Friday, July 06, 2007

The importance of Cash Flow....

These past two months have taught me the importance of having a reserve of money at the ready because at times it is all about cash flow.

That's right, I had a few unexpected bills pop-up last month that centered around the girls trips to school this summer. I thought I had enough money in the bank to cover it all fairly comfortably, but this month the problem came to roost.

You see I had not considered the increased costs associated with the girls coming home. My weekly food bill rose from about $40 per week to over $100. I even saw an increase in my water and electric bill. (I have only one light on at any moment...)

Anyways, the budget I have crafted has very little wiggle room in it. In fact, if I go by the expected expense levels, I am in the hole at the end of the year. (but I have not gotten to things like paying my house and vehicle insurance....things like that will be what drives the account into the red and will require the selling of a longer term asset)

But those have not come due....and the main issue was not that the expenses I came across were totally unexpected....but they were unexpected in that month....certainly all at one time.

Cash flow....the flow turned into a drip....barely enough to feed the need. Thanksfully, I have not had any emergency expenses.....nothing large anyways. I have had a few unexpected things, but that went on the credit card....which only delays the problem until 30 days from now.

I need to build up my buffer I can survive the ebb and flow of money.

I am going to cut back big time where ever I is the first thing. I am going to try to go a month without buying any food.....basically eat from the cabinets and freezer.

Sound impossible.....not really. I have a number of things in the freezer, and in the cabinets. I might not be eating exactly what strikes my fancy every night....but the checking account will benefit and my fear of balancing the budget week after week will get better. (a small price to pay for lower stress)

Here is a BLOG with good ideas on cash flow. It is written for small business, but many of the concepts are valid for household finance too!

Cash flow is king.....

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