I promised you yesterday we would talk about what to do if you are cash flow negative. Remember, that being cash flow negative means you spend more than you earn. It's likely that you are cash flow negative because of your discretionary spending habits (rather than your nondiscretionary expenses). If you are cash flow positive until you reach your discretionary purchases, then look for places you can reduce. Maybe you should discover gas station coffee rather than designer coffee. Or you could eat a few less meals out, or take your lunch to work. Perhaps you should go to the mall or home shopping channel or amazon.com a little less. We are doing cash flow analysis (not budgeting), and it's your decision.
What if your nondiscretionary expenses are too high? This is more complicated. Here, you may need to do a combination of approaches. First, cut some of your discretionary spending. Then, look for adjustable nondiscretionary expenses. Turn off lights when you leave the room, buy regular gasoline not premium, and cut back on the cable premium channels. If you are still in trouble, cut more discretionary expenses and look at replacing cars with less expensive models.
If this is too painful, your other option is to earn more money. Maybe you want to keep your lifestyle more intact, and you would prefer to add an additional income to your household (through a first or second job by a family member). This may be an option for you.
Often, these approaches are sufficient, but sometimes, they are still not enough. If you are really in trouble, who can you trust? We will talk about that tomorrow.
Be prosperous!
Peggy
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