• Linda Ruffenach

Lessons from Mom: Always balance your checkbook.


My Mom was a very smart lady but I could not admit until I was over the age of 18. She has been an inspiration to me throughout my career, teaching me many valuable lessons.


When I was younger, I used to watch my mother at my grandpa's old desk, sitting in his vintage red leather chair, meticulously reconciling the family checkbook. If she was off by even a nickle, she would scour through checks and her checkbook ledger to find the discrepancy. She knew where and how the family was spending money. We weren't rich so every penny counted. We did not have money to splurge on fancy dinners or big trips. Those things were planned way in advance and savings was set aside. When bad times hit, we were always prepared.


Beware of little expenses. A small leak will sink a great ship. - Benjamin Franklin

When I was in my early 20's I was offered a job in Dallas that included moving expenses rent for the first few months and a great salary. This would be a major step to my independence. It was the first time I had my own apartment and was responsible for covering all of my expenses. I started my new adventure with confidence, cash and a good job. The first few months were great! When I received my first paycheck I was in awe of the numbers. It was the most money I had ever made. I was on top of the world and had money in my pocket to burn.


So what does a young person do with new found freedom, living in a big city, with extra money? They go shopping and go out with friends and have a good time without a care in the world. Well at least that is what I did. But a funny thing happened after a few months, I started to live paycheck to paycheck. My credit card bills started going up and I was living way beyond my means. But heck I was young, there would be plenty of time to catch up. Right?


After living the good life for 5 months, I was stunned by the announcement that the company I traveled half way across the country to work for was closing shop. Our division was no longer needed and I suddenly found myself without job, very little money in the bank, mounting credit card bills, a car payment and 12 month lease on an apartment. The first question my mother asked was, how much money do you have in your checking and savings accounts. I couldn't answer the question. I knew my parents did not have the money to bail me out. I was on my own. I learned quickly that independence does not come cheap.

Like many business owners going through the current crisis, I had no idea what I was going to do and how I was going to dig myself out this situation. I could shut down my apartment, move back to Louisville and live with my parents while I figured everything out. But for me that was not an option. I took on the risk and I had to prove I could succeed.


The first thing I had to do was get a handle on my financials. My guess is that many business owners are having to do the same.


I went into this period of job loss with existing financial challenges. I spent money because I could. If I had money in the bank, everything was good. If I had room on my credit card, everything was good. Everything was good until it wasn't.


For the first time in my life I was REALLY worried about money. I had financial obligations that I had to meet. I quickly had to create a budget. It was critical I knew how much was coming in the door and how much was going out the door. It was critical that I did not just rely on the bank to keep track of what I spent, I needed to know not only my balance but what expenses were coming up, which ones I needed to pay no matter what and which ones I could pay in increments. I had to recognize the cost of credit cards including penalties and interest charges. It was the only way I was going to dig out.


It took discipline but I created my own version of a cash flow statement. I mapped out my required expenses for the next 6 months. Required expenses included the essentials like rent, utilities, insurance, car payment etc. The bills that I absolutely had to pay to keep a roof over my head and my car from being repossessed. I identified items with flexible payment terms that would not get me into deeper trouble (being mindful of interest rates and penalties), and had to eliminate much of my discretionary spending.


For the next few months, I did not spend a dollar where I did not know the purpose. I did everything I could to bring in money including taking temporary jobs, waiting on tables etc. I had to be flexible and humble enough to recognize I had no other choice, unless I wanted to move back home.


I eventually found a full-time position that paid really well but this temporary period in my life taught me many valuable lessons. I spent the next 3 years getting completely out of debt and have stayed that way for many years. I won't pretend to be perfect, there have been times that I have spent money frivolously but I always force myself to tally up the details so that I have a clearer understanding of where the money was spent. I needed to know where and how to cut back if needed. I was taught that times like the ones we are experiencing in 2020 will always come along.


We have made many changes in our lifestyle. Some mandated, some by choice. We cut back on the unnecessary things. So I guess my Mom was right, if you know where your money goes, it is easier to make sure you have what you really need in good times and in bad.

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