Money is easier to hold
than to write down.

Income enters at the north end as a stream. Spending leaves through a pipe near the bottom. The level of the lake is your balance.

Hold the lake. Now hold the stream separately, because the stream can stop and the lake can still be there. Now hold the pipe. You have never seen the pipe, and you do not need to know where it is yet, but you must know that it is there.

The one in your home is your rent. He lives where you live, and you pay him for that. The one down the street is your utilities: he doesn't live with you, but he is always nearby and he is always awake. The one who owns the grocery store is your variable spending. You go to him; he does not come to you.

The size of the bucket is the amount. Go to the man in your home first, because you cannot skip him. Then the man down the street. Then the grocer, with whatever is left. This is the order of needs, and it never changes.

Envision the three buckets side by side. Now envision them empty, on the shore, waiting for next month. They are the same buckets. This is why a budget repeats.

Envision the man in your home lending you a bucket. Each month you give it back slightly fuller than you received it. The extra is interest. He then lends it to you again, because that is the arrangement.

If you have borrowed several buckets, stack them, with the one that must come back fullest on top. Pay that one off first. This is called the avalanche method, because when you pull the top bucket off the stack, envision the stack falling on the man.

He is not a mouse. He is a dentist. He is standing slightly too close to you, and he is the one who decides how much fuller each borrowed bucket must come back. Envision his teeth. Count them. That number is your APR.

He does not need a costume. You will not forget him. If he smiles wider, that is a variable rate; the number changes while you are counting it. Do not let him smile wider.

Do not connect it to the first. The stream does not feed it; you fill it by carrying buckets, which means it fills slowly, which is correct. Nothing leaves this lake unless something has gone wrong.

Now envision the ground between the two lakes. It should be at least three months wide. If you can see across it, it is not wide enough.

The gumball is your limit. You may chew as much of it as you like, but whatever you chew, you must give back at the end of the month, and you must give back a little more than you chewed. If you chew the whole thing at once, you will have to make more of your own gum to chew later, while also giving gum back to your lender, and there is only so much gum a person can make in a month.

Chew a small piece. Return it in the shape you received it. Envision the gumball whole again. It is not the same gumball, but it is the same size, and that is what matters.

Both are fragile. Both are overpriced in today's economy. Both are worth the most on the day you get them and less every day after, and both need care to keep them from losing value faster than they should: heat and safety for the egg, maintenance for the car. Neglect either and you are left holding the shell.

The eggs come from somewhere. You will meet where in Lesson 14; until then, hold the eggs without knowing their origin, which is how most people hold them. The car does not come from anywhere. Hold it anyway.

One has a wallet. The other has a detailed, accurate, fully audited description of a wallet, prepared in good faith and containing no errors. The description is true. The description is also not a wallet.

Only one brother continues, and the booth does not care which one was more honest.

A payment due today is a man already standing in your kitchen. A payment due in ten years is a man ten years of walking away, and the road slopes uphill, and the slope is the interest rate. He arrives smaller. The steeper the slope, the smaller he arrives. This is discounting.

Nobody is stealing from the man. He is simply walking uphill, and that costs him some of himself.

It floats on the first lake. Each month, one more bucket goes into the boat instead of to a man. The men are still there. They are in the boat with you, because you will still owe them when you retire; the boat is how you will keep paying them once the stream stops.

Left alone, the boat gets bigger. You do not build the larger boat; it grows around the one you have, a little each year, faster toward the end. This is compounding. Envision the boat at year ten, twenty and thirty as three outlines around the boat you are holding now. They are one boat.

But now you need to worry about leaks. A leak is a fee. It is small, and it is constant, and it is below the waterline where you would not look for it. A leak of one percent sounds like nothing until you envision it for thirty years, because the boat that would have grown from what leaked does not grow. Envision thirty years. Envision the boat the whole time.

One works the ground floor, one works the fortieth. The fortieth-floor washer is paid more, and the extra money is not for the washing. The washing is identical. The extra is for the height.

And note: if he could somehow wash the fortieth floor while standing on the ground, he would be paid the ground rate immediately. Nobody pays you for a danger you found a way to remove.

If all forty get laryngitis on the same night, you have no choir. So you hire thirty-nine singers and one horse. The horse cannot sing. That is the entire point. The horse does not catch laryngitis, because the horse was never participating in the throat economy.

Your choir now sounds slightly worse on an average night and is never fully silent on a bad one. You paid nothing for that. Note that a second horse helps much less than the first horse did.

Each flock is a company. You cannot buy a turkey; you buy a portion of a flock, and the flock keeps the turkey. The flocks compete for the same buyers: the meat processors, such as Crazy Dirk's Turkey Lounge on the Dover side, who sell on to restaurants. When restaurants order more, the processors buy more birds, the flock is worth more, and so is your portion of it.

The price of a portion is not what the flock is worth. It is what the next person will pay for it, which is what they think the restaurants will order next year. Envision that person. Envision what they are envisioning.

It is your lake, the first one. The names are posted on a sign in the parking lot that everyone read on the way in, beneath the prices of the two flocks. You may still fish. You will catch fish. You will not catch surprising fish, because the surprise was priced into the sign.

You only get an edge three ways: you know a fish the sign doesn't list, you own the only boat that reaches the far end, or you're willing to fish in weather that sent everyone else home.

It also converts a small wobble at your feet into a large wobble at your head. Same wobble, longer arm. Twice the ladder is twice the fruit and twice the wobble.

And note the two separate ways this ends badly: the ladder can be structurally unsound, in which case you were never going to make it, or the ladder can be perfectly sound and your arms simply give out this afternoon while the fruit is still right there. Those are different problems, and the second one kills more climbers.

Every year the painters come, and every year they quietly take four inches off the far end while repainting the rest so it looks new. Your hallway is the same shade it always was, and it is shorter.

There are three painters, inflation, taxes and fees, but look closely and it is one man working three shifts in different hats. That is how he affords the paint.

The price of the room you are in is not the door fee. It is the second-best room you could have been standing in instead. So a room is not good because it beats standing outside in the rain. A room is good only if it beats the next-best room.

This is why people with many excellent rooms available to them are so hard to please, and why they are correct to be.

The raccoon guards the trash magnificently. The raccoon guards the trash from you. At no point did the raccoon breach its agreement. You paid it to be near the trash, professionally, and it was.

Every financial disaster is a room full of people who were exactly as near the trash as they were paid to be.

Carry it to Finance Your Way, Dover location, from the first lake, not the second. We are not a man; we are closer to the stream, in that we come to you and you do not have to go anywhere. Hold the bucket while you decide. It counts. (No relation.)

Before you decide, apply Lesson 18: the price of Module Three is not the bucket. It is the second-best course you could be holding instead. We have envisioned it. You will prefer this one.