Foretelling the future

In 1979, Dan Bricklin and Bob Frankston implemented a computer application on affordable microcomputers which brought the ability to foretell the future into the hands of the average person. Prior to this, such ability was relegated to large, expensive mainframe systems. This became a “Killer App” which sold many home PC’s in its day. The remarkable thing about the application was the fact that the more information it was given by a user, the more accurate the predictions became. Even more remarkable was the fact that the information didn’t need to be that detailed nor even perfectly accurate. Given that every thing we do today affects our future, I consider the ability to be able to see the effects of our actions today as they will unfold to be the most powerful utility my computer can perform. Today, variations of this powerful piece of software can be had for free, and will even run on old, obsolete PC’s dating back to the 1980’s. I did not discover the true power and utility of this powerful application until after my first year of college.

Discovering the tool to predict

My first year of College was cause for a great deal of change in my life, both of how I thought and how I lived. So many things happened so quickly, I lost track of my finances. As I had done in the past, I had quickly calculated on a piece of paper of how much rent I could afford, how much I could afford to spend on groceries, and so forth. As long as I stuck to this budget, I reasoned that I wouldn’t need to worry about cash flow. Imagine my surprise when, a month into the second semester, I had run out of money! I wished I had seen that coming; I would have been able to do something earlier like take on a part time job. Now I was scrambling. Fortunately, I was very resourceful; I got a roommate to help with the rent, I applied for and qualified for a small bursary, and I sold my SLR camera. The bursary was a one time thing, I wasn’t sure if my roommate would be around in the following year, and I really had nothing else of value to sell that I didn’t absolutely need. I certainly wasn’t going to get more money through OSAP in the year following than I got that year. Fortunately, my grades were good enough that I could be a peer tutor for the first year students in my second year, but I still needed some way of ensuring that I wouldn’t run out of money again.

My aging Amiga 500, a computer that got me though the first year in 1993, was no longer up to the task in 1994. With courses like math, communications, word processing, and accounting in my first semester, I managed reasonably well, but my micro computer application course in the second semester required me to spend a greater deal of time in the computer lab at the College than on my own computer. Most of the computers we used were older PC XT’s from the 1980’s, most of which had no more than 640k of RAM; though the College did have a lab of new ‘386’s. I had acquired through my program business applications that ran on a basic 640k PC, but did not run on my Amiga very well, as the Amiga was intended more for games. One of the programs I had learned to use in the middle of my second semester was the Lotus 1-2-3 spreadsheet. Having dealt with cash flow difficulties, I understood the true power and utility of this software which I will share.

I should clarify that spreadsheet software existed for the Amiga as it did for all microcomputers of the day, but purchasing business applications for the Amiga represented another expense. As well, nothing on the Amiga compared to the standard-setting Lotus 1-2-3, dBase, and WordPerfect on the PC that I had at the time. Finally, it was pretty clear that the Amiga had become a dead platform with Commodore declaring bankruptcy in 1994. I had learned to use Lotus 1-2-3, I had Lotus 1-2-3, and I had a host of other industry standard and recognized business applications and programming languages I used in my course that did not run on Amiga, except very poorly with emulation. I calculated the cost of building a working PC from used parts would be more cost and time effective than would be acquiring and learning the equivalent business software for the Amiga, and that a career in the industry would be more promising by sticking to the standards. Amiga was a leftover from my pre-frugal days, and represented a loss I had to cut.

In the fall of 1994, I set out on a mission: With a budget of only $100, I was going to build a usable PC from used components that I could use at home to run the software used for my course. This would save me on bus fare, as I wouldn’t need to make those extra trips to do homework in the computer lab; it also gave me an edge in that it allowed me to practice any time I wanted. I went over budget by $10, but I had built, out of an Epson Equity case and motherboard, a ‘286 PC with 640k of RAM, a 30MB hard drive, a 1.44MB floppy, and a fairly large and pleasingly crisp amber monochrome display. I loaded up my spreadsheet, and started punching in the data.

A mock-up of my first financial forecast

In some cases, I estimated or rounded up an expense or income source; in others, I had the actual figures. In either case, I always rounded up expenses and rounded down income so that any errors would be in my favour (i.e.; I’d end up with more money than I realized). The more information I provided, the more accurate the predictions became. I had discovered that I would, once again, run out of money before the end of the year. The difference now was that I understood how much I would come up short, and what I had to earn each week and each month to make up the shortfall. In the mock-up example above, I’d have to earn another $40 a week to avoid disaster, which is exactly what I did when I took on an extra part time job as a computer lab technician. That was certainly easier than would trying to come up with an extra $1200 in the middle of my second semester. I also learned that giving up smoking would help out quite a bit; this was something I accomplished in my third year.

My frugal tool of choice to manage my finances

My spreadsheet, as demonstrated in the mock-up above, is not a budget; rather, it’s a real-time tool that provides me with an accurate financial forecast. I think of it as a model with which I can perform “What if” scenarios and from which to derive a budget. With it, I have complete control over the financial resources of my future by making educated choices today. Obviously, the spreadsheet I use today has grown considerably from the first one as pictured above, but the beautiful thing is I didn’t have to do it all in one shot. I started out with something basic just like my first one as mocked up above, and as my income and knowledge developed, I was able to build on that. The other nice thing is that even a simple spreadsheet as pictured above would give me a reasonably accurate prediction.

The one thing the spreadsheet brings me is peace of mind. Ever since I started using it, I’ve never come up short on cash. Further, I’ve been able to use it to plan purchases, such as a house, a car, or a new big screen TV. Best of all, a spreadsheet is reasonably easy to learn to use. It does take an investment of time, but I consider it a worthwhile investment of time which leads to a better quality of life.

I certainly wouldn’t recommend something as archaic as Lotus 1-2-3, unless all one can afford is a 640k PC XT; in which case, it works just as well today as it did back when it was new. Chances are good that most people have access to a reasonably modern PC; in which case I frugally recommend LibreOffice. This is a free download from http://www.libreoffice.org/ . The spreadsheet in this package is called Calc. It’s essentially a modern version of OpenOffice and works exactly the same, so tutorials such as those at tutorialsforopenoffice.org will apply. Another option that I”m starting to favour is the spreadsheet app provided by GMail and Windows Live mail. The spreadsheet program runs in my browser, and the file lives on the GMail/Windows Live server.

Learning to use a spreadsheet and then implementing it for my own purposes was another tool that paved the way to future success in my life, and is something I highly recommend to anyone wishing to improve their own future.