Gails Blog

Lori from Vancouver wrote on my comments page about her confusion in trying to figure out which income numbers to use on her budget. She said:

For people paid bi-weekly such as myself, you tell them to take their net income x 26/12. When I do this it leaves me in a deficit monthly. For example, if the net income is $1500.00 biweekly x 26/12 = $3250.00 doing it the way you suggest. However the actual monthly income would be $3000.00, until we hit May and August where we are paid 3 x. If these were my numbers I’d be in the hole $250.00 a month until then. I think I must have done something wrong!!

 

No Lori, you haven’t done anything wrong. This is where the theory of math bumps heads with the reality of your bank account. You’re absolutely right, in fact, and the only solution is to budget with the lowest monthly amount you receive over year

I often tell people who receive commissions or bonuses that they can’t “count” on their bonuses for their monthly income planning. Don’t know why I haven’t taken the same approach with pay, except that it is guaranteed, just not “regular”.

I’m going to revise the budget page instructions based on my rethinking (because of this question) and tell people what I’ve said here: use your lowest monthly income as your base, and use any extra money you receive to boost your planned spending (for things like furniture acquisitions, vacations, and the like).

 

Have y’all signed up for the free Toronto seminar I’m doing for Credential on February 13th. If you haven’t, you better hurry up. The registrations closed early in Winnipeg and Saskatoon because the demand was huge and space was limited. If you don’t sign up TODAY, don’t whine to me that you couldn’t get in!

 

The credit crisis in the US (can ours be far behind) has been all the news of late. The latest bad news from the financial markets is that the Bears are eating the Bulls. For those of you who think I’m talking zoo-garble, I’m not. I’m talking investor-babble. The Bulls are those who believe the stock market is going up. The Bears are those who believe the stock market is going down. Markets all over the world took a hit this past week, virtually wiping out the gains of 2007.  According to the Toronto Star, “four days of heavy selling caused Canada’s benchmark stock index to record its worst weekly drop in about seven years.”

So, if you’re holding investments should you be panicking? No. This should be the wake-up all that reminds you that markets rise and fall. All markets. Stock markets. Bond markets. Credit markets. Housing markets. Life is cyclical and so are markets. And just because things are going well, and have been doing so for a while, doesn’t mean there’s no likelihood that things will ever change. Get real. Things change all the time.

Having a balanced financial plan means you don’t panic. You can withstand changes and wait for said same markets to move into the next phase - going up again - because you have time on your side. And because you are not leveraged - read “in debt to your eyeballs”.

So, assuming your financial house is in order and you’re following the golden rules of investment (you do know what these are, right?), you just have to wait out the latest bump.

This, too, will pass.

 

This entry was posted on Saturday, January 19th, 2008 at 10:26 am and is filed under This & That. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.