Update on cash flow

Hello everyone,

Here is an update on our cash flow situation. We are paying off any credit card debt we incur by setting aside an equal amount of cash to pay for variable expenses. That’s positive. Fixed expenses come straight from our paycheck. 

We are still in a negative cash flow situation but have a plan to turn it around and a time frame. The amount is much less than before. One of my favorite books, Outwitting the Devil by Napoleon Hill, says the key for any goal to succeed is to have a definitive purpose, a plan no matter how poor the original plan may be, and persistence. Plans will get better as more information becomes available. A time frame makes the goal complete. One of my friends graduated with an MBA in Leadership. She’s a huge fan of Mr. Hill. People at the highest levels take what he says seriously. 

One way we have found that works for us is to set aside cash every week for our personal expenses. There are four of us in the house. These personal expenses include haircuts, clothes, shoes, massages, electronics etc. I have also started setting aside money for house maintenance, auto maintenance, and 1% as savings every week. We feel much better knowing how much we can spend and having that cushion available. We no longer have guilt on spending money on ourselves. I will soon be adding a fund for travel and iPhone upgrades. We also have a special fund that I haven’t decided what to do with yet. I keep track of the funds by using some basic accounting and physically counting the money every week. The leftover from our cash budget goes into our emergency fund. As I said our stress level is much reduced. 

I was supposed to keep track of our detailed budget this week. Totally flunked this month. I aim to do better next month. 

Two of our credit cards are off balance transfers and now incurring higher interest. I am not happy about it. Our plan is to refinance or house, withdraw equity, and pay off most of our credit card debts. The cash flow boost will be immense. We will be in a similar fix next year when student loans come due. Once the refinance goes through we will devote 100% to paying off the debt. 

Our long term goal is to save for a house. I have heard that lenders are requiring 20% down and 6 months of mortgage payments before agreeing to a loan on a new mortgage. Regulations and Credit are too tight. Ridiculous. A housing downturn for the USA and other countries is near according to Armstrong Evonomics. 

Stay strong. 

Vijay @ smilingdad