Watching the cash flow ...
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  1. #1
    Registered User CookieLee's Avatar
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    Default Watching the cash flow ...

    I often remind people that being debt-free and putting money into savings isn't the entire story when it comes to financial freedom. If we're not careful we can obligate ourselves to all sorts of recurring monthly payments that hurt our cash flow and give us no freedom to adjust how we're spending our money. Some examples are (keep in mind, I have a teenager):

    ~ allowance for the child/ren
    ~ clothing allowance for the child/ren
    ~ school lunch (no, she doesn't 'brown bag it' because it isn't really an option where she attends school)
    ~ school tuition
    ~ lessons: music, dance, gymnastics, etc. In the case of music lessons, we also had to "rent" an instrument for two years.
    ~ monthly dues / clubs (scouts, for instance, and we belong to a club that means once a month we are going out to eat because that is how the club gets together.)
    ~ subscription services: Netflix, software, contribution pledges / tithe pledge, etc.
    ~ Expanded utilities: electricity, gas, telephone, cell phone - service and phone purchase, internet, cable, satellite, garbage, sewer, water, etc.
    ~ Insurance and warranties: life, house, auto, cell phone warranty, home repair warranty, pet insurance, etc
    ~ Recurring shipments: automatic renewal of prescriptions, vitamin or toiletries on auto-ship, etc. These programs are getting so popular now!
    ~ Other: mortgage, rent, storage unit rent, furniture / appliance rental, on-line game access, and tons more I'm sure I'm forgetting.

    I noticed the last time I went to buy a software package like Microsoft Office, I couldn't just buy the software. They wanted me to subscribe to a monthly service that included "free updates". The trend only continues. It seems every time I turn around we are encouraged to not buy an item out-right to to pay for it monthly. If we're not careful these recurring monthly obligations, while not debt, become worse than debt because they can easily out-strip our monthly net income.

    Have you noticed a slow creep of recurring expenses against your monthly cash flow?

  2. #2
    Moderator nuisance26's Avatar
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    ~No, this is something I avoid religiously. I opt out of everything. My kids aren't in classes. We don't have subscriptions. Nothing is on auto-pay with the payees except DH's cell phone, but I do have my bank regularly pay my mortgage and the car payment. I don't like to have my financial information in anyone's "files" unless I don't have another choice. I don't give regular allowance, but cash for jobs done. I put $25 a month per child in the budget for this and it's working just fine.

    I like to be in control and I like things simple.

    Businesses hate that don't they? Hence the assault on all fronts. ~

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    I try tobe very careful. No one is taking classes and all subscriptions have gone by the wayside.we used to belong to the shooting club but quit and dont even do the Fri night fish frys. No church functions. No donations until DH gets back to work.
    -dont use makeup anymore or creams
    -dont buy cleaning solutions except bleach and vinegar
    -both my kids support themselves
    -I stopped renting movies off On Demand
    -DD is making dog toys
    -I had to get a phone this week so I got a $70. Motorola from Target and a $30. minimal plan. NO upgrades. I used my CC points to off set $26. of the phone cost and then just turned in $16. worth of bottles and cans
    -I have stopped shopping at S.A. its started to be justified entertainment
    -I have stopped giving the Animal rescue donations except for the 3 hrs. a week I work.
    -We are stockpiled and groc. to the max. I have no intention of buying anythind i dont have to in the near furture. CC's are now paying me in points to have them. I have made at least $500.?
    Cable should watch it. I am aiming for "the bundle" next.
    got the consumer gas from $109. to $92. and the electric has held at $135. for 2 reveiws.
    We only water the grass in end of July/August and do all our own lawn care
    I wear some clothes 2x if I not going out and wash less per week,sometimes every other.
    I clipped our entertainment budget to almost nothing and begrudingly bought parks passes for 1 vehicle only.

    Just clamping down even more.

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  5. #4
    Registered User CookieLee's Avatar
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    Good points. I should have added to the list:

    ~ Service workers: lawn care, house cleaner, etc.

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    Excellent post. I think a lot of times once you pay off a large expense, you think you have extra money and start saying yes to small things that start adding up.

    For me, it's definitely helping my kids. My twins are older now and one is completely on her own. I tend to "butt-in" quite a bit and try to help them make good financial decisions. Last year, I contributed to their ROTH accounts because I knew they didn't have the money to max those out. I also know how much I regret not starting my retirement savings until I was in my 30's. Starting a ROTH at 21 is just a giant advantage and I know they will be thankful. BUT, I cannot continue to finance their lives when I should be working on financing my own.

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    If we're not careful we can obligate ourselves to all sorts of recurring monthly payments
    I watch this very carefully - 'monthly' costs have become almost a way of life over the past 50 yrs. Years ago, you paid your car insurance once a year, the newspaper, periodical subscriptions, etc. Marketers learned that "breaking it down" is an effective sales tool - instead of paying $420/yr for your newspaper, it is now 'only' $35/m ('just a little over a dollar a day'). The TV non-profits have locked in on that ploy over the past few years - "for only $19/m you can save puppies, help wounded warriors, stop abortions, cure sickly kids in Africa, fund the ASPCA, save the elephants". Somehow, $19/m (only 50 cents a day) has been calculated to be an optimal request - it sounds minimal (was less than $228/yr), it doesn't carry that annoying 99 cents - ie, it has been very well thought out.

    Whenever I get a marketer call for something that's only $20/m I immediately multiple by 12 and ask '$240 per year, wow'.

  8. #7
    Registered User khaski's Avatar
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    Interesting thoughts. I recently skipped buying a video game for DS's bday because I read carefully enough to catch that to play the game, one HAD to have an 'Xbox live' subscription- it wasn't a buy-and-play. No thanks!

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