Cash Flow Management
Credit cards, they are the problem for most consumers when it comes to cash flow management. If you cannot pay your credit card bill on the due date then you are having trouble with cash flow management. It is that simple. The standard rule is that you should not be charging anything to a credit card that you do not have the cash to pay for when the credit card statement arrives. This includes Christmas and other holidays such as a vacation. Credit cards carry high interest rates for any unpaid balance. If your cash flow management was difficult before, then it gets worse when you also have to pay interest on the debt. Especially if the interest charged is at 20% or higher as in the case of store based credit cards.
Cash Flow Management : How to Manage
If you are having difficult managing your money, the first approach is to put your credit cards away and pay cash for everything. It will be a difficult period since you still need to repay your credit card debt, but at least it will not grow or continue at the level that it is currently at. If you are collecting points towards airfare, hotels or even cash, forget it. The interest you are being charged will be more than what you will save using a these points. Once the debt is repaid, then continue paying cash for everything. If you do not have the cash, they it means you should not be spending that money since you do not have it.
Cash Flow Management : Set a budget
This is often very difficult for many people. You need to decide how much you will spend on discretionary things such as entertainment and eating meals out. Pay your mandatory bills first and then all of your groceries and things that your children and family need. Everything else is discretionary and you need to make sure that you have enough cash to pay for everything especially as you near the next payday.
Develop an emergency fund and also a fund for savings that you want to save for, whether it is a vacation or something special that you need to purchase. Continue to pay cash and focus on cash flow management to avoid further debt.
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May 19th, 2016 at 6:39 am
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