Tidying Up My Finances

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In last week’s blog post, I introduced Marie Kondo’s book The Life Changing Magic of Tidying Up and explained how I began my tidying journey.  After I purged my home of junk and clutter, I had an overwhelming desire to declutter everything in my life.  The thought echoing in my mind was:

Everything must be tidy.

How much joy could I experience by having my entire life tidied?

Tidying Up My FinancesCredit Cards

The need to simplify went hand in hand with the Profit First philosophy. As I walked through the Profit First method of accounting and banking in my company, I realized tidying up my finances needed to come next.

For years, I had accumulated credit cards. Any time a store offered a deal, discount, free shipping, or friends and family pricing for card holders, I signed up immediately. After all, I rationalized, it’s a bargain. I would be a bad steward if I didn’t take the card. I realized, however, that in order to receive free shipping on an order and redeem my $10 discount, I needed to spend $50. That just caused me to spend money on things I didn’t need and that did not bring me joy. Managing the “discount” credit cards actually cost me a large amount of energy and money, brought distraction, and cluttered up my wallet and finances. I no longer wanted to use my energy and brainpower to manage the many credit cards in my wallet. I begin to cancel them and cut them up one by one, and therefore, tidying up my finances. 

Tidying Up My Finances with MikeMy Profit Assessment Meeting with Mike

When I first started implementing the Profit First methodology in my own company, I had a strong desire to become a Certified Profit First Professional, so I applied to do so with Profit First. The first step in my journey to become certified was analyzing a Profit Assessment on my very own business with Mike Michalowicz, the author of Profit First!  We scheduled a conference call and went over the details of my Profit Assessment. During that phone call, two main points of focus came to mind:

  1. Our business was going in too many different directions. We needed to tidy up and rid ourselves of the services that were not profitable. As Mike taught in Profit First, The niches are in the riches. One specific area of low profitability immediately came to mind, it was something we had maneuvered around for years. Mike guided me to the reality that this particular service needed to be let go in some fashion. We needed to create a laser focus.
  2. My company could no longer use a credit card. Even though it was the kind that was paid off from month to month, for me to be a purist and embrace Profit First system fully, spending on a credit card just wouldn’t work. The money needed to be spent in cash via a debit card.

I needed confirmation that the right thing to do was cut up my company credit card. My initial plan was to take a month. As recurring bills hit the credit card, I would change the billing to a debit card. But I’m not much on an ease-into-things-kind-of-girl. When I make a decision, I like to start right away. I realized almost instantly, that we had to get rid of the Amex. I pulled everyone’s credit card and started paying for all our bills with a debit card.

That month was painful! I was paying for everything twice- the credit card bill with the charges in arrears and the current monthly expenses as they occurred. However, the joy I felt the next month when I didn’t get an Amex bill, made the pain worthwhile. I no longer dread the 17th of each month when I would receive a bill that was somewhat of a surprise. (I don’t like surprises. As a company, we focus on no surprise bills for our customers. This new method of tidying up my finances and paying for things up front fell right in line with that philosophy.)  

Now, I know how much money I have available all the time and I’m truly living the Profit First focus. Stay tuned for next week’s blog post – Grasping Opportunities

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