The 6P Principle

6Ps = Prior Preparation and Planning Prevents Poor Performance.

I have written before about my Grandmother's ' one up' principle, that is, you have a spare of everything in the cupboard and as you finish one off you get another one to replace the spare so that you never run out of anything. 

This week I have made a list to fully prepare my stores cupboard.

I have worked out my usage, for example, I know that at all times I want a container ( 3kg) full of flour as well as 4 1kg bags in the cupboard.
This will take me some time to finish because I will only stock up when the products are on sale. The overall aim is to never pay full price for anything again.
If you watch the sales you will see, for example, that Vegemite may come on sale every 6 weeks and you may know that you go through 3 jars in that time, so I would buy 3 when they are on special.

If you let your items run out or run low, you will have to buy them when you need them rather than when they are on sale.

If you use the store cupboard idea of stockpiling, you will eventually get to the position where you only buy sale items each week.

This will cut your grocery bill dramatically. If anything unforeseen happens you always have your insurance policy.
 We all think that a ' disaster' will not happen to us, but sometimes it is the simplest thing that can cause problems, like blackouts from storms or floods.

 If there is no power, the doors of Coles can't open ! I wonder how many people were caught by the flooding around Newcastle - not caught by flood waters but caught by the shut down of services.

 The moral of the story always comes back to the 6P's.

The 6 P principles is the answer to how can you get ahead and work towards never paying full price for anything ?

Working with a Cash Budget

Over the years we have tried many different methods for controlling our spending and working on a budget. By far the most successful method for us is to work in cash. I have worked out what we need each week and I withdraw that amount of money.

The following are our ' cash categories'.

Groceries

Fuel

Entertainment

Christmas

Holidays

Birthdays

Scarlet Ribbon ( clothing shoes etc)

Kids Banking

You can see in the photo that I use resealable plastic bags with the category and the amount written on it. Each week I go to the bank or post office and I have a little card in my wallet that says " 3x $50, 4 x $10 etc and get the exact breakdown. When I come home I give the cash to our young sons and they go through and put the amounts into the bags. Then, when we want to do something like hire a DVD or buy a present etc, we just go to the appropriate bag.

Having the money in cash is great for a couple of reasons. When you have cash in your wallet you are much more careful about spending it. My sons have also learnt the value of money because they control it. We are also empowered by the fact that we have money in advance for needs that may arise.

I call one category 'scarlet ribbon' because of the proverbs 31 woman who has no fear for her household for when the winter snows come her household is clothed in scarlet. It is a very old proverb but one that has always stuck with me.

I have also calculated how much we require for bills. You can do this by looking at what your bills are over a year and dividing the amount by 52 or 26 depending on when you get paid. Then I transfer that amount into an account we use for bill paying.

So.... what do you do when you finally sit down and add it all up and the results are frightening ? When I did this the first time I was totally shocked at our living expenses. Son number one was about 12 months old and I was faced with the prospect of going back to work. I was a school teacher then and was going back to work just two days per week. I hated the thought of it! So, we sat down and worked through everything in a huge amount of detail. I called it my " Plug the holes audit". By this, I meant that I thought the ship ( our house) would sink by the little holes that were in it, not the gaping big holes. So I set about saving money on little things, $2 here, $1 there. I changed phone plans, shopped for cheaper insurance, worked out a price book to track specials and calculate unit pricing, worked a cash budget etc etc. The results were amazing and I gave up teaching at the end of that year.

I often hear people talking about how difficult it is to make ends meet ( while they are watching pay TV and smoking and eating take away food). My answer is to be totally honest with yourself and live within your means. Take control of your money so it doesn't control you. It is such a wonderful feeling to jump in the car and go for a holiday with the freedom of knowing that you have the cash for it all and you won't have to face the credit card bill when the holiday is over.

If you can't be bothered with the hassle of micro-managing it all then you will need to be happy with staying in debt and having no money and having lots of stress. The choice is yours to make, so which path will you choose ?

A Little Light Reading

Do you know that if you want something you should always start by ' putting the word out'. Someone will always know someone who has what you need.

Rather than spend money, ask what already exists in your circle.

Using this principle I was able to gather all this reading material. I also got some from the local library. Your local library is such a brilliant resource. Check it out.

I am excited by the prospect of reading these books. I love being inspired.

Christmas in July

No I am definitely not talking about those functions and parties everyone seems to be going to. 

Perhaps I should call this post THINKING ABOUT CHRISTMAS IN JULY. 

Most people ( me included) start complaining when Christmas decorations and 'gift idea' catalogues start appearing around late September. But the strange thing is that many people leave their gift shopping until the last minute and have to battle the crowds and are left with the age old dilemma of what to buy people in your family. You even hear them talking about what you buy the person who has everything !!!! ( Isn't the answer obvious ??)

I want to start thinking about Christmas so that there is no rush. Without prior preparation and planning we end up buying complete rubbish and maxing out credit cards buying STUFF for people that already have enough STUFF.


STOP THE THOUGHTLESS CONSUMING.



So, remember the phrase Prior Preparation and Planning Prevents Poor Performance (The Six P Principle).


Think about these things: 

1. Who do you want to give a gift to. Make a list


2. Will you make a gift or buy a gift.


3. If you start now there is plenty of time to make thoughtful gifts


4. If you don't want to give STUFF then do what I have done for the past two years - buy a goat in a village in Bangladesh in the recipients name. Last year we purchased school books, a water well for a village and a toilet. Visit Tear Australia and get a copy of their "World's most useful gift catalogue". http://www.usefulgifts.org/



Anyway, the challenge I put to you all is .... be prepared. Refuse to be sucked in to the marketing concept that people will know you love them by what you buy them. 

Think carefully. Start your purchases now. Mail order from small Australian business houses. Make thoughtful ethical purchases or make it yourself ! Nothing says I love you like the investment of your time !!!!



Let me know your ideas for gift giving or home made gifts.