Monday, May 21, 2007

The Perfect Storm - Checking Account Style (or, it's all about cash flow!)


I suppose I have gotten a pretty good handle on my finances over the past 5 or 6 months, so my charting in spreadsheet and log form has pulled back to a less difficult rate.

Because I have tuned my IRA and stock plan contributions to pretty close to "peak" my contributions, I have to be a bit careful with my cash flow. (my budget supports the expenses, but only if they come in sort of staggered and not at the same time)

As with any budget, you have to be careful with spending since your current savings account is probably higher than you expect given some of the expenses that were "baked in" but that have yet to be realized. (like real estate taxes that hit once a year, or car insurance which is the same)

But once you get the total income / spending budget in balance, you still need to watch monthly cash flow. One of the levers you have to "fix" this is your credit card....not by pushing things off to the point of paying interest....but to decide to pay something now or defer it for a month.

But be forewarned.....you can not defer things for ever.....this is a once in a while way to push payments out.

So the way I do this is to have a mental picture of all my expenses, current and future. I then have an idea of the amount of money I have in the bank, and how money is flowing in and out. (is the total increasing or decreasing over the next couple of months)

If I see a situation cropping up where I am short some money in a month...I might choose to defer a payment by slapping thing so on the credit card. (again, only if I know I will not be creating another "bubble" a month from now when I have to pay that)

Well, everything was going along fine until I ran into an expense I forget to consider. That expense was my own school tuition.

I forgot because "most" of my tuition is picked up by the place I work. But this only happens after I submit my grades. I generally choose to have my tuition bill deferred by the school until after grades are available...as that is as easy to do as giving the school $100 and showing them that the company I work for has a tuition payment plan.

So I did that last semester (about $2600), and the bill is due June 2ND. I then received the bill for this semester, which I have decided NOT to defer....and that is for about $1300.

I had planned on paying for Kristen's field School (about $1800) and Kimberly's summer classes in Copenhagen. (about $9800) with the former being paid by check and the latter a deferred payment of my AMEX card from last month.

I screwed up.....I still have the normal payments like my mortgage and car payment coming due early next month, and now I have to go in and really sharpen my pencil and check on a day by day basis. (to see when my paychecks are going to hit the account and so forth)

In the long term, this is not an issue...my budget is a good one, it is mostly a matter of cash flow. (actually, last month I had planned on needing to take money from long-term savings/investment....but an unexpected profit sharing bonus at work made that requirement unnecessary.....so this really is just a cash flow issue)

I need to perhaps create a cash flow spreadsheet to make all of this easier to track. Cheryl used to do this by simply listing it all out on a month by month basis on paper....I sort of do it in my head now....which is obviously not good enough!

Oh well.....live and learn!

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