I’ve been driven to distraction for several years now at work by people who have drunk and want everybody else to drink the Lean Six Sigma (LSS) kool aid. My initial reaction, without knowing what the ins and out of LSS were, was that it sounded like an industrial process that people were trying to force on us working in a service industry in which there are so many outside human variables that it couldn’t possibly be appropriate in our non-widget-making industry. However, I paid little attention to this push in favour of LSS and went about my job. So yes, from the start and with no real empirical evidence, I was dismissive of LSS.
Then, more recently, in an environment in which traditional financial institutions are facing competition from Fin Tech start-ups, another methodology has become all the rage: Agile. Unlike my initial reaction to LSS, my impression upon reading a few blurbs from Agile advocates and converts on our intranet brought me to think that this methodology made more sense in our context. However, reading something through the filter of the company intranet is also akin to mindlessly drinking the company kool aid, so I resolved to do some research on my own one day to understand it a bit better and to compare it with LSS. Are the two complementary or two different beasts?
But doing this research was never a great priority of mine. I had real work to get done and I didn’t relish the idea of spending much of my off-work time on such a research endeavour. Maybe I would have been more motivated if I were younger or a careerist, but I’m no longer young (though I’m not ancient) and I’ve never been a careerist. Being a careerist is not inherently bad even though the term certainly has some negative connotations, but the focus of all my hard work in life, whether as a freelancer or today as an employee paid to do a specific job, has always been about providing exceptional service to others. I get more out of the gratitude of others than from climbing the echelons of power.
In recent months, however, I started to pick up on a trend. That trend is seeing how some people at work who are very good at articulating all the right “high level” ideas that those above them in the hierarchy want to hear but who are in fact quite bad at handling details, complexity, outside-the-company perceptions, and real-life highly variable work flows are all proclaiming on their email signature that they are yellow belts (or whatever colour belts) in LSS. Mere coincidence or a damning indictment of LSS?
To be totally blunt as is usually my way (at least in this blog or when I vent with someone in person), these people are often so feckless that I doubt their ability to organize a wet dream. Worse, when I hear some tell clients that they’re “just following standard procedures,” I doubt they have any idea how badly clients receive such lines.
Six Sigma started out in 1986 as “a set of techniques and tools for process improvement” at Motorola. LSS is a breakaway from Six Sigma that attempts to blend in notions of Lean, which is often referred to the Toyota Production System. In short, in both cases, the origins of these methods are strongly rooted in manufacturing. Proponents of LSS are eager to explain at great lengths how those principles are applicable in the service industry, but often their arguments lack the academic rigour that would be required to be convincing.
The roots of Agile, on the other hand, is in software development. There I can see the appeal of this method for large financial institutions that are slowly but surely having their ass handed to them by Fin Tech start-ups. To remain relevant and not lose their large share of the market, large FIs need to be able to provide better online services, faster — a tall order within an environment where processes have become rigid, complex, and highly siloed. But already I’ve witnessed some remarkable achievements with this methodology in which changing process midway if it will better meet consumers’ demands is par for the course.
That’s not to say that I’m a total nay-sayer with regard to LSS and a total devotee with regard to Agile. Outside nature, any system depends on identifying all the variables and trying, if possible, to minimize their number. Abstraction allows to give a variable X different values yet still end up with a similar outcome each time. If you bother to notice the difficulties well-heeled scientists are having with developing artificial intelligence, then it becomes clear that humans and nature are astonishingly complex and extremely difficult to define and replicate.
In my view, if LSS has any merit, it’s that it has the potential of providing a framework for those who have problems with visualizing complexity or having a consistent methodology where details matter even though each detail, on its own, may seem trivial or not worthy of attention. However, the emphasis on the process itself (Define, Measure, Analyze, Improve, Control) leaves me cold for being far too formulaic to my liking. On the other hand, from what I’ve seen at work, those who have embraced the Agile methodology have shown signs of being much better and adaptable.
But my overall conclusion on the merits of LSS is indeed damning. From what I’ve seen, those who have bought into it have, by the time they’ve achieved yellow belt status, gone from being able to organize a wet dream but not yet mastered the complexities of organizing a three-house paper route. As such, their inability to grasp the impact of the vagaries of human behaviour and, in turn, their impact on organizing anything leads me to having a rather dim view of their alleged achievements. But if in 2017 you still use “automate” as a buzzword, then you’re likely going to love the LSS kool aid and won’t be able to get enough of it.
It was my second date with Momma Tee this summer while she was visiting her hometown of Montréal from Vancouver. We’d agreed that I’d pick her up late that afternoon from where she was staying in the West Island, take her to my place, walk down the street to dine at a nearby South Indian restaurant, and come back to my place to share a bottle of red. Our first date was some 10 days earlier in the Village, and that had been the first time we’d seen each other since 1988 — yes, 28 years before.
She wasn’t Momma Tee back then, at least not yet. We’d met at university in Halifax the previous fall when we found herself in the same American Literature class that was taught by The Grand Poobah of Culinary Delights, whom I didn’t call by that monicker at the time and who was still years away from becoming the life partner of my BFF, The Queen of Sheba, whom I hadn’t met yet.
In many ways, Momma Tee and I were the two most unlikely individuals to become friends, yet friends we did become. She returned to Montréal at the end of the Winter 1988 session, thinking initially that she would be coming back in the fall and be admitted to the PR program, but her plans changed that summer and she didn’t come back. But we kept in touch for many years afterwards, mostly by mail, for those were still the days when people wrote letters and avoided long-distance calls because they were prohibitively expensive. In that summer of ’88, her letters were filled with deliciously salicious details of her life back in Montreal, while mine waxed poetic as I was assuredly and absolutely falling in love with Hiker, whom I didn’t come to call by that monicker until many years later.
So back to that second date some 28 years later, I gave her the obligatory tour of my apartment. In the room I call my office, she noticed a picture of my mom on the bookshelf and, knowing that I had fairly recently lost her, she advanced to comtemplate it. (She’s particularly sensitive to grieving and loss, she herself having to grieve for that most unspeakable kind of loss: that of her 7-year-old son to cancer.) Then she looked at the other pictures on the shelves when suddenly the quasi-solemnity of the moment got broken when she practically sucked all the air out of the room, pointed at a photo of a guy in his graduation robe and asked, “Who the HELL is that?!” So I told her: that’s the infamous but much younger Hiker, to which she kept saying over and over, “Oh. My. God.” Once she recovered, she said something to the effect that she remembered thinking when reading my letters so many years ago that he must have been quite something to have me in such a state, but she had never imagined that he was so handsome.
Interestingly, that same picture had triggered a similarly strong but negative reaction eight years earlier. It’s funny in a way because I hardly notice the picture anymore. It’s just part of my stuff. But mere minutes after NowEx first set foot in my Halifax apartment after that horrible, horrible plane ride that night from Montreal, he noticed the picture and demanded — he never asked — “Who the FUCK is that?!” Unaccustomed to such blatant displays of jealousy, I had to pause for a few seconds to understand what was happening and recall what I may have said about Who-The-Fuck-Is-That until I simply told him that it was Hiker, about whom I had already spoken along with his nearly 20-year partner Bello.
* * * * * * *
I had a truly wonderful vacation trip this past summer. First I spent two days in the Québec City area. Then I drove through the Charlevoix region to cross the Saint Lawrence by ferry to Rivière-du-Loup to visit relatives. The next day I drove to Fredericton and stayed a few nights at Hiker and Bello’s before spending several more days in Halifax and then slowly driving back to Montréal. I think what made the trip so wonderful is that although I was only gone for 10 or 11 days, it felt, even during the trip itself, as if I’d been gone much longer. I avoided freeways as much as possible and my attitude in general was, “I’ll get there when I get there.”
One evening after dinner, sitting at the Queen and the Poobah’s table in Halifax, I reflected on how and perhaps why this trip was so enjoyable. About my Fredericton segment, I told them about how I didn’t get to see The Quad because he, too, was on vacation and out of town, but instead I did get to have lunch with one of my former PR students. Of course, the Queen then asked after Hiker and Bello, and I quite enthusiastically shared their big news: in the spring, after 25 years together, they finally decided to get married. Theirs was a super low-key affair with only a few friends on their back deck — no fancy suits or anything.
— So how do you feel about that?” the Queen asked me.
Her question puzzled me, for sometimes the Queen knows me better than I know myself. I stammered something or another, even joking that it was perhaps time after 26 years together, but I think I was stammering because the question — “How do you feel about that?” — simply didn’t compute in my head. She kept looking at me as I was answering, and once I’d finished she continued looking at me and finally dropped what felt like a non sequitur:
— He was the love of your life.” To which I said, after a sigh:
— That was so, so long ago. Like a lifetime ago.”
We were so desperately young back then. I was 22 going on 23; he had just turned 21. I had been his first.
Although I still can’t wrap my mind around it, I’m 51 now. But that comment by the Queen catapulted me into memories of the summer of ’88 in that 13th-floor apartment on Gerrish Street in Halifax. And worse, it reminded me of a train ride from Moncton to Halifax the following late-October or early-November that seemed to last forever and through which I had to fight back my tears, for just a few hours earlier, Hiker had asked that we “just be friends.”
I entered a fog that lasted 18 months through which I somehow managed to finish my degree. When I came out the other side, I had been changed. In each significant relationship I had in the following decade, the shadows of my memories of Hiker hovered over those relationships… until they didn’t anymore. They didn’t anymore not only because I stopped believing in what we euphemistically call “relationships” but also because I couldn’t find or understand the point of them for me, a fact I painfully demonstrated with my quicky marriage and divorce with NowEx.
* * * * * * *
I first met Hiker in the spring of 1987 and the first thing I saw on him was his crotch, but that was an accident.
I was sitting in a conference room at the library at the Université de Moncton, where I was mounting for printing the latest issue of the newsletter for the association of Gays and Lesbians of Moncton, when my friend !!!!! — there’s definitely an inside joke in that nickname — called my name as she entered the room and noticed me. She walked behind my chair to go sit in front of me and I turned my head to the right as she and — it turns out — Hiker were walking behind and around me. So my head just happened to BE at his crotch level, which is why I maintain to this day that it was an accident.
Trust me: when I saw the tall, slim, dark-haired mustachioed guy sitting next to her, I first had to quickly find the most gracious way of picking up my jaw from the floor and then I had to figure out how not to sit and stare at him in awe. Then !!!!!, bad girl that she was and had long known by that time that I’m gay and active in the community at the time, kept insisting on asking me what I was doing since I’d quit the U de M several months before. Now remember: this was in 1987, and back then it wasn’t easy to just casually say as you could now — at least I couldn’t! — that you’re putting the final touches on the local fag rag!
Time passed. I don’t know if we’re talking days, weeks, or months, but “some” time passed. I had gone out with The Quad and we ended up sitting at a park bench on Main Street in Moncton when suddenly !!!!! and Hiker came walking down the sidewalk. We chatted for a bit before they went on their way — to or from a movie, I don’t recall — and then I just gasped to The Quad something to the effect that I’d gladly give my right nut to be with Hiker but that he’s probably not gay, to which The Quad said, “I wouldn’t be so sure about that.” But rather than comfort me, that comment made me despair: a snowball in hell would have a better chance than I would with him.
Then several months passed and, truth be told, I didn’t think much if ever about the gorgeous francophile anglophone demigod although it had been clarified with absolute certainty that he preferred to kiss boys although he hadn’t yet. I had had my figurative good cry over him and moved on. By this time, both The Quad and I lived in Halifax and were enrolled in the PR program at MSVU, and Hiker was supposed to come visit The Quad on the May long weekend. Except that a few days before that visit, The Quad fell ill and ended up in hospital.
That’s when I concocted the ballsiest plan in my entire life — so ballsy that it was unprecedented and never surpassed since. Feigning disinterest and pure altruism, I managed to get Hiker’s phone number in Fredericton and called him to invite him to stay at my place so that he wouldn’t have to cancel his trip to Halifax and could get to visit The Quad in hospital. He was a bit hesitant at first but finally accepted my invitation after I assured him that it was no trouble at all. I’m pretty certain that at that precise moment, Jesus either wept or shat the bed.
* * * * * * *
I know no one in the peanut gallery will believe me, but I was a perfect gentleman that whole weekend and I do have a witness: Hiker himself. Although we didn’t end up visiting The Quad in hospital that much, we spent the weekend drinking lots of coffee, exploring the city, eating at home and then staying up late, talking the night away while listening to music. On more than one occasion I wanted to take him in my arms and seduce him to my bed, but I didn’t because I knew he’d never been with a guy and, even though I could tell that we were getting on like a house on fire, I still wasn’t convinced he’d want to make that leap with me. So every night I’d make my bed on the sofa and send him to my room, by himself. It took every ounce of my strength not to enter my room that one morning I go up before he did and saw him sprawled on my bed sleeping and wearing only bikini briefs. In fact, the sight of him there seemed so surreal.
In 1988, few had ever heard of e-mail, let alone used it. He had a summer job in Fredericton and I studied full-time through the summer sessions. So began our exchange of long letters as neither of us could afford long-distance calls, as well as the inevitable staple of relationships in the ’80s: The Mixed Tapes. I introduced him to Michael Franks and Jane Olivor; he introduced me to Helen Merrill. I challenged him to figure out which Michael Franks song reminded me of him and, to this day, I get carried into thoughts of Hiker and the summer of ’88 each time I hear “Tell Me All About It.” Yet, at the same time, I find myself blushing: We were SO damn young!
I still have all the letters he sent me, along with all the cards and letters anyone ever sent me when people still did that. I may re-read them every 10 years or so. The last time was about a year after I moved to my new apartment, but whenever I do, I always keep his for last, as if they were some kind of dessert. In them, we weren’t professing our neverending love; we were just continuing the conversation, talking about the most mundane things, although I suspect we would have just as assiduously read the phone book if we’d thought the other guy had written it.
The intensity of the whole thing was such that he inevitably came back to Halifax a few weeks after his first visit, for the Canada Day long weekend. By then it was clear where all of this was heading, but I still harboured this fear that if I moved too fast, I would, as RuPaul would say, fuck it up. So the night he arrived we stayed up impossibly late — dawn was starting to break — as if we — but especially I — were afraid to broach the topic of sleeping arrangements.
Finally at one point he got up to go to the bathroom and I took that as my cue to start making my bed on the sofa. But when he came back out and saw me getting some bedding out of the linen closet, he asked me what I was doing.
— I’m making my bed. It’s late…” I stammered.
That’s when he came behind me, took me in his arms, and with his bristly cheek against my bearded cheek he softly said as only a francophile anglophone would: “Je te l’interdis…” (“I forbid you.”) That was the Torch Song Trilogy moment of my life, except that for my unspoken, “What am I going to do …with my beer,” substitute “beer” with “bed linen.”
And so we went to my room, but you know what? We undressed, got into bed in each other’s arms, and simply fell asleep. And while this song hadn’t been written yet, it’s of that precise moment I think whenever I hear it.
* * * * * * *
I have to tell you something: It feels weird for me to be writing about this. Specifically, why am I writing about this? Moreover, why now?
Hiker met Bello two years, give or take a few days, after he had asked that we “just be friends.” He had finished his university studies and landed a job which he still holds to this day. Between me and Bello, he had a fling with a guy studying in Halifax whom some of us very affectionately nicknamed the Cyprius Fruit, and this brief pairing turned out to be the electroshock treatment I needed to get out of my aforementioned fog and accept that my proverbial ship called Hiker had sailed. Being still in my mid-20s at the time, I assumed that more and better was yet to come.
But then I changed. By the early ’90s, I began to question if I even believed in “relationships” or what having a relationship really meant. I began to notice how most of my friends were forever seeking this elusive thing, going from one to the next and the one after that, completely unable to picture themselves alone or single, while I rather enjoyed extended periods of time on my own. At some point between the age of 25 and 30, I began to make a distinction between sex and lovemaking and wondered if I might be polyamorous. (I think I am but never got to test it out.)
Then I look at the life I’ve had after Hiker until now. My professional life influenced my so-called love life a lot, not only because I had at least a decade of financial precariousness but also because of the intensity with which I work — or used to work up until a few years ago. I found myself not falling in love so much as falling into relationships. This is an awful, terrible thing to say, but I think I’ve had a few particularly intense infactuations that I mistook at the time as falling in love. But setting aside that thing with NowEx, which was so entirely different from everything else that it’s like comparing a galaxy to a planet, I always seemed to reach a point where I needed more time to myself to do nothing but be by myself.
If I were to be totally honest with myself, however, I would have to admit that Hiker loomed over all those others who weren’t Hiker. To this day, that man is capable of saying things that make my heart melt all over again. I remember a comment he once made to me about Bello that some people might have viewed as criticism but was in fact so disarmingly sweet and loving. Meanwhile, I once had a colleague at work who couldn’t be any more different than Hiker except for one thing: they have a very similar laugh, and whenever I’d hear him laugh, I inferred that he had as kind a soul as Hiker.
So that’s where it all stops making sense to me. While it’s clear that Hiker is prime long-term relationship material — I mean, 26 years and counting! — was I ever? I can’t convince myself beyond a shadow of a doubt that I would not have come to the same questioning about myself by my late 20s, and I don’t think that would have flown over very well with Hiker even though he, himself, is also a fiercely solitary type. Then again, monogamy aside, it’s not like he and Bello are anywhere near being joined at the hip: they maintain very separate interests and even vacation separately at times because of those different interests. Meanwhile, as much as it’s true that my professional choices had an influence on my love life post Hiker, wouldn’t my choices have been different had there not been a post-Hiker?
These questions can’t ever be answered. At 51 I might have a house and have travelled as much as Hiker and Bello have, but do I yearn for that now at 51? Honestly? No, I can’t say that I do. Do I wish I could fall in love like I did nearly 29 years ago? Yes …and no. I mean, yes, of course, it’s the most wonderful feeling in the world! But the older I get, the more time and space I need for myself and I can see my capacity to share my intimacy and privacy dwindling after each passing year.
Then that brings me full circle, doesn’t it? It sounds like I want my cake and eat it, too. Or as we say in French, le beurre et l’argent du beurre (the butter and the butter money).
Maybe that’s what it is! They say that to write a good story, there has to be conflict. Perhaps I feel compelled to write this because there’s a conflict. On the one hand, I think I’m finally reaching that point where I’m ready to have a significant man in my life, but on the other hand, I’m not ready for compromise. And by that I don’t just mean compromise on the time and space I need for myself, but also merely “settling” for a kind, handsome, intelligent, independent guy who just doesn’t quite light my fire.
That might be the conflict, but I’m not sure it’s making for a good story.
So you asked your bank for a line of credit (LoC) but they looked at you and laughed, huh? Gosh, I’m sorry to hear that! It would have been helpful but either the bank rep you spoke to is an asshole or your credit is so bad that it was high time that you started doing something about it.
Well okay… *SIGH* No point crying over spilled milk. At least if you’re still reading through this series, it means you’ve done your homework and you know that there’s more money coming in than there needs to go out, so you’re not a candidate for bankruptcy …at least not yet. That’s if you told me everything, right? For if indeed your needs including minimum payments on your credit cards have you right up against the wall with no room to move, then yeah, maybe you came too late to the realization that you’re in deep financial trouble.
Maybe that’s why the bank laughed at you.
Oops! Sorry… Oh cheer up! Perhaps my method can be applied in the framework of a consumer proposal plan or, if it’s really bad, outright bankruptcy. If you’re well behaved, you’re likely to be given very limited credit in a year or two to prove you can be responsible with credit and at the same time start rebuilding your credit history while you’re still under bankruptcy (NOT under a consumer proposal, though), which typically last 7 years. And you’ll definitely be able to use my method to do that and stay out of debt afterwards.
Wait! What’s that? You’re not up against the wall? My method showed you that you DO have some manoeuvring room but it’s just that the bank didn’t buy into your idea for a LoC?
Well then, in that case, there’s a well-known tried-and-true alternative for you. I don’t like it as much as the LoC method because you’ll end up having paid a lot more interest by the time you finish getting out of debt, not to mention that you’ll have to keep your eyes on several balls at once. However, if those are the cards you’re being dealt, you’ll just have to grin a bear it.
The debt-snowball method is a debt reduction strategy, whereby one who owes on more than one account pays off the accounts starting with the smallest balances first, while paying the minimum payment on larger debts. Once the smallest debt is paid off, one proceeds to the next slightly larger small debt above that, so on and so forth, gradually proceeding to the larger ones later. This method is sometimes contrasted with the debt stacking method, also called the “debt avalanche method,” where one pays off accounts on the highest interest rate first.(emphasis mine)
As you have guessed from what I’ve written previously, I prefer getting rid of the debt with the highest interest rate first, regardless of whether it’s the smallest or the largest. I understand that it might not reduce your number of debts quite as fast, but the interest rates are the real killer.
Before you even start, you should also see if you can transfer the balance from your high-interest cards to the lowest-interest card you have, effectively still attempting a kind of consolidation. In fact, while the bank may not have wanted to give you a LoC to consolidate your debt, it might accept to replace your current card with one with a low-interest option and transfer the balance onto it. Since this card will become your LoC substitute, you can only add extreme “contingency” spending on it, like a flat tire or something you couldn’t reasonably see coming because, from now on, that’s the only way you’ll ever be using credit.
The bank will probably try to talk you out of their low-interest option card if you’re the one who brings it up, though. They’ll say stuff like, “Oh, but there’s an annual fee of $20 on that one and yours has no annual fee, plus it doesn’t give you any air miles/cash back,” but just give them your best “Are You Seriously Kidding Me” look because $20 is a drop in the bucket compared to how much you owe and how much interest you’ll have to pay on your lousy current card. They’re making more money on your back in the pickle you’re in now, thus why they’ll resist the idea of the low-interest option card.
So here’s a simple illustration. Let’s say that you have 5 accounts to which you owe and $225 per paycheque to distribute. Instead of doing one payment per month, you’re going to use my reserve method which is every 2 weeks (assuming you get paid as I do). The most “expensive” debt (highest interest rate) is in the first column, the second-most “expensive” next, and so on. If two are as “expensive,” then put the smallest amount owed first so that you can get the kick of seeing that one fall off sooner.
Minimum Monthly Payment
Week 1 Minimium Payment
Week 1 Top Up
Week 2 Minimium Payment
Week 2 Top Up
Paid Over Two Periods
Assuming you’re not adding any more to these debts (ahum!), the next series of minimum payments should be lower, although the difference should be most noticeable for Debt 1. Repeat half the minimum payment per period on all cards and the remainder of what’s left to distribute on Debt 1.
Eventually the balance owed on Debt 1 might be the minimum payment plus a portion of the available “top up” amount, so in that case you’ll be in a transitional period when you’ll be able to put some extra on two debts. (The minimum payments below are for illustrative purposes only and could be higher or lower depending on balance owed, interest rate, time, and so on.)
Minimum Monthly Payment
Week 1 Minimium Payment
Week 1 Top Up
Week 2 Minimium Payment
Week 2 Top Up
Paid Over Two Periods
Be careful, however, with Debt 1! There might be residual interest to pay from the last month during which you had a balance owing, so you’ll have to throw a few final dollars on it before you can finally consider it really done.
It’s also possible that a debt like Debt 4 in the illustration above might be ripe to be wiped off by topping it up now rather than waiting for its time mathematically. I know that it would make me feel good to knock it off if part or the entirety of the Week 2 top up would be enough to do so even though that debt is not as expensive as Debts 2 and 3. So I leave that up to you!
There’s another thing you need to consider. Maybe the amount you can put toward your debt is so low that, although you can implement this debt-stacking scheme, it will take you more than 3 years to find yourself debt-free. If so, you’re risking debt repayment fatigue.
In that case, if I were you, I would use this scheme for one year and then go back to the bank and try again for a LoC so that you can benefit of the much lower interest rate it imposes. Always paying all your minimum payments for a year — and possibly having paid off a debt or two — will have done a remakable amount of good to your credit rating. And maybe — maybe! — the bank will see that you’re serious about restoring your financial health, so this time they might not laugh you out of the bank when you ask for a LoC.
If they do, change bank. Your Credit Score = Your Profitability, Not Your Financial Health
Unlike what you might think, your credit score is not about your financial health. In other words, it’s not as much about your trustworthiness with credit as it is about your profitability to lenders. They WANT you to carry a balance. They WANT you to pay only the minimum balance. That’s how they make money on you.
Ironically, while you’ll be following this scheme for a while and pay all your minimum payments and then some in a few cases, your credit score might eventually become better than mine! That’s because lenders don’t like someone like me (and what you’ll eventually become) — someone who pays off his cards in full every month. I’m not profitable in the eyes of lenders. In fact I’m their worst nightmare because I make money off my main credit card!
Your credit score might even take a hit for a few months after you close an account you’ve paid off, so instead you might consider keeping those cards but sticking them under the fridge. However, when you get to be my age and reach not only debt-free status but also have real savings socked away, you won’t really care about your credit score because you won’t need credit that much anymore. Yet if you do need to get a big loan, you’ll be able to point to your assets instead of relying on that score which, quite frankly, is biased since it doesn’t represent what you perhaps always thought it represents…
In traditional accounting, cash-flow mapping is not a budgeting tool but an awareness tool designed to show you what’s left after you’ve taken care of all your fixed expenses (that I call needs) and how you then disburse what’s left.
What I needed after figuring out how much I have to put aside per paycheque for each of my need categories is my own cash-flow time-mapping method, which consists of chronologically plotting by pay period for an entire year exactly when sums of money will be coming in and when sums of money will be going out. But I still needed two amounts: How much would I putting on the debt each period and how much did I have to eat and live?
Beyond Needs: How to Distribute the Remainder
My situation was peculiar because only days prior to starting my budget, I had asked my employer to stop deducting an extra $225 per paycheque for income tax. I had made that request when I started working in mid-March 2006 under what was officially a one-year contract because I thought at the time that I would be able to continue work on my freelance business in the evenings and on weekends, but for two reasons it didn’t work out that way.
The day job was far more intense than I imagined it would be and thus I didn’t have much energy left in me on weeknights to do anything but zone out.
I didn’t charge clients for work I did manage to do on the side out some sort of weird sense of obligation that I had to complete, albeit late, stuff to which I’d committed myself prior to starting my day job (which demonstrates why I was a lousy freelancer).
At the end of the first year at the day job, I got renewed for another six months and, before that came to term, I became a permanent employee. By that time, however, I was no longer doing any work on the side but, thinking that I might still come back to it one day, I didn’t ask my employer to stop deducting that extra $225 per paycheque.
One thing I did do while I was still considered a contract worker is to fool myself into thinking that the job would remain a contract and would eventually end. So I came up with a crude budgeting method at the time that had me living as though my income had remained below poverty level and I would put every cent I didn’t spend on living toward my debt which, at that time, was about $33K. By living as a pauper with a decent salary, I got my debt down to the high $9K in a year and a half.
Alas, personal events in subsequent years, like getting married and divorced almost à la Britney Spears, permanently moved my eyes from freelancing, yet still that extra deduction kept being retained from my paycheque. Worse, I completely abandoned any semblance of budgeting and started getting back into debt. So when I finally got my employer to stop making the extra income tax deduction, that $225 that I never got to see, let alone spend, in over 5 years became my mental benchmark of the least I should be putting towards my debt every payday.
My situation was peculiar if not unique. However, your equivalent might be that 5 percent per paycheque you’re automatically stashing into self-directed savings or a percentage you’re voluntarily contributing into a non-registered shared-dividends savings program at work. (“Non-registered” would mean that you’re not getting a tax break for your contributions and the dividends your employer pays you are taxable on your tax return each year.) During your debt repayment phase, you should certainly discontinue the former and find out if you can temporarily opt out of the latter with little or no penalty until you get your financial house in order. This is all part of maximizing the impact of any savings you have. And if you’re allowed to withdraw part or all of what’s in that savings plan without penalty or tax consequence, you should in order to use that money as part of implementing your reserve account and possibly even put a dent on your debt if the withdrawn amount is sizable.
When I restarted to budget in late 2011, I was at an emotionally and psychologically low point of my life. Outside therapy, I asked myself when was the last time I felt really GOOD and, moreover, what contributed to that feeling. I realized that it was when I had become permanent at work in the summer of 2007, which coincided with the time I had just cleared a shitload of debt. I felt so proud of that achievement that I felt invincible and, more importantly, that I had a more certain future and some flexibility to make choices. Unfortunately, I hadn’t learned yet that flexibility only comes when you’re totally out of debt, not just partially.
Nevertheless, by late 2011, my state of mind was such that I had neither the energy nor the desire to cook at home. I lived on take-out and restaurants. But now I was confronted with this pesky matter of the cost of eating, one of several needs I hadn’t accounted for yet. Thankfully, my brush with poverty had instilled in me a way of eating cheaply, albeit not necessarily healthfully.
So I combed through several months’ worth of statements to try to find out how much I spent on average on eating, including the odd groceries I’d sometimes get. When I discovered, much to my surprise, that I averaged about $100 a week and considered that this was one area that I probably shouldn’t skimp or make contingent on always eating at home, I decided to keep that number — so, $200 per paycheque for food, whether groceries or eating out.
To that I added the bi-weekly cost of cigarettes while, at the same time, tried a new-to-me quit-smoking method. If that method worked, I would eliminate an expense; if it didn’t, I had planned for that expense. It turned out it failed, so the latter applied in my case and I didn’t beat myself up for having spent close to $1,000 on something that didn’t work.
Fine, but even with a number for food and cigs, there was no living in there — no occasional coffee on Friday night, no movie nights out, no bottle of wine to sip on while watching TV on weekends, no gas in the car, no nothing! Yet what I wanted most eagerly is to get out of debt. So thus begun an afternoon of working on two cells and two cells only in my then workbook. What was the most I could put on debt repayment without driving myself crazy, which would effectively sabotage my whole plan? By what date might I be out of debt if I put this much rather than that much? I knew that these were merely estimates, since I lacked a crystal ball to predict the unexpected which, indeed, did come. Should I stick to $225 per paycheque on debt and the remainder go on food, cigs and etcetera, or should I keep the latter as low as possible to attack the debt more aggressively?
I opted for a compromise. Again taking into account my state of mind at the time, I realized that I would feel resentful if I cut too close to the bone (for example, “Here I am, making good money for a single Canadian male, and I can’t even afford a cheap bottle of plonk!”). So I gave myself what I viewed as a generous allowance of $400 per paycheque. (Remember that I’ve known practically not having a pot to piss in, so that’s why that amount struck me as generous.) If I spent it, fine! It was planned in the budget. But if I didn’t spend it, whatever was left from this period’s $400 would automatically be added to debt repayment in the next period.
The only condition I imposed was that I was not allowed to go beyond $400 and, if I did go over a little bit, it would be deducted from the $400 for the next period. I only started using my savings account as “reserve account” a year later as part of an effort to understand why my budget had needed a few adjustments in its first year, so if I did go over in a period, the deficit was on paper only and there were funds in the account to cover it. (It turned out that the adjustments were necessary due to an error in the logic in my spreadsheet rather than a problem caused by not physically moving reserved funds into another account, but I figured that out only after I had convinced myself that the “reserve account” idea was cleaner.)
So I devised a spreadsheet to record day by day how I spent my period’s allowance and connected it to my cash-flow time-mapping spreadsheet below. Over the years I revised the detailed spending spreadsheet so that I can report exactly how much I’ve spent on about 75 categories of expenses — some needs, most wants. Compared to most people, I have a lot of wants on which I’ve spent nothing, but those are the choices I’ve been making and I haven’t felt in the least bit deprived.
One Period More or Less Like Any Other
The following excerpt showing my mapping for the period from 24 Nov 2016 to 7 Dec 2016 is an interesting example because there’s one expense (Dentist) that comes only 3 times a year while the others are monthly.
On 24 Nov and beyond, this spreadsheet automatically marks the first and last row as cleared.
* Reserve: When the amount is negative as it is here, that means I have to transfer that amount from the reserve to the chequing account in order to cover the coming expenses and my $400 period allowance. But had the amount been positive, that would have meant I would have had to transfer that amount from the chequing to the reserve account yet still get to cover coming expenses and my $400 period allowance.
I know I wrote previously that you should assume that a cheque will clear your account on the day that’s written on the cheque, but I’ve come to know my landlord well enough by now to know that 5 days into the month is the earliest he’ll probably deposit it. But on the reserve side of my ledger, I stick to the unlikely assumption that the cheque will clear on the first business day of the month.
The cell in the last row that current reads -400.00 is connected to another spreadsheet on which I keep track of each day’s spending. On 24 Nov, it automatically changes to 0.00 and then goes down each time I enter an amount spent on the other spreadsheet.
Each time I manually mark an entry as cleared, the corresponding number under real balance (in green) changes to the exact balance in my account, except the cell in that column on the last row (in dark red) always shows the exact amount in my bank account that I can freely spend from my per-period “allowance” (thus preventing me from spending money that’s already been earmarked for something else).
By this period, I’ve already maxed out my contributions to the Québec Pension Plan and Employment Insurance, but having looked a year ahead, I don’t spend the extra cash. Instead, I put much more aside into long-term savings than I normally can through the first 10 months of the year. And I even get to pay myself a $50 bonus over the period that covers Christmas, which I suppose I could also afford to do for my birthday period as well, for if I start doing that for the next 8 years, I don’t think the missing $400 will make much difference when I’m retired. Again, see how budgeting actually increases choices you can make?
This whole plan of using the year as my base and projecting far into the future worked like a charm! Even while I was attacking my debt, I knew I could still go out if I wanted to — and I did! — but the challenge to myself was to see how little I could spend in two weeks. The fact I set my start date sometime in early November 2011 helped, as I’m notorious for not going out more than I have to during the winter. But when I began to see the long-term effect of throwing an extra $20, $50, even sometimes $100 here and there on the debt, the game actually became fun! Seeing how soon (relatively speaking) the debt would go below $20K, $15K, $10K (!!!) only encouraged me to try harder. If I recall correctly, my initial projection of reaching debt-free status was sometime in mid- or late-Winter 2014, but by challenging myself at my game of “How Little Can You Spend,” I reached this status months ahead of schedule, namely on Thursday, October 17, 2013.
Since that date, I use this method for saving instead of paying debt except that I’m not as hard on myself — although, by managing on average from year to year to put aside 1 dollar out of every 5 I take home, I think it’s safe to say that I probably fall into the category of “super saver.” And that doesn’t even take into account how much I save by contributing to my employer’s pension and shared-dividends savings program, nor how much interest I’m earning on savings under both registered and non-registered plans.
When I say “I’m not as hard on myself,” I mean that if I finally go on that trip to Mykonos that I’ve long been promising myself, I won’t regret it when I’m a pensioner because I know I won’t be a starving pensioner due to going on that trip. Even the $400 100-ml bottle of that perfume I like so much is not even a dot on the radar! The number I’m staring at for Retirement Day is pretty sweet considering it doesn’t even take into account the pensions I’ll be getting when I retire.
I just KNEW that looking beyond the paycheque or even the month held the secret to successful budgeting! Of course, planning and some discipline is also part of the equation, but being a total cheap wad is not. My experience does lend some credence to Scotiabank’s slogan, “You’re richer than you think!” But there’s one important condition for that to be true. When you finally do climb out of debt, promise yourself to never, ever go back there. If you can’t afford something right now or in the very near future, or that getting that something will seriously compromise your so-called golden years, that means you can’t afford it, PERIOD. Suck it up, buttercup!
In a later part of this series, I’ll look at how you should consider dividing up your savings, because as much as it’s important to think of retirement, you probably have a whole lot of living before then, so you need not to put all your proverbial eggs in the same basket. However, this is quite enough for this part…
The problem with the combined paycheque-to-paycheque and month-to-month approach to personal budgeting is that you end up saying stuff like, “Oh, well a huge chunk of this paycheque is going to get eaten up by rent (or the mortgage)” and “This paycheque has to cover those bills that come due X number of days after payday but Y days before next payday.” It’s a terribly reactive, “putting out the fires” approach and, while it’s arguably a kind of planning, it’s too short-sighted.
What happens with this approach is that whatever is left over after you deduct those amounts from your paycheque is what you’re likely to fritter away because you’re incorrectly going to assume that’s your discretionary income. Combine that big mistake with another doozie, which is to exclusively trust what the bank tells you is the balance in your account without thinking carefully about what did clear your account and what will clear your account soon, and the only epithet that can be ascribed to your personal financial style is indeed “reactive.”
Indeed, that’s NOT your discretionary income and that’s NOT how much money you really have in the bank, and therein lies the problem. What’s left after paying the next bills is money you should be setting aside incrementally for later rather than spending now, and the balance the bank is reporting back to you is only a snapshot in time — a mere sentence in a story being told to you by a very accurate but uninspired bean counter. You need to break free from these two terrible financial trompe-oeils.
Putting Out Fires Without Seeming To Be Doing So
The question I really wanted answered when I began budgeting is, “How much money do I need to have at any specific point in time?” I wanted to know how much money comes in and when and how much has to go out and when so that the sums needed will be ready when they need to exit my account.
Ideally, what I wanted to make my life easier is to pay everything that needs to be paid in the course of the year on payday — 26 times a year.
— I need to pay you $X per year? Here’s $X / 26 today.
— I owe you $Y every year? Here’s $Y / 26 today.
And so on.
That ideal was just that: an ideal that could never be turned into a workable idea, because who I am to single-handedly change how the world does business just to cater to my quirky desire? Or could the spirit of this ideal be made to work in the real world?
So I started to think about having dividers in my bank account, an idea I freely admit was inspired by Gail Vaz-Oxlade‘s “magic jars” except that I visualized my jars as being electronic and I wouldn’t be filling them up front with the amount of the next payment in that category.
Indeed, I wanted to have something like “sub-accounts” within my account so that I would be able to say at any time, “This amount is how much I have set aside so far for the next rent payment” and “This amount is how much I have set aside so far for my next dentist’s appointment.” I wanted ONE number for each big category of needs as if I were able to make an installment on each on payday, but instead I would squirrel away each amount it its own divider so that it would be ready when the time to pay would come. If only I could figure out the amount I should have in each category right now and applied that theory going forward, none of my sub-accounts would ever go below zero, right?
There were only two problems with this idea as I pondered it for a little while.
I couldn’t set up such virtual dividers in my account — at least at my bank and I doubt at any bank — and having a separate account for each need would not only be unmanagable but probably would also be disallowed by the bank.
It seemed rather silly to have a “large” amount of cash sitting in a regular chequing account that returned no interest on deposits, not to mention that I could, in a moment of inattention, become a victim of the second trompe-oeil I mentioned above.
Those weren’t really problems, though. I would just have to represent my dividers on a spreadsheet, and the bank not only allows me to have a separate savings account that gives a bit of interest on deposit but also permits unlimited transfers back and forth between my chequing and savings account. So on each payday, I need to know exactly how much I need to set aside (the sum of all my needs) and exactly how much will be payable in the next 14 days. If the former is larger than the latter, I move the difference to my savings account, and I transfer in the opposite direction if the latter is larger than the former.
Thus that savings account, which gives me ridiculously-low-but-better-than-nothing interest on deposits, has become my “reserve” bank account, and I have a spreadsheet tracking it with all my wonderful “needs” category (see Table 1). Each category of fixed expenses has two columns: the first to enter money being deposited or taken from that category and the second for the balance within that category. Each payday has two rows: one to deposit the amounts and one to withdraw the amounts. And there’s an extra row for the first business day of every month to record the interest that the bank pays me, which goes into a “contingency” savings set of columns that I try to keep at $1,000 at all times. Despite what I’m about to tell you below, I recommend that you give yourself that float even if you’re in debt repayment mode. The “Reserve” Account: Implementing the Yearly Approach to Budgeting
You need to find a point in time — normally a day or two before the payday when you want to start your budget to get out and stay out of debt — to set the counter for each of your need categories to zero — that is, make sure you have what you ought to have right now in each category.
To achieve this, you need to find out exactly how much cash you have on hand at this moment, excluding what should have cleared your account but hasn’t yet for whatever reason. That amount might be insufficient to reset your counters to zero but you’ll just have to borrow the difference. That idea might sound crazy on the surface but that’s exactly what you would have done before you embarked on the budgeting backwagon, except now you’re promising to yourself that this is going to be the last time you’re ever going to borrow from Peter to pay Paul.
As I mentioned in Part 3 of this series, if you have any accessible savings, namely those that aren’t tied up in an RRSP or non-refundable GICs, you need to count them as “cash on hand” because they have no significance when you owe far more than what you have.
So true is this statement that even if you do have a non-registered, non-refundable GIC, you should think long and hard. Isn’t it worth foregoing the interest for cashing it in before maturity if doing so will bring the date you’ll be reaching debt-free status closer, and by how much would you be delaying that date if you don’t cash it in now? How much more interest will you have to pay on your debt for not putting this GIC in the till now? Indeed, the odds are virtually nil that you’ll earn more interest by leaving that GIC mature rather than cashing it in now. If this non-refundable GIC is with the same bank as where you have (or are planning to have) your LoC, you might have more luck in being released from such a GIC, especially if the bank knows what you’re trying to achieve and understands that you’re not just being a flake. Table 1–The Reserve Account
In this example, I’m pretending that I’m starting my budget on the period of 10 Nov 2016. I’m only showing 3 categories due to space limitations and I’m skipping the monthly row where I record the interest I receive and automatically move to savings.
I currently have 13 “needs” column set in my real spreadsheet. The last set of columns — with three columns instead of just two — allows me to manually enter whatever is left over from the paycheque that will go toward debt repayment (when you’re paying off debt) or savings (once you’re in the clear). Plus as I just mentioned, I also keep a loose $1,000 in this account as a contingency fund that I can dip into for unforeseen expenses, which I bring back to $1,000 as soon as possible even if it means less debt repayment (or real savings in my case) during the next period or two.
The first step is to go down the “+/-” column, one category at a time, to enter as a negative the amount that must go out (that is, be returned to your chequing account) in each “Amounts due” row — but leave it blank if nothing is to come out during that period. To do this, I found it helpful to map it out on a sheet of paper. On the page, one row represented a category and, next to it, I would list the due dates. For example, I had “Electricity: 17 Feb, 17 Apr, 17 Jun, 17 Aug, 17 Oct, 17 Dec,” but I simplified in cases like “Rent: 1st of month” or “Car Insurance: 19th of month.” I also had a perpetual online calendar handy to keep track of when those dates fell on a Saturday, Sunday or holiday so that I could advance the date of payment to the next business day, which sometimes meant that a payment due at first glance in a given period should be advanced to the next period. This is more likely to happen around end-of-year holidays.
Then, go back to the top and, in the same category column but in the “Reserve” rows, enter the amount that should have been contributed by paycheque (see Table 2). The further into the future you go, the better, although I don’t know too many people who are as compulsive as I am and will go 10 years ahead.
By the way, the “Floor” cell for each category has a formula to find the smallest value in that category’s “Bal.” column and you will use it to ensure you never go down below 0.00 in that category.
09 Nov ’16
RESET TO ZERO
10 Nov ’16
10 Nov ’16
24 Nov ’16
24 Nov ’16
08 Dec ’16
08 Dec ’16
22 Dec ’16
22 Dec ’16
For each category set, the “Floors” cell should show the lowest amount in that column, which is most likely a negative. Enter that amount as a positive in the cell at the intersection of “RESET TO ZERO” and “+/-“.
Then, if you notice that the balance in that category never goes back to 0.00 after the first time, you can reduce the amount in the “Reserve >>> +/-” directly above the smallest balance by the amount of that balance. Indeed, that means that you’ll occasionally set aside a bit less in some periods. It might only be a few cents or a few dollars, but it’s still worth the effort to assign it instead to debt repayment or savings, depending on what stage you’re at in your financial life. I’ve bother doing this for amounts as low as $0.95!
The result will be that the tiny balance will become 0.00 in the row showing when the payment gets transferred to your chequing account. You might detect a pattern and insert tweaks to the amount to be saved every Xth period to force a category’s counter to go down to 0.00 more frequently, as there’s no point in having a surplus locked into a category column when it would serve you better to pay off debt or in savings.
Of course, it’s a sad fact that prices tend to change — mostly upwards but occasionally downwards. Fortunately, they tend to change one at a time rather than all at once. You’ll need to update that category from the time of the price change (the amount due starting from the date of the increase onwards) and the amount to set aside going forward (per Table 2 below). This would be a good opportunity to reset the column’s counter to zero from the point of the increase. However, what you’ll find interesting is that even a substantial increase won’t seem so bad. In the span of a year when I went from owning an old car to a new car, the insurance on it went up several hundred dollars a year but this increase translated to only $14 per paycheque, which demonstrates very well the “shock absorbance” qualities of the yearly approach to budgeting.
After you will have repeated this exercise for each column set, the “Bal.” cell at the intersection of the “Account” column on the “RESET TO ZERO” row may show an amount that is greater than the amount of cash you have on hand. But that’s okay. Part of your debt consolidation plan might mean that you’ll have to increase your debt sligthly by borrowing from a line of credit or, if you must, a credit card cash advance, just to bring each of your “must pay” columns where they should be at this point. Table 2–The Fixed Amounts Per Category
My fixed reserve categories are as follows, but yours could obviously be different (for example, if you have a student loan or a car payment). Notice how 2 times what’s in the period column doesn’t add up to the amount in the month column? That’s why I’ve been saying all along that taking a monthly view doesn’t work! If you get paid 26 times a year as I do, you’ll have to save a bit less each paycheque than the monthly amount divided by 2. THIS is how you get to see the effect of your two “extra” paycheques!
Time / Yr
$ / Yr
$ / Month
Permit & Registration
Cable & Internet
¤ Often a bit less than that, requiring occasionally adjustments to reset to 0.00.
* A service certificate for about $200 CAD is renewed once a year but the monthly fee is about $45/month the rest of the year. Amounts vary a bit due to the CAD/USD exchange rate, requiring occasionally adjustments to reset to 0.00.
** It’s really 8.77 over several years but I use 9 as the denominator and occasionally make adjustments to reset to 0.00.
I don’t know about you, but I find it very interesting that the amount I have to save each paycheque ($720.91) is considerably less (and less painful!) that my biggest expense each month (apartment and garage rents, $1,020.00). Plus I love no longer being among those who say, “Oh, well a huge chunk of this paycheque is going to get eaten up by rent.”
Note that my food allowance is not here because it’s part of the $400 per paycheque “allowance” I give myself that also includes my housecleaner and …uhmmm …yeah, smokes, all of which I’ll explain in next part of this series.