Comments

Oprah would agree with you. Her financial "wake-up" plans for highly indebted families include, as a first step, making them LOOK at their spending.

Second step: get rid of the credit cards, often cut up ritualistically with scissors.

Posted by Ramla A. at July 6, 2007 9:07 AM

MBLA: Management by Looking At ("It")

Posted by Ramla A. at July 6, 2007 9:09 AM

Good points, Tom. Over a decade ago ago, I observed a pattern of repeated bouts of overspending in a particular product development organization. The manager seemed to think it just went with the territory of projects and project-oriented spending, but I wasn't sure.

I created a very simple computer model (a "system dynamics" model, if you will) of the way managers decided how to spend money and the way money, goods, and reports flowed through the system.

That simple model recreated the essence of the monthly variance graphs the manager had been tracking. When I modified the model to give the simulated managers different information, the problem went away. When we did that in the real organization, we cut spending variance by 95%, and we made it easy to adjust desired spending levels on the fly.

That project is described in a National Productivity Review article called "Pipeline Inventory: The Missing Factor in Organizational Expense Management." You can find the full reference and another article about the model itself at http://facilitatedsystems.com/pubs.html.

As you might guess from the article's title, what we essentially did was make the ramifications of spending decisions immediately visible to the manager, without the typical delay until items were received and the accounting system reported them. As the NPR article points out in more depth, what we did was the analog of paying with a checkbook rather than a credit card.

Posted by Bill Harris at July 6, 2007 9:41 AM

1. Expense the gas/car & dining & books/cd's as business expenses - I love 5% cash back credit cards & merchant dispute they provide - use for everything - pay in full. PS - TP that is a lot of cash you stash in le car.

Posted by sean at July 6, 2007 9:55 AM

I worked for many years in what was often perceived by too many of us well meaning managers as a ‘bottomless pit’ of money – it was never really ‘our money’. Actually when it came to the crunch we didn’t really give a toss about how much paper we used – how many wasted photocopies we made and so the story goes on. Now I’m a single hander and I know the cost of every inkjet cartridge I use and I don’t print unless I must. I now look for the cheapest way to make business phone calls. If I can afford to go to conferences I will take home the writing pads and pencils and pens to save buying them – is that stealing I ask myself? – not really says me :-). These are but small examples.

You are right about the "work as a clerk for a day crap”

I come across quotes like ‘Walk a mile in my shoes” as if by doing that one might understand. It helps a bit but actually to walk in someone else’s shoes still means they are not your shoes.

I recently destroyed three plastic cards because the temptation is to ‘buy today pay tomorrow’ – it’s a human trait when tempted … and tomorrow sometimes never comes.

The only way to live within our means is to live within our means. Carrying cash is a great discipline - I love using cash. When the coins are gone you have no money - something rather simple but refreshing about that concept – but I fear it will never catch on …… :-)

Posted by Trevor Gay at July 6, 2007 10:31 AM

Having worked many stints as a waiter early in my career, I can say that this practice should also be used occasionally to pay individuals for their work. Most of us work on long-term projects where the pay comes either sporadically (i.e. when the vendors finally deliver) or electronically on a regular basis that never correlates to the pace of the work.

Imagine if you were paid by your boss or client on a daily basis for what you actually produced. The payee would mete out the green directly to you based on what you actually produced that day. When this happens as a waiter, for example, you leave the workplace with a great feeling of satisfaction and relief--you've worked hard, the job is done, and you have the pay right there for what you just did. Think about what that would be like in your current gig, or gigs.

Posted by Tom Ehrenfeld at July 6, 2007 12:07 PM

Having worked both "agency" and "corporate," I'm a big fan of corporations actually adopting the practice of hourly "billing" -- tracking every hour you spend on a project. This helps evaluate why time estimates are so "off," and helps identify when things get out of scope.

While we sit in our comfy "corporate land" and gleefully enjoy our time-sheet-less days, managers above us wonder "why things take so long." If we could document that every text change on our web site requires 15 minutes from each of six people, maybe we'll all start understanding why a content management system must become a priority.

Posted by Christy at July 6, 2007 1:31 PM

Paying cash is an excellent practice if you want to really see how fast your money goes. But I fear that the day will come when we're not allowed to pay cash. It'll cost too much to handle. Or the store will charge a cash-penalty because they're not getting your personal information for their data base.Cash payers will be viewed with distrust. (What are we hiding?) I think of this everytime the twenty-something in line in front of me at Dunkin' Donuts uses plastic to buy a cup of coffee.

Posted by Maureen Rogers at July 6, 2007 10:50 PM

It's not just the tangible cash that worries me it's the time cost. When you have 5 managers in a room for goodness knows how long discussing the purchasing of 1 PC. I believe that tangible costs actually get quite enough checks (cheques?!) and balances - it's the intangible that worries me...

Posted by PaulH at July 7, 2007 10:59 AM

For lower wage people, think in terms of hours worked. I'm retired and have a part-time, low-wage job. When I look at something and realize that it's two days work, I think twice about it.

Posted by Tom E. Snyder at July 7, 2007 1:28 PM

Today, we as consumers are being conditioned to think of our spending as patriotic. It’s our part in the great Global Free Market Capitalist system. As a sole proprietor I have become painfully aware of the great manipulation of the masses to use plastic where the banking system sucks up 5% to 23% on every transaction from the fees charged to the retailer to the poor brainwashed individual who has lost the ability to beware of the seller. I call it the Great Corporate Vacuum effect. It is no wonder the middle class is shrinking, bankruptcies are escalating and the retirement age is rising.

“Or the store will charge a cash-penalty because they're not getting your personal information for their data base.”

To respond to Maureen, Being in the creative end of the marketing field, I see from the inside how the gathering of information and the covert data mining of individuals has been elevated to the level of all out surveillance. It pales in comparison to KGB days of the Soviet Union. All that information is POWER being used to turbo charge the suction of Great Corporate Vacuum and separate us from more and more of our money without giving anything in return and doing nothing to better our society.

There needs to be pyridine shift away from corporate profiteering to corporate ethics and social responsibility. In the super speed race to globalization someone needs to step back and ask what kind of society are we building, and will we want to live in that world?

Posted by MLM at July 7, 2007 6:33 PM

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As an exercise in reminding yourself of the value of money, this is an OK idea. It's simply a shame that people forget it. Personally, I think there's a deeper problem with credit cards and it's got more to do with people not appreciating that the credit has to be paid back and quite possibly with interest; over-extending their borrowing; and some people seeing no wrong in defaulting on their obligations. We can all rant at the lenders for making it too easy - although we'd rant at the civil liberties implications if they insisted on doing the credit checks that would help address the problem! And ultimately, it's about individuals taking responsibility for their own behaviour - a lesson we seem poor at teaching our youngsters.

BTW, I get really annoyed at this blind assumption that BigCo = no sense of the value of things. Sure, we can all rattle off examples of waste (and maybe we'd even find some in SmallCo, too?) but I'm sure there are plenty of people like the Admiral doing their best to ensure they and their people behave responsibly.

Personally, I hate cash and shall carry on spending my money on a credit card (it's a fabulous convenience + there's a loyalty programme) when I know I can afford it and can pay it off at the end of the month. And I shall always try to treat the money of the BigCo I work for as though it were my own business.

Posted by Mark JF at July 9, 2007 2:41 AM

Paying in cash definitely has its payoffs. When you're out shopping with kids, sometimes it's a good idea to pay in cash, especially if you're buying something for them. This makes them attach a value to their possession. Sure, this may not have anything to do with busines, but your kid one day might change the business world, who knows!

Posted by Subir Ghosh at July 9, 2007 3:28 AM

Similar concept was explored in a recent NY Times article detailing a study that showed tolls rise faster once EZPass is introduced: outta sight, outta mind.

Posted by Jeffrey Cufaude at July 9, 2007 7:52 AM

I wonder, too, how much internet selling actually benefits from this cashless phenomenon? It's very easy to click a few "Buy now!" buttons and it's so convenient and all of a sudden you've spent much more money than you might ever have intended.

And another problem here: what about people who shop on the internet in the evening after they've had a glass or two of sherry?!

Posted by Mark JF at July 9, 2007 10:36 AM

BTW: that's some stash you keep in the car!

Posted by Mark JF at July 9, 2007 3:07 PM

Tom Peters,

Keep paying cash and you may become a fan of Dave Ramsey.

http://www.daveramsey.com/etc/cms/index.cfm?intContentID=3478

= http://tinyurl.com/27jrhz

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John

Posted by ShakespearesFool at July 9, 2007 3:13 PM

Tom,

Do you really think it was a good idea telling a million people that you keep cash in your car?

You're such a trusting soul, you wouldn't last 10 minutes on Youtube :)

Posted by John Gregor at July 11, 2007 12:12 AM