Financial Advice

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Disco
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Financial Advice

Post by Disco » 22 Nov 2015, 11:22

Thought I'd throw this out there and see if anyone else is as hopeless with their cash as I am :lol:

I have a bad habit of living off my credit card, over spending and then paying off the overdue chuck of the credit card of when I get paid and it's a shitty way to live, so I've been tightening up the purse strings lately. Ideally I want to get myself into a position where my credit card debt is zero (luckily that's not far for me) and I'm being more responsible with my cash.

Hopefully this will mean if I get invited on a night out I'm not concerned about having zero cash (only credit card monies), and can deal with those unexpected bills that come up, or the splurge on something nice that I might like.

I've gone through and organized all my necessary expenses which was a good start, and taken all bills and direct debits from my credit card onto a debit card instead, which should allow me to get ahead in those and build a reserve of cash as well - this means that I'm putting more onto my credit card than taking off which is a good step. I've also cancelled any unnecessary subscription services, Netflix, websites, magazines etc. in an effort to help too and I'm not blowing my work bonuses on shit anymore, better things to do with them!

So what do you do to help your cash flow, any tips?
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Nekosan wrote:
29 Mar 2018, 00:36
Disco is fkn banned from the flamethrower. :lol:

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Eppiox
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Re: Financial Advice

Post by Eppiox » 22 Nov 2015, 11:37

One of the people I used to work with would put their last weeks pay into two accounts, one was for spending like an allowance one was saving & bills. (they had a mortgage).
An old friend used to write in a little pocket book (pre-smart phone era) everything he bought.
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Makena
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Re: Financial Advice

Post by Makena » 22 Nov 2015, 11:51

I put a portion of my income into an account I share with my partner, mortgage comes out of that, and we do all grocery shopping, bill paying etc on credit cards tied to this account, and have it set to automatically pay off the full credit card amount on the last day of every month. So on the 1st of the month CC debt is zero again, so we never get out of the interest free period.

But the catch with that is, it wouldn't work well to kill already existing debt unless you've got the cash reserves to just kill your debt.

The remaining money that I don't transfer pays for stuff just for me, video games, food/drink (Unless my partner and I go out to dinner together or whatever), lunches and just general stuff.
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brimlad
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Re: Financial Advice

Post by brimlad » 22 Nov 2015, 13:07

Makena's plan is a good one. Important to have a zero CC debt at the end of the month as that money is very expensive.

to get there Disco pay as much off your CC as you can without starving, having a good budget will keep your CC debt at zero once you get that debt paid.
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CherryRed
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Re: Financial Advice

Post by CherryRed » 22 Nov 2015, 13:28

Just to clarify, because I was nearly 30, already had a house and a mortgage when we met, merging everything seemed both painful and lacking in benefits. It's something we'll do when we buy our next house. Disco and I only have one truly joint account that we both have access to; that's a joint savings account, and it's how we pay for our big "fun" things like holidays etc. We contribute to it every pay and it's in both our names.

We do have an account which I call our "Budget" account which I consider to be joint, as we both put a pre-determined amount of money in it every pay. It covers the mortgage repayment, insurances, utilities, health insurance, etc. This stuff is always paid, and it's not uncommon for me to be in credit with certain providers.

In addition to the budget and savings account, I have a third account which is the only account I own which has keycard access - although it's in my name, Disco also has a card to access this account - it's used for groceries, fuel, chemist, any other miscellaneous expenses that arise from day to day and general spending.

So yeah, when Disco says he's broke, this only relates to his personal expenses (his credit card, mobile, motorcycle, spending, etc) as foods, household bills, mortgage, etc is managed by me.
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09 Oct 2018, 21:26
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Disco
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Re: Financial Advice

Post by Disco » 22 Nov 2015, 13:29

Lol yeah, Mrs Disco is the smart one and she asked sure all the bills are paid

Sent from my Xperia Z2 in my Submarine via Tapatalk
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Nekosan wrote:
29 Mar 2018, 00:36
Disco is fkn banned from the flamethrower. :lol:

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CherryRed
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Re: Financial Advice

Post by CherryRed » 22 Nov 2015, 13:46

Disco wrote:"Sent from my Xperia Z2 in my Submarine via Tapatalk"
That's more obnoxious than my pink text colour ever was. Just sayin'.
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Mugsy wrote:
09 Oct 2018, 21:26
I was raised to not do things I wouldn't want done to myself. And that's why anal sex is off the agenda.

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DarkMellie
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Re: Financial Advice

Post by DarkMellie » 22 Nov 2015, 15:22

I work at a bank in mortgage lending, so I deal with budgets and affordability all the time. I'm on a good wicket myself with a good budget and some pretty clear financial goals between my wife and I. However, when I was younger I had credit card debt that I couldn't shake and I wasn't very good at managing my finances so hopefully, some of the below advice is relevant and not too ignorant of day to day reality.

Any and all advice here is general and not specific to anyone and your circumstances may differ.

The thing that people underestimate the most (because they refuse to look straight at it) is their lifestyle expenses.

Here's what I'd suggest you look at (if you haven't yet worked on your budget) to get to a monthly figure (this is not an exhaustive list);

Commitments and Liabilities - this is the biggest one on the list. Here you have your rent/mortgage, credit card / personal loan / line of credit repayments, HECS/HELP, Court-Ruled Debt, Child Maintenance payments
Utilities - Electricity, Water, Gas, Council Rates, Mobile Phones, Internet, Landlines
Education - School fees, childcare, school activities/sports, university/adult learning
Clothing - for kids and adults
Food - groceries, meat, fruit and vegetables
Health Care - Private health, medicare subsidy at tax time, ongoing medical bills, opticians, dentists, GP visits
Transportation - Petrol, train/bus/tram faires, vehicle registration, regular servicing, other vehicle running costs
Other expenses - entertainment (games, movies, online purchases, etcetera), regular holidays, netflix or other online subscriptions, gym memberships, any subscription or payment not above, coffee at work, lunch at work, random crap you buy

The correct calculation for monthly is $X * frequency / 12. So if you spend $40 a week on petrol, that's ($40*52)/12 = $173.33 (if you just multiply a weekly amount by 4, then in this instance you'd get $160). If you spend $200 a fortnight on food it's ($200/26)/52 = $433.33 (not $400). This makes a big difference, obviously.

Most people find it really, really hard to calculate that last expense and again, it's because it can be painful to look at it directly. It can also be hard to just do this as an exercise on your own but trust me, it is worth doing.

Okay, you calculate all of that to get your monthly living expenses. Sure, there are things you could cut down on but don't worry about that for now.

Now take a look at your monthly net income, subract your total monthly living expenses and see if the figure left is a positive or negative i(t's likely to be a negative if you overuse your credit cards or other lines of credit). Doing your budget is all about going through the above living expenses list and determing what is your absolute priority.. so things like paying your utilities and your liabilities and your food/transport and so on. Take the monthly figure of your absolute priorities and subtract that from your net monthly income. This figure is your lifestyle cash and is money you can now start to make choices with. For some people, that will translate into fun stuff which is fine (because you've already put aside money for groceries and bills so who cares). For others, this will be the money they use to improve their financial health (by getting on top and in front of their liabilities). Either way, the key here is to not keep blindly swiping your card until your purchases are declined.

Some options for that lifestyle cash are;

Rein in your lifestyle expenses - buy fewer games (or buy second hand), drink more water, make lunch, buy transport in bulk (bulk anything makes so much more sense when you have a budget and stick to it)... this is the hardest to do but are also the easiest things to ultimately let go of, considering what you can do with the money instead. Even if you don't do the above budget, just seriously think about what you spend from the start to the end of day. If you're just buying lunch and drinks, you're probably looking at $60 a week minimum which is $260 a month you could be using to knock over debt (which in turn will save you thousands over the life of that liability).

Pay down your credit card - my suggestion for anyone doing their first budget who has a high limit/owing credit card is to make this your priority. Suck funds away from entertainment and from whatever is spare and knock your card down. If you find it difficult to not re-spend, call your bank and lower the limit each time you pay it down... force future-you to go without... cut the card in half, remove it from Steam or any other online service, forget you ever knew your 3 digit code by memory and keep reminding yourself why you're doing this. Credit card statements will even show you now how long they'll take to pay off at the minimum monthly amount and it costs you many thousands of dollars to keep ignoring this. This is an area that's exactly as Disco describes... people have a card at the limit, they pay it down, then use it again... that never-ending cycle can cost you thousands in interest and fees.

Double down on your mortgage or other liabilities - my wife and I lived frugally for the first 6 years of our $205,000 home loan and after just 10 years of owning it we had $40,000 owing. This gave us a $250,000 to put towards our new house which, after just 12 months, is already $30,000 ahead. Keeping in mind I get a good salary, but we still live well within our budget so while the numbers will vary, the overall experience of being on top of your loan will not. You can call your bank and ask these questions as to how much of a difference it can make and the figures are ridiculous (we've saved probably $300,000 in interest over 30 years by doing that with our first loan). Factor into your budget the ability to repay as much in advance of your loan as you can. Keep in mind though that there are limits to repayment amounts on Fixed Rate loans. Something that worked for us at the time was fixing around $80,000 of the mortgage and letting that tick over while we smashed down the variable rate amount... and because it was a smaller amount we could see it going down quicker which then motivated us to pay even more until eventually it was gone and our fixed came out of term and we did the same to it.

Pay early, look for options to save: As it says. There are some reasons to do things like only pay your CC bill on the last day its due, but to me, the discpline of budgeting is further reinforced if I pay bills when I receive them and if I'm given the option to save money by paying in advance (like council rates or drivers license renewal) I'll always take that option.


Anyway, bit of a splurge there, i hope it's useful to someone and if ever you want to talk generally about banking or mortgage lending, hit me up :)
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Nekosan
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Re: Financial Advice

Post by Nekosan » 22 Nov 2015, 17:31

So uhhh.. let's say i have 50k sitting in the bank Mellie, what am I best off doing with it?
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CherryRed
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Re: Financial Advice

Post by CherryRed » 22 Nov 2015, 17:35

^listening, seeing as I'll have that and then some come March!
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Mugsy wrote:
09 Oct 2018, 21:26
I was raised to not do things I wouldn't want done to myself. And that's why anal sex is off the agenda.

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Disco
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Re: Financial Advice

Post by Disco » 22 Nov 2015, 18:48

I like your advice Mellie, luckily I'm not in any financial drama but I think that I do want to prepare moving forward although honestly my biggest test is spending on shit I just don't need, but I also have a lot of disposable income that could be better spent on getting rid of my credit card.

I found it really interesting that you could lower the link on your credit card, I honestly didn't know that was a thing! I'll focus now on getting off the credit card and paying it off, should have all sorted in the next 6-12 months and be cash positive.

Gotta save for that Rolex somehow!

Sent from my Xperia Z2 in my Submarine via Tapatalk
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Nekosan wrote:
29 Mar 2018, 00:36
Disco is fkn banned from the flamethrower. :lol:

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DarkMellie
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Re: Financial Advice

Post by DarkMellie » 22 Nov 2015, 19:33

Nekosan wrote:So uhhh.. let's say i have 50k sitting in the bank Mellie, what am I best off doing with it?
It entirely depends on your financial goals!

If you wanted to save, you could pop it in a higher yield online account but the money is readily available, so if you lacked discipline you might put it into a term deposit. Outside of that (like, investing) I'm not much help.

If you wanted to buy a house, there's a few factors to consider;

* what's the price of the house? This determines your Loan to Valuation ratio (LVR) which in turn determines whether you have to pay Lender's Mortgage Insurance... it also tells you whether you have enough saved (for example, on some loans the maximum we will lend is 95% of the purchase price).

* how were the savings arrived at? This is important for demonstrating they were genuine savings, so a lucky punt at hte Melbourne Cup wouldn't be considered as genuine.
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acegiak
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Re: Financial Advice

Post by acegiak » 22 Nov 2015, 20:11

Honestly one thing I would totally recommend checking out for anyone trying to get their finances in check is:
The Financial Diet on Youtube
The production and content are just super well designed and make it way easier to not only pick up the stuff but also understand it and feel cool about using it, even if some of it is a bit US centric.
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Chucky
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Re: Financial Advice

Post by Chucky » 23 Nov 2015, 10:36

Disco wrote: I've also cancelled any unnecessary subscription services, Netflix...

So what do you do to help your cash flow, any tips?
Not Netflix Disco?!? :shock:

I would have suggested something similar to Eppiox in relation to having another account to save money, as it worked for me over the past few years. But after reading CherryRed's post, it sounds like you guys have more accounts than most, so I don't think that is going to assist.
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PinothyJ
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Re: Financial Advice

Post by PinothyJ » 23 Nov 2015, 19:38

Bet it all on black…
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Disco
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Re: Financial Advice

Post by Disco » 24 Nov 2015, 15:45

Chucky wrote:
Disco wrote: I've also cancelled any unnecessary subscription services, Netflix...

So what do you do to help your cash flow, any tips?
Not Netflix Disco?!? :shock:

I would have suggested something similar to Eppiox in relation to having another account to save money, as it worked for me over the past few years. But after reading CherryRed's post, it sounds like you guys have more accounts than most, so I don't think that is going to assist.
Yeah I just can't find enough content on the Australian version to make it worthwhile, which is a shame - and because I play using Chromecast it was all just too hard in the end to watch other regions so I gave it the flick.

I've contacted a few of the local credit unions and I'm really surprised by how much better the rates they're able to offer are - I'm chatting to one at the moment to consolidate my personal loan and my credit card - into a much lower interest rate account and a lesser payment period. So by spending an extra $50 p/w, I can pay it all off in 4 years rather than 6 - this seems like good value to me.

I'll also reduce my credit card limit, and reserve it only for big things/emergencies, like car/bike rego etc. and cap it at $1k - and once that's sorted I should be right as rain with about $300 p/f cash in hand for spendings/savings after I pay my bills, not bad I think!
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Nekosan wrote:
29 Mar 2018, 00:36
Disco is fkn banned from the flamethrower. :lol:

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Disco
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Re: Financial Advice

Post by Disco » 01 Dec 2015, 12:39

Well all things are looking good now! Interestingly, I managed to save a few hundred bucks in the coming months by cancelling all my subscription services, and then being offered the ones I want back at a lower price than I was paying originally or getting a few months thrown in for free.

Pretty happy :D
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Nekosan wrote:
29 Mar 2018, 00:36
Disco is fkn banned from the flamethrower. :lol:

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Yurtles
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Re: Financial Advice

Post by Yurtles » 01 Dec 2015, 14:06

Ooooh, I can sense that garage sale I've been waiting for coming on. Get all your cool junk together Disco, I'm going to buy me some!
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PinothyJ
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Re: Financial Advice

Post by PinothyJ » 01 Dec 2015, 22:15

My business partner and I bought a laser cutter and now I am poor :(. Why!!!!!!!!!!!!!!


I miss you, money…
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kharis
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Re: Financial Advice

Post by kharis » 01 Dec 2015, 22:52

My son is saving up for a wiiu so im selling his pokemon cards fof him. Little bugger has $320 so far and a couple of thousand cards left (or there abouts) like I didnt have enough to do...
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Makena
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Re: Financial Advice

Post by Makena » 02 Dec 2015, 08:25

kharis wrote:My son is saving up for a wiiu so im selling his pokemon cards fof him. Little bugger has $320 so far and a couple of thousand cards left (or there abouts) like I didnt have enough to do...
"I'm sorry son, we only raised $12 from your cards. No, mum's new computer is unrelated"
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CherryRed
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Re: Financial Advice

Post by CherryRed » 02 Dec 2015, 08:41

kharis wrote:My son is saving up for a wiiu so im selling his pokemon cards fof him. Little bugger has $320 so far and a couple of thousand cards left (or there abouts) like I didnt have enough to do...
I really like what you're doing here though... much better than just buying it for him.

A friend of mine has a 'chore chart' for her son who is 6 or 7, he isn't assigned chores BUT each chore has a value (ie: take rubbish out = $1, Make bed = $0.50, sweep the kitchen floor = $2, help with baking for school lunches = $3) and at the end of each week he gets his pocket money based on how much he helped out that week. She then asks him how much he wants to 'bank' and to begin with she suggested he should consider saving half. She said most weeks he banks everything, and he checks in with her on the balance and every few months he buys a heap of cool Lego shit etc.

She said she almost never has to get up him for there being a mess anywhere, he can now fully make all of the morning tea baking she just has to put it in the oven/get it out for him, etc.

Funnily enough, her 'mummy friends' crucified her when she told them she was going to do this and said she was teaching him that he should only help around the house if he is paid to do so; I can sort of see their point, but I think she's doing wonders for teaching him the value of money and that it doesn't simply grow on trees.
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Mugsy wrote:
09 Oct 2018, 21:26
I was raised to not do things I wouldn't want done to myself. And that's why anal sex is off the agenda.

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Disco
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Re: Financial Advice

Post by Disco » 02 Dec 2015, 09:11

Yurtles wrote:Ooooh, I can sense that garage sale I've been waiting for coming on. Get all your cool junk together Disco, I'm going to buy me some!
Hell no :lol:
CherryRed wrote:Funnily enough, her 'mummy friends' crucified her when she told them she was going to do this and said she was teaching him that he should only help around the house if he is paid to do so; I can sort of see their point, but I think she's doing wonders for teaching him the value of money and that it doesn't simply grow on trees.
I wish my parents had tried teaching me about the value of money, luckily I'm not in a hole or anything like that but I could still be much better off financially if I'd had a better understanding of finances and money about a decade ago :lol:
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Nekosan wrote:
29 Mar 2018, 00:36
Disco is fkn banned from the flamethrower. :lol:

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kharis
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Re: RE: Re: Financial Advice

Post by kharis » 02 Dec 2015, 09:59

Makena wrote:
kharis wrote:My son is saving up for a wiiu so im selling his pokemon cards fof him. Little bugger has $320 so far and a couple of thousand cards left (or there abouts) like I didnt have enough to do...
"I'm sorry son, we only raised $12 from your cards. No, mum's new computer is unrelated"
Who told you? Image no unfortunately hes very ocd and knows exactly how much is missing and what its been sold for. He also got some money to take to school to get an icecream and he bought that home and put it in the wiiu envelope. Hes a good boy
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PinothyJ
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Re: Financial Advice

Post by PinothyJ » 02 Dec 2015, 10:18

CherryRed wrote:
kharis wrote:My son is saving up for a wiiu so im selling his pokemon cards fof him. Little bugger has $320 so far and a couple of thousand cards left (or there abouts) like I didnt have enough to do...
I really like what you're doing here though... much better than just buying it for him.

A friend of mine has a 'chore chart' for her son who is 6 or 7, he isn't assigned chores BUT each chore has a value (ie: take rubbish out = $1, Make bed = $0.50, sweep the kitchen floor = $2, help with baking for school lunches = $3) and at the end of each week he gets his pocket money based on how much he helped out that week. She then asks him how much he wants to 'bank' and to begin with she suggested he should consider saving half. She said most weeks he banks everything, and he checks in with her on the balance and every few months he buys a heap of cool Lego shit etc.

She said she almost never has to get up him for there being a mess anywhere, he can now fully make all of the morning tea baking she just has to put it in the oven/get it out for him, etc.

Funnily enough, her 'mummy friends' crucified her when she told them she was going to do this and said she was teaching him that he should only help around the house if he is paid to do so; I can sort of see their point, but I think she's doing wonders for teaching him the value of money and that it doesn't simply grow on trees.
Later on, in the kid's teens, would it not be more beneficial to have base chores and have money assigned for any additional housework undertaken? It strikes me as something that would prepare them better for life.


Shrugs…
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