Rule Register: Accounts And Reserves

R04 / Keep Assets, Debt, Income And Expense Distinct

Type: Definition. When: Before assessing wealth, cash flow or an acquisition.

Action: Use a balance sheet and a cash-flow ledger with consistent boundaries. Distinguish asset value from its financing and operating costs.

Exception or boundary: An item can have value while consuming cash. An ownership interest already valued net of entity debt must not have that same debt subtracted twice.

Check: Reconciliation to statements; every amount has a date, owner, unit and source. Basis: M01-M03.

R05 / Choose A Reserve Policy Through Exposure

Type: Design rule. When: When setting a cash target or evaluating a recurring commitment.

Action: Set an explicit reserve floor using income reliability, dependents, health, fixed bills and access to funds. Test several disclosed shocks.

Exception or boundary: The chosen floor is a household policy, not a scientifically established universal number. A temporary shortfall calls for revision and support, not blame.

Check: Minimum projected cash; first reserve breach; first unfunded need. Basis: M02-M04.

R06 / Compare Debt Paths On Cost And Feasibility

Type: Conditional recommendation. When: When there is cash available beyond essential obligations and the chosen reserve policy.

Action: Compare feasible repayment schedules, interest costs, fees and adherence burden. Keep required payments and urgent consequences visible.

Exception or boundary: Rates, promotional expirations, arrears, secured debt, benefits and tax treatment can change priorities. No universal rule requires every debt to vanish before all long-term saving.

Check: Actual payment schedule, total modeled interest, cash floor and completion. Basis: S05; M05.