The Secret to Staying Out of the Red and in the Black

Don't spend money that hasn't entered your bank account yet. Ariya J/Shutterstock

When I am not writing about personal finance and consumer debt, I knit. Something about the gentle rhythm of yarn and needle calms my spirit and unwinds my brain.

I have managed to finish a few projects, not because I’m a great knitter but because I can “tink” almost as well as I knit (knit spelled backward is the process of undoing your stitches to fix a mistake).

Because all knitters make mistakes, tinking is a required skill for those who take the craft seriously. It doesn’t take too many oversized sweaters or undersized hats to figure out that the smallest error at the beginning of a project can produce disastrous results if not found and corrected.

Just 2 Options

Money is a lot like knitting. By some miracle, all knitting consists of just two stitches: knit and purl. Likewise, with money, you have two options: spend or save. And who among us can say they have never made a financial error? We all make mistakes, but the secret to staying out of the red is correcting the little mistakes before they lead to disastrous results.

In both money management and knitting, the more you practice, the fewer mistakes you‘ll make. And the more success you’ll enjoy.

If you’ve ever found yourself in the red, it is likely that you didn’t land in that position overnight. Rather, it was a series of small, uncorrected mistakes that, over time, escalated to the crimson condition.

1 Small Mistake

As a college freshman, I made the mistake of thinking I could get away with spending money before I actually had it. The first time I dared to write a check for more money than I had in my account, I was nervous. But I figured with any luck, my next paycheck would get to the bank before the one I was about to write. It’s a chance I was willing to take.

Actually, my little plan worked perfectly. My paycheck did get there first, and no one was the wiser. So I pulled that stunt again and again. I got caught from time to time but cleverly concluded that I wasn’t really overdrawn; I was just underdeposited!

In time, I moved my antics from my checking account to a bevy of credit cards. I allowed myself to believe that as long as I could get away with it, it was OK to spend now and pay later.

Here’s my point: I didn’t start out in the red. But that one small mistake repeated over and over again led to debilitating debt that changed my life. Had I corrected my thinking early on, I could have saved myself from the disastrous results that were to follow.

Many people—in fact, the majority—aren’t in particularly serious financial trouble. They flirt with the red zone from time to time, teetering between red and black and spending all that they make. For them, being in the red is an attitude that keeps them from making financial progress.

Simply Wait

Waiting is a concept we are careful to teach our children. Too bad so few of us practice what we teach. Simply doing nothing—waiting—is likely the most efficient way to change your mind from red to black.

Wait to spend your tax refund until you actually have it in hand. Ditto for the next commission check or bonus. Wait to buy until you’ve saved the money to pay in full. Let money sit in the bank for a while. Savor the feeling of being in the black.

Thanks to the consumer credit industry, waiting to buy until you can pay in full has become socially archaic. But so what? Patience is a virtue. Waiting builds character. It’s good for the soul.

Now, if you will excuse me, I need to get back to my knitting. I have a tiny mitten to finish for a very special little boy whose favorite color just happens to be red!

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