Friday, February 12, 2016

Lesson From Automatic Budgeting with Simple Goals

In the last couple of posts, I have written about how I am using Simple.com to manage my self-banking experiment. It turns out that one flaw in the process is me. It has become habitual to check balances, transfer money, schedule payments, and figure out strategies to ensure what needs to be paid gets paid. I maintained the habit knowing that Simple can mostly manage things.

Since switching my payroll direct deposit over to Simple, finally, much of my fussing over money is automated. It has been difficult for me to let go of the reins. At first, I was putting lump sums into Simple Goals in order to pay off self loans, as I have done since beginning the self banking experiment.

The problem with manually doing this is that Simple automatically allocates a daily amount into your goals. Therefore, your Safe-to-Spend quantity goes down every day as Simple allocates your daily rate.

For example, let's say that to meet my Goals, Simple needs to set aside $45.67 per day among the various Goals. This means that I would need to have enough money in Safe-to-Spend to set aside until next pay day. So, if I were paid every week, I would need $319.69 available to put towards my daily budgeting.

What I was doing instead was allocate money manually and make payments to my self loans without leaving that 7 day buffer. Therefore, my Safe-to-Spend balance would zero out and cause my Goals to pause their daily budgeting. Then, by the next paycheck, my Goals would grab a big chunk of my paycheck to catch up, in addition to the daily allocations from my already diminished paycheck.

The result is that I kept "running out of money", which is preposterous because I earn sufficiently to cover all my expenses.

Whereas I manually budgeted in lump sums per paycheck on my own, Simple budgets smaller daily quantities automatically.

I have to learn to let go and allow Simple to do its magic so that I can go about enjoying some extra free time.

To remedy my problem, I've had to borrow from myself to ensure that there is enough cash in the account to smooth out the roller coaster budgeting that my interference has caused.

My take-home lesson is that once I automate a process, I should step back and let it run. My interference caused something meant to uncomplicate my life do the total opposite.
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