from the time and money saving ideas presented in The Dollar Stretcher newsletters each week. His mission is to help people "Live Better for Less".
He also provides private label newsletters for companies wishing to provide money saving information for their clients and/or prospects.
Gary lives in Florida along with his wife of thirty years and their two children. Much of his time is spent working with the men's ministry of his church. One of their ongoing projects is the "Holy Smoke BBQ" which sells bbq on Friday nights with the profits going to support local foster kids and orphans.
When he has a free moment you’ll find him restoring a Checker station wagon nicknamed “Two Ton” or cruising in a '65 Impala SS Convertible with doo-wops playing in the background.
