In a former life, I spent a lot of time in spreadsheets. And not just any spreadsheets. I had the opportunity to work with a gentleman who took Excel to a whole new level. I am fairly sure some of his later spreadsheets eventually became sentient, and are still out there on the Internet somewhere, crunching/pivoting/sorting data, day after day, quietly churning through numbers no one knows exists, automatically shading and formatting acres of highly complex multi-tabbed spreadsheets that no human eye will ever see.
In addition to this master class in excel, I’ve long worked with databases, Visio, MS Project, and many other software tools related to data flow. At an executive level, I used these tools in any number of ways to assist with decision making with budgeting, project planning, hiring and much more. Data is what allows the business equivalent of IFR, or “flying by numbers”, flying the plane without needing to look out the window. If you are good at assessing your situation based on numbers, that is often all you need. “Hey look, our wages are too high for our sales. COGS is too high. Margin is too low. We’re overstaffed.” It doesn’t matter what it is, if it’s important, it’s reflected, somewhere, in the numbers.
Cost per day budgeting
Data is very malleable, in that you can take it, bend it around and use it for different purposes. As a simple and useful example, consider “cost per day” budgeting, something I think is a brilliant analysis tool for homesteads. Take all of your costs and turn them into a daily cost. That’s all there is to it.
Let’s look at a vehicle. If your car insurance cost is $1,000.00 per year, we know that your daily cost is $2.74. Let’s also allow $1000 per year for maintenance. If we spent about $200 a month on gas, that is $6.57 per day. At minimum, we are looking at $12.05 per day to insure, maintain and drive our truck.
Having done this exercise, I now know that it costs me about twelve bucks per day to have and drive the truck. It is pretty easy to visualize the spending of twelve dollars, relative to my overall bank balance. If you do this for all of your costs you will get a much clearer picture of things.
Personally, when budgeting, I like to visualize a small group of personable yet shady gangsters who show up at my house at the end of the day. “We’re here for the cash, Walker!”, they say. “It is time to pay up.”
“Alright, come in. Wipe yer friggin’ feet.”
“Twelve bucks for the truck.”
“Ok, here. Take it. I like the truck.”
“And I want six bucks, or you’ll freeze to death this winter.”
“Fair enough, six bucks to not die sounds quite reasonable.”
“Fourteen bucks, or we TAKE your LAND!!!”
“What’s this for again? Who are you?”
“Property tax, my man”, he chuckles. “Those pothole filled roads ain’t cheap ya know.”
“Alright, here, fourteen bucks. You gonna pay me for the leaf spring I blew on a pothole?”
“Haha, no. Not for fourteen bucks a day.”
“Christmas. Fourteen bucks.”
“Ok. And who’s that besuited dandy you’ve got with you?”
“We call him Smoky. Tobacco and tobacco related products.”
“How much does HE want?”
“Well, let’s just say he’s taking property tax and Christmas out to lunch.”
“Somewhere nice, man. Somewhere real swanky. Salad forks and all.”
And so on.
Analyze & categorize your expenses
Of course, you can drill down deeper. To take groceries as an example, you could organize by type, and know exactly how much chicken costs you. Or meat, generally. You can do this with paper products, produce, dairy. The data is all there in the form of your grocery bills and receipts to do whatever you want with.
From a homesteading perspective it makes a lot of sense to look at your store bought expenditures in order to be aware of your costs.
You may very well find that your dairy expenditures justify the cost of a cow, or that your bacon expenditures easily justify raising a pig. You may find that it makes a whole lots of sense to buy a half tonne worth of apples to make juice with, because your kids go through it in sufficient quantity.
Use your data to make confident purchasing decisions
With the proper numbers to back your decisions you can do more extreme things with volume purchases, crop planning, and even lifestyle adjustments, confident that your actions are backed by sound numbers. I find it very satisfying to do things that make people ask, initially, “What the hell are you thinking?” but turn out beautifully, because the math was done properly. Data is a beautiful thing, and I am continually surprised at what it can show you.
Of course, the ultimate goal of data is to get to the point where it is no longer necessary! Once you’ve got your systems dialed in as a result of good, concrete data, maintaining those systems becomes that .. maintenance. You never have to think about how much you are spending on nice cheese, for example, because you now have a cow, and fifteen aging cheese wheels, because a cow turned out to be 37% cheaper than your dairy expenditures, and you get unlimited cheese. The evaluation only needs to change if some variable changes: cheese crashes in price, feed costs escalate, you get imprisoned for selling deadly raw milk to your neighbor, etc.
So do the numbers. Get out there. Buy a cow. When your significant other freaks out at the unexpected bovine arrival, show em the numbers!
“Did you buy a cow?”
“It’s 37% less costly AND we get all the dairy we can handle!!”
“Who’s gonna milk it?!”
“Traditionally, it was the female. The milk maid.”
“That is bullshit. We don’t even have a fence.”
“Foraging is 88% cheaper.”
“We still need a fence.”
“Can’t we just let it loose in the back woods? Rope her in, or, somethin’??”
“What about a milking stall?”
“I did get a stool.”
“So I have to milk them outside? In the cold?”
“Well .. it’s not the Ritz, dear. We ARE homesteaders.”
“Where the men organize and the women work.”
“Don’t be so rude. I saved us 37%.”
“What about the 10,000% extra work I have to do?”
“That’s a different number set entirely. I can’t speak to that.”
“When do we get cheese?”
One final thing to note. If you want to deceive yourself, DATA is a great way to do it. You can take small numbers and magnify their importance. Conversely you can minimize the significance of other data, or rationalize it away as being insignificant. Numbers only mean something if you are honest with them, with what they mean. Take wall street, GDP numbers, inflation rate calculations: all of these are examples of numbers that have been fudged to such an extent as to be near worthless. As they say in programming, politics, and commercial sanitation: garbage in, garbage out.[jetpack_subscription_form title=”Subscribe Now” subscribe_text=” Never miss another article or announcement. Sign up for Walkerland’s FREE email subscription and stay connected!” subscribe_button=”Sign Me Up”]
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