Simplifying Hive Bookkeeping
A few years ago, I joined a multi-level marketing organization that focused on mobile phone service. They had competitive rate plans. You could earn monthly income from referring others to subscribe to the service. One of their messages was something like, "How would an extra $250/mo improve your life?". They weren't striving for people to go out and grow large user bases. They were trying to reach those households who just need a little boost. The company folded, eventually. But, the question still remains in my mind. I find myself wondering, how much difference would an extra $250/mo make in my life? I ask myself this now because the Core Number Compounding I started a bit over a fortnight ago is yielding much more than $250/mo. I am conscious that this could be life changing to some extent.
For simplicity, $250/mo can come either in a lump sum or in installments. In the end, $250/mo is an extra $3000/year.
To be fair, $250 could mean a great deal for somebody on a low income. It may not mean much to somebody on a high income. For me, it is still significant.
Living On A Budget
For the past few years, I have taken control of my finances by maintaing and keeping a budget. Having a budget ensures that everything that needs to get paid is paid on time without overdrafts. My budget works hand in hand with credit. Items that I can't afford to buy cash get put on a credit card. The payments are spread out into biweekly installments. In electronic terms, a budget is like a capacitor. It resists sudden fluctuations in current.
As a result of timing differences between monthly bills and pay days, sometimes payments squeak by with nothing to spare. Other times, there is a good chunk of spending money left over. Knowing your spending needs in advance allows you to plan ahead by paying things early when you have extra cash so that you can have a little extra cash later when you would have been left penniless.
An extra $250/mo for somebody on a budget would make a huge difference. It is an electric bill or two other utilities. It is mobile phone service for a family. It is a car payment. It is insurance coverage. It is an extra payment to a credit account. It is grocery money. To somebody on a budget, $250 has a specific purpose.
In my case, my salary is budgeted to pay bills. Part of my salary included a set aside of about $200 per paycheck for discretionary spending. This covers things like buying groceries, lunch, beer, and occasional dining. An extra $250 means I can put all of my salary towards paying bills. The extra $250 goes towards discretionary spending.
If I did not live on a budget, I doubt that I would be in the same position. Without control of where your money goes, it is difficult to have any savings. I would not have savings to buy the crypto I am now using to do Core Number Compounding, if I did not have a budget. Yes, you have to budget a certain amount of savings. An extra $250 makes saving a little easier.
Does The Money Exist?
One thing that I have done to help me better stay on top of expenses is to maintain a budget based on my income 5 years ago. I got a raise since then. However, the extra money accumulates in my account. I have to tap into it from time to time for that emergency Bitcoin buy or to help with an unexpected purchase. This keeps me from completely destroying the budget. When we get large payments, such as our tax return or stimulus payments, they stay in our bank for the same purpose. The money slowly dwindles down as we deal with surprises. We have the money. But, the money does not exist on our budget. It is extra cushion for those times when the maths are off.
If I received an extra $250/mo in income, it might not officially exist on our budget. Although, a budget item for contingencies might do the trick. However, having it on the budget then makes it something that can be routinely raided while keeping within budget. The system I have now allows me to take a little here and there. However, as it is unaccounted, I am less tempted to take large amounts to avoid overdrafting the account. The mystery is what makes that money less spendable.
More Thinking Needed
I'll have to give more thought on how to deal with the extra income from Core Number Compounding. Definitely, most of it will go towards building up the amount of money in play. I should like to eventually have $10K or more doing CNC. Increasing the size of the positions has greater nominal yields even though the real return is identical. But, just like my off budget cash, I can siphon off a little bit of spending cash here and there without jeopardizing the entire system. However, at some point I'll need to keep track of the numbers. CNC throws off a lot of cash. But, it can also consume a lot of cash during drawdowns.This is partly the reason why growing the size of the CNC is important. My $20 withdrawals have less impact on $20K than on $5K. For sure, I can continue to live on my salary while allowing my investments to grow mostly undisturbed. Keeping separate pools of money will be key to long term success, I suspect.