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Monday, November 7, 2011

Cash Flow is Key

So you have a budget, or at least you know that you are making at least a little more than you are spending. So why does it seem like you run out of money every month?

Cash Flow.

Do both you and your signot(significant other) use your primary account for flexible spending? Maybe you are in charge of the finances so you know not to do the big grocery trip right before you get paid, but do they know that?

Many of our bills tend to be grouped into one end of the month or the other. The key is to spread out our bill payments so that we can maintain a positive cash flow.

Today's tip:
  • Jot down all your bills (mortgage, car payment, electric/ gas, phone, cable, internet, subscriptions, credit card payments, insurance, and monthly savings contributions). 
  • Divide into two categories so that each side is as equal as possible. 
    • For example: 
      • mortgage/ rent= $1500
      • car payment ($400)+electric/ gas ($200)+phone ($100)+cable ($100)+Internet ($50)+ subscriptions ($100)+credit card ($200)+insurance ($150)+savings($200)= $1500
  • Next, look up all the due dates. Since most of us pay our mortgage or rent at the beginning of the month that will be one major expense allocated to the first half of the month. Next, take the bills that are  due in the first half, and see if you can change their due dates to the second half. Sometimes you can do this right in your online account, otherwise you will have to email or call customer support. There should be no reason why you cannot switch the payment date; just keep in mind, you may end up paying twice in one month when you make the switch.
  • Finally, set up as many of your bills as possible with autopay; this way you won't forget when they are due, and save yourself from late fees as well!
If you are worried that you will not be able to keep track of how much "extra" money you have left to spend on food and entertainment- check out this post for those of us who don't do well with "formal" budgets.

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