Cash flow hole

shakinros · January 2015

Longtime lurker, occasional commenter, first-time poster here. Hello!

H and I have a persistent cash flow issue that I can't seem to get out of. Back in May, we bought our first house. We moved in August after some DIY renovations. All settled pretty quickly afterwards, but those months were like flinging money out the windows.

Since probably Sept, we've been in a cash flow hole where I end up borrowing about $1000 from our savings for bills at the end of the month. Then when H gets paid on the 1st, we pay it back in full. We'd be within our budget with a little to spare each month if we didn't always start $1000 in the hole.

What would you do to fix this?

als1982 · January 2015

Are these home purchases (big or small, anything from a new broom to a new couch) or just your regular bills?

I'd suggest you start with posting your budget, and everyone here can help you identify possible places to make cuts or look for better deals.

ETA: Welcome, and glad you're posting!!

hoffse · January 2015

I agree you should post your budget.

This happened to us too when we first bought the house, simply because of the timing of the bills. I ended up moving some money from savings permanently to fill in the hole, and then I paid our savings back over time with money left over.

Money is fungible, so it doesn't really matter how you do it. Just be diligent to make sure your savings cushion doesn't drop too much before paying it back.

Wulfgar · January 2015

Sometimes you have to space out repairs or wants over time instead of trying to do everything up front. MW bought a 1920's house and we are just now getting room in our budget to tackle some of the larger needs and we have been in the house for 7 years.

Mom987 · January 2015

I know what you mean. We had a lot of expenses in December (not just Christmas, but DH's bday, two driving trips to see family and car tags are also in December) and are still catching up.

shakinros · January 2015

Wulfgar said:
Sometimes you have to space out repairs or wants over time instead of trying to do everything up front. MW bought a 1920's house and we are just now getting room in our budget to tackle some of the larger needs and we have been in the house for 7 years.

These were repairs we did before moving in last summer. Can't take it back now!

I will post our budget tomorrow. It's too much to type on mobile. To add info though, we're within our budget each month if you look at just the month's spending/earning. I guess I was asking more of a strategy question:

Would you do as @hoffse‌ did and take the chunk out of savings so as to stop the borrow/payback cycle? Then pay back e-fund slowly?

Or keep the process as is and try to reduce the deficit by $100-200/mo?

Or not worry about it because the budget is fine and this is just part of cash flow management?

Mom987 · January 2015

If I had 3-4 months of savings I would borrow from it and get it paid off.

formerlyGDaisy09 · January 2015

this has been happening to us recently, just based on when H is paid and when our mortgage payment is due, I'll often have to float $500 from savings for a few days so we don't overdraw our account when the mortgage is due. I'm slowly decreasing what we transfer to savings for a few months to fill in the hole.

Erikan73 · January 2015

Can you pick up some extra hours at work or use your tax return (if you are getting one) to get back on track? Also maybe consider a part time job. I know holiday seasonal jobs are over, but maybe check to see if there are any businesses that start up in the spring like garden centers as a way to make some extra money. Then you might also be able to get a discount on things you had planned to buy for your yard too.

Xstatic3333 · January 2015

We are in a $200-$300 cash flow hole from Christmas. I just way, way under budgeted, probably because I don't want it to be as pricy as it really is. I was going to budget to pay it back monthly, but so far we've had some unexpected expenses (car and dental) that would can cash flow, but at the expense of that plan. My new plan is the tax return. You could also see if you or H has a "bonus paycheck" coming up if you're paid biweekly.

simplyelise · January 2015

We do a zero-based budget each month, but I get paid every two weeks and DH has been out of a job in January, so I understand the cash flow issues. We keep about $1000 padding in the checking account which we don't touch in our monthly budget. It's not our emergency fund (that's in savings) but just a buffer so we can pay rent on the first, etc.

I'd probably just move some money over from savings and then have a schedule for paying it back over a couple months.

shakinros · January 2015

Oh, tax return. I wish you were a thing we still had! Last year we owed $4K (ouch) and this year is shaping up to owe $1500. So, improvement?

I'm still working on it though and hoping to get the amt owed under $1000. Everything happened last year so it's proving difficult to unravel all the pieces. (Moved, bought house, H seems to have been double taxed on about a third of his income by the states we lived in, and so on)

Kahlyla · January 2015

simplyelise, we also keep a $1000 "chequing buffer" to avoid having this happen again in the future.

Basically we made it our goal to fund our e-fund to a certain point, then made the $1000 buffer a goal, then moved back to funding the e-fund - that's what we did on paper; in reality what we did was simply move the $1000 from savings into chequing permanently, then re-padded the e-fund in the months to follow, like @hoffse. We knew the money was there somewhere, and it removed a lot of the stress that the monthly bills were causing.

kmurphy2131 · January 2015

We have a similar problem - when I plan out all the numbers for what we will bring in each month and what will go out we have $X available to transfer to savings but it we end up with it not quite working out because of timing of paychecks etc. I am planning to take some bonus money we got to just leave it in the checking account as extra padding but not to view it as "available" funds. In your case, I would put the money in your checking account, but look at it as a buffer, not as available funds (if that is something you can do).

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