If you want to become an entrepreneur, you’ve got to get hardcore about your personal budget. I don’t have too many soft spots for over-spenders and rationalizers.
Seemingly innocuous decisions like signing a lease, a loan, or getting (and using) that new credit card can profoundly define the trajectory of our lives and limit our entrepreneurial options.
To illustrate this to our October Tropical MBA attendees, I decided to dig out my actual budget spreadsheet from way back in early 2007– a time when I was just starting to see entrepreneurship as a real possibility for my life. The next financial step seemed logical: get out of debt.
The debt I had accumulated was all the lazy and normal middle-class trappings– retail therapy and stuff I thought I “deserved.”
All of these purchases, loans, and commitments were made under the assumption that I was going to have to job for a long time to come– something I was starting to doubt.
* * *
The debt reduction strategy that worked for me was one advocated by Dave Ramsey— he calls it the “envelope system.” Here’s how I implemented it:
- I cut up my credit cards.
- I made a detailed spreadsheet that outlined my desired expenses per pay period, including savings goals.
- I set up auto-pay on all my bills and loans.
- Each pay period I went to the bank and took out a whole wad of cash for my daily expenses.
- I split the cash into different areas of my wallet (or into different “envelopes” depending on what the money was for– food, fun, dining out, etc…).
- When the money was gone, it was gone. I couldn’t resort to an ATM or credit card.
For the record, this worked very well. (Cheers Dave!)
As I was taking a look at my old spreadsheets, I came across a figure that delighted me. Despite my aggressive efforts to pay off debt, I budgeted $200 monthly for books. At the time a huge figure– over 10% of my take home pay.
I remember a few friends guffawing. One said, “given you are trying to pay off debt, isn’t that kind of a luxury? What kind of person reads 14 books a month?”
I didn’t say it at the time, but looking back, the answer is: somebody trying to change their life.
Shortly thereafter, one of my first official moves as a business owner (set up in late 2007) was to move the book budget onto the company books. After that was agreed upon, I promptly went to a downtown San Diego bookstore and made a major haul, causing a few eye rolls back at the office. Education was going to be an important part of whatever we were doing! ;)
I’ve listed some of my favorite books from that time period below. I’d love to hear your recommendations for me!
Here’s some of the books I read in the early days of my business that were particularly inspiring.
Purple Cow, The Art of Seduction, The Ultimate Sales Machine, Maverick, Getting Real, The No BS Guide to Direct Marketing, Dreaming in Code, The 4 Hour Work Week, Getting Things Done, Good to Great, How to Get Rich, The 80/20 Principle
Here’s some books I’ve read or bought in the past few weeks that I’m excited about:
PS, if you’d like to receive emails form me you can put your email address into the form below: