A not too often used phrase but one with as much meaning today as it was long ago is Making Your Nut. Simply put it means that a person has the money that will be needed to pay the bills that are due. But where do terms or phrases like this come from? Here is the accepted version of the origin of this one:

Back in old England is the origin this phrase. There were gypsy circuses that would travel from county to county entertaining the townspeople. Before the city fathers would allow them to set up camp, they would come to an arrangement as to how much the circus would pay the city in taxes for the privilege of setting up. Once this amount was agreed upon, the city sheriff would take the large nut that secured one of the wagon wheels on the biggest circus wagon.

Until the circus was able to pay the amount, they would not get their nut back. This way the traveling entertainers could not sneak away at night without making payment.

Today this phrase is used when discussing whether or not there is enough cash coming in to pay your bills. As in ‘Because of too little work this month, it will be difficult to make our nut.’

Although we don’t often hear this phrase being used the situation is probably more common to most of us than we want to acknowledge. While taxes are inevitable (Another common phrase even today: ‘Only two things are certain  Death and Taxes’) we do have control over our other financial obligations: bills, loans, credit cards etc.

Here is the question Would you be willing to pay more taxes if you didn’t have to? I can’t imagine anyone answering Yes to that question.

Question Two  Would you be willing to pay more to your credit cards and loans (auto, student, personal) than you have to? Again  who would say Yes? And yet so many of us do pay more, everyday, month after month.

While the things that make up taxes are sometimes hard to break up (schools, city, county,etc) and we have no choice but to pay what we owe, the same is not true with our loans. Any loan mortgage, auto, student, personal  is made up of principal and interest. The principal is a true obligation that needs to be met. But the interest is money we agreed to pay in order to stretch the payments out over time. Now I am not telling you something that you didn’t already know. And yet it is all a matter of focus.

In today’s world our focus is directed to the monthly payments. Buy a car and the salesperson asks what you can afford monthly. Qualifying for a home loan is based upon your monthly payment ability. Can you make the Nut? What is just as important to our financial well-being is another number we have chosen to not focus on is the total cost of ownership  or the total amount you will have paid by making the monthly payments as they are laid out in the loan agreement Principal plus Interest.

Most loans allow prepayment of the loan without penalties which simply means pay it off early and reduce the overall total cost of ownership. Pay less interest. After all if we would not voluntarily pay additional taxes why are we so willing to pay additional interest. It is money you will never see again, your hard earned dollars going into someone else’s pockets and it just makes it harder to Make Your Nut each month.

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