My wife and I were both approached by people in need in the same week. People who appeared to be genuinely in need instead of folks simply pan-handling to be lazy (which is a bit of a generalization, and I apologize). One of the things that we wrestle with this is that we want to be generous, we want to look for opportunities to help others, and we really like the idea of serving people as Christians. However, we’re paying off debt because as a moron (instead of a Christian) I allowed the family finances to get way out of whack. That being said, we’re considering pulling $40.00 aside from somewhere to setup someone else’s emergency fund. That is $20.00 for each of us to help others in an emergency.

We don’t anticipate tapping into it regularly, but the opportunity to serve is great, and sometimes we may have the ability to use our finances when others are in a teachable moment. Of course, in those same moments we need to remain teachable, but we’re glad to have learned to live on less than we make. What do you think? Would you create an OPEF category in your budget?

I’m reminded of Bob at ChristianPF and his story of compassion.  God uses us, others needs are met, and we can learn something.  That’s worth more than $20.00 to me.

If you want to be successful in life then there is one principle you must learn first: Learn principles. What makes a chef great? They know the principles of cooking and flavors and how they balance and then they can take unlikely ingredients and mesh them together into a signature dish. What makes an engineer great? They learn principles and then take those principles and apply them systematically to their work. What makes money managers great? They learn principles, apply them and keep their finances in order and grow their net worth.

Elementary school and primary school, and unfortunately some college classes tend to be about rote memorization. The best teachers I ever had were the ones who took the principles behind the things I was memorizing and taught me those instead of merely cramming data into my head. As a web developer/programmer I have memorized a lot of coding things, but I didn’t begin to think as a programmer until I learned the principles behind smart programming (sometimes called ‘patterns’). My finances were a mess even though I had heard good personal finance bits and pieces, but it wasn’t until I learned the principles behind sound personal finance (influenced by blogs like the Simple Dollar, NCN, and Dave Ramsey’s “The Total Money Makeover“).

Smart, successful people will be able to think with abstraction. They’ll be able to identify the principles that make up great process and then merge those principles, where they apply, to their different areas of expertise. Recently I read a book called, “Critical Chain” and it had lots of good principles in it. It is how I run my budget (which I posted a bit about before, but I’m going to write a further detailed article later), but it wasn’t how I ran my budget before reading it because I hadn’t clearly seen the principle. Once I learned it, I was able to see how it could apply to other areas in my life.

Learn principles, learn how they can be applied across broad scopes of your life, and then forget about rote memorization. It could save you thousands of dollars, millions of dollars, your life, or a few minutes time here and there, but get past the short term rules and start thinking bigger.

My sister is a brilliant cook. She and her husband are both brilliant cooks. I hate to say it but they rock my pallet better than most restaurants. Someone needs to hire them to help create menus to keep a restaurant wait list long. She’s going to, at my request, attempt to create some fun posts discussing a low cost recipe and money saving opportunities to give you some fun ideas to stay frugal and full. You should totally check out this week’s recipe on her blog The Two Foot Kitchen. This week she’s hitting up the classic French Onion Soup.

When my wife and I were merely high school sweethearts looking each other in the eyes and feeling as googly as any two people could feel without being any way related to the search engine I suggested that she go on a budget. This was possibly one of the best worst ideas I’d had to date in the relationship. You see my wife is a math genius, except that she’s not a budget buffer kinda gal, she’s an accountant at heart and she wants all of the columns to add up and if forty-three cents were missing (or extra) then she would spend far too much time looking for the difference so as to balance her budget. Since then we’ve worked out a much more workable system that allows for a little tiny bit of innacuracy, just enough to not hunt for forty-three cents, but not enough to ignore forty three dollars. As she became frustrated with budgeting my wife gave up because the small details threw her for too great a loop.

Now we budget for zero. By zero I mean that we plan to spend until we have zero dollars in the checking account. We save what we need to save, we calculate our bill payments, but our focus is on the following:

1. Don’t spend it if we don’t have to
2. Anything left over goes into savings for potential snow-flaking/snow-balling if its left over after quarterly taxes
3. Next month if things get tight we may grab any previous left-over cash into the budget to buffer the differences
4. Pay with cash whenever possible, or use the debit card, but only spend what we have

As we’ve employed these principles we’ve been able to manage our finances much better than previous attempts at budgeting. With my wife focused on paying off the debt as fast as possible she’s spent a lot less on the extra little things and we’re making progress on our debt reduction like never before. We’re “budgeting” to have zero left over at the end so that we don’t spend it on the frivolous.

How do you budget?