The dynamics of money and TIME: crimping cashflow for a period

[TiminOz]

Hey all!
I decided to ask this here because I think it takes a particular kind of 'mind' to analyse this question beyond a shallow approach.

I don't think many people are good at analysing the interaction of time and money, but having asked questions on here before, I reckon a lot of you ARE.

It's a question about the consequences of crimping cashflow for a certain time.

To keep it simple I'll use a common household example.

Example

Let's say:
1. A house pays its rent on the 10th.
2. The person managing the house asks for the rent 10 days early
3. Let's assume there are no savings in the bank, only fortnightly income
4. What are some of the likely consequences of this for the person who's money is 'tied up'?

What are the effects? Is it as simple as the average punter assumes?

Some would claim this has no financial effect, because 'they have to pay the money regardless...they are just paying it at a different time'. I'm wondering if this analysis is a bit shallow!

Others point out that the person is losing interest on their money during those few days, but they'd say it's negligible.

But what about other dynamics?

If during those 10 days, the person has to pay other bills, is it possible they would run short of money during that time and have less to spend? (i.e they suffer a financial burden).

Perhaps a good exercise is to try out the classic 'extreme case':
if you were deprived of your money for (not just a third) but for most of the month except, say, three days, would it make life difficult?

General principles of deprivation of cashflow?

What about other dynamics?
1. What are the general consequences of crimping cashflow for an individual?
2. Does the intensity or character of the consequences change over time?

I admit I'm not great with this type of time-money analysis, which Is why I'm asking the ASF brains-trust!

I expect this has been studied by someone. If someone could list off a few commonly-known principles, that would be very interesting!

Ethico-legal concepts

I'm also interested in any ethical-legal implications you know about.

I do have some small knowledge of law and I know the law recognises the concept that depriving people of their own funds unduly draws a consequence.

I know Chat GPT is not reliable, but this account DOES nicely indicate the general 'philosophical thrust' of this.

ChatGPT

A conversational AI system that listens, learns, and challenges

chatgpt.com

Does anyone have specific knowledge of some key legal principles around this?

 

[TiminOz]

TLDR version:
1. What are the general consequences of crimping cashflow for an individual?
2. Does the intensity or character of the consequences change over time?

Example:
1. A house pays its rent on the 10th.
2. The person managing the house asks for the rent 10 days early
3. Let's assume there are no savings in the bank, only fortnightly income
4. What are some of the likely consequences of this for the person who's money is 'tied up'?

Some might say "this has no financial effect, because they have to pay the money regardless - only the time is changed".
Others point out obvious things like (small) loss of interest on capital .
But it also seems that if other bills come due during that period, the person may have to go without to pay them.
Be interested to hear from people who understand the dynamics and principles of money being tied up.

 

[divs4ever]

TLDR version:
1. What are the general consequences of crimping cashflow for an individual?
2. Does the intensity or character of the consequences change over time?

Example:
1. A house pays its rent on the 10th.
2. The person managing the house asks for the rent 10 days early
3. Let's assume there are no savings in the bank, only fortnightly income
4. What are some of the likely consequences of this for the person who's money is 'tied up'?

Some might say "this has no financial effect, because they have to pay the money regardless - only the time is changed".
Others point out obvious things like (small) loss of interest on capital .
But it also seems that if other bills come due during that period, the person may have to go without to pay them.
Be interested to hear from people who understand the dynamics and principles of money being tied up.

wowee ! back when i was living 'pay-check to paycheck , i always tried to pay rent one month in advance ( and have a little cash stashed outside of the banking system )

now sure that worked MOST of the time , but yes 'interest-loss' wasn't a huge amount for me ( cheap digs ) but might be for those with a family and a reasonable domicile

now because 'my cheap digs' resulted in close neighbours , (in lower economic circumstances ) some of them resorted to illegal activities , so there were 'losses' inflicted on other residents/businesses in the area (contagion effect ? )

more obviously there would be a hit to 'economic activity' in the other areas ( of various types ) from reduced consumption , and businesses forced to give extended credit ,a boost to the local pawn-shop , perhaps ( i hold CCV and CCP )

but then you have the converse side of loss of profits caused by keeping 'adequate liquidity ' close and personal ( as a safety buffer v. the impact of seeking emergency credit as needed )

micro-economics to be sure , but when you are living in 'basic-wage world ' can become major impacts on your normal lifestyle

 

[TiminOz]

Just for the record, the rent in the example would still be paid one month in advance.
But the housemate would pay it 10 days before it's paid to the agent.