Helpfull hints to find loss areas (Finding Money).

Lets see if we can discover some real cash flow together.

First as we discussed before, we must stop using debt to meet our needs.

Second we need to establish a sound budget.

People tell me all the time why they cannot do a budget or why “Budget’s don’t work for me”.

Sorry folks, that is a Copout!

Lets start with a reflective budget instead of a projected budget.

We can always look back and see what we did easier than trying to look into the future.

Just keep receipts for everything or write down what we bought. Then add them up at the end of the month and Presto,we have a reflective budget.

If we do this for several months in a row we can clearly see where our money is going.

 We Must Establish an emergency cash reserve!

Without a cash reserve to fall back on we are always on the edge of being forced back into debt.

When we find some loss areas and  begin to recapture these dollars, we must set them aside until we have an emergency cash reserve of at least $2,000.00, that way if the car breaks down or the hot water heater blows up, we have money to fix it instead of going back into debt.

This reserve must be replenished immediately if used for emergencies.

That way we always have a hedge against new debt.

The number one reason people fail to get out of debt is lack of an emergency cash reserve!

OK, where is this money coming from ?

There are many ways we can find cashflow without resorting to eating bean soup.

Lets start with tax returns. Most families get back $2,000.00 in tax return.

Can we, if we are strugling or desiring debt relief, afford to make intrest free loans to IRS? That’s right, if you are getting a tax return you are loaning YOUR MONEY to IRS interest free for a year.

Ok, how much do you get back on average? $2,000.00 We  need to INCREASE how many deductions we claim on our w-4.

We do not want to end up owing IRS so we take $2,000.00 -$200.00= $1,800.00

Divide  by 12 Months = $150.00 per month freed up in our budget every month by making this change.

First increase deductions by 1 and after 1 pay period figure how much our pay was increased by this change. Next divide that difference into the $150.00 or whatever amount weare wanting to attain. Then claim that many more deductions than before we started. This will ensure we don’t owe given we don’t change any other deductibles on our taxes more than normal.

Now we have freed up $150.00 each month.

Next, If we are struggling to get a grip on our finances consider temporarily stopping our 401k, 403b, 457 or Thrift Savings plan contributions. Even though our employer may match our contribution, if we are struggling stop temporarily, establish a Cash Reserve,  pay down at least all consumer debt and then resume the contributions.

“But everyone tells me not to stop my contributions”.

We must decide if we are going to remain broke like “Everyone.” or become truly free.

With the average family that means another $300.00 per month freed up.

That is a total of $450.00 and we havn’t given up pizza, movies, dining out or anything .

We will explore several more great ways to take control of your financial life next time.

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