Five Ways to Drastically Improve Your Cash Flow Today
Posted by jefferson on Dec 11, 2012 in Eliminating Debt | 66 comments
When you make the commitment to get control of your finances, one of the first things that you have to do is to take a no-holds-barred look at your budget. When we did this, we found that we had so many financial obligations each month, that our entire paychecks were pretty much spoken for the moment that they hit our account. Many folks find themselves in an even worse situation, with a monthly cash flow that is actually in the red. If this sounds like your situation, then you may have reached the point where it is time for drastic action. We all know that operating with a negative cash flow is not sustainable, unless you are the US government (sarcasm, obviously) .
Of course, I should note that if you are in debt, fixing your cash flow is only the beginning. Moving from the red into the green doesn’t mean you will suddenly be empowered to go out to eat every night or start shopping at the high end department stores. Instead, it means that you the extra money that you have can be applied to start eliminating your debt, so that you can improve your cash flow indefinitely.
Start Hustlin’ For Additional Income
It takes a multi-tiered strategy to start bringing balance to your budget. One of the best places to start is to try to find ways to increase the amount of money you have coming in. The ability to scrap and scramble for extra income should be a weapon in everyone’s arsenal. My own skills in this area didn’t really mature until I had children, but I have learned to pull a few rabbits out of my hat from time to time. We documented one month where found ourselves hustling a great deal, back in August.
The term “side hustling” is meant to describe money that is earned outside of your normal employment. This can include taking on additional work (like perhaps delivering flowers around Valentine’s Day), converting your natural skills and hobbies into side income, or locating focus groups or online survey companies that will pay you for your opinions.
Sell Your Stuff
In addition to taking on additional work, many people are sitting on a pile of cash and might not even realize it. A big part of getting out of debt is shifting your mindset away from thinking that material things can bring you a lasting happiness. If you have items in your home that you are not using, you should be willing to explore selling these items in order to bring about a better financial situation. We did this recently when I made the decision to sell my electric guitar and amplifier, that I wasn’t using at all. It wasn’t an easy thing to do, but the money raised brought us that much closer to becoming debt free.
Ask For a Raise
Perhaps even before you start selling your things, it would be wise to find out if you are maximizing your earning potential in your current job. Wouldn’t you find it a bit frustrating if you learned that your co-workers was making more money than you for doing the exact same job? It is a fairly common occurrence, and is certainly worth your time to look into.
Even if that doesn’t describe your situation, you shouldn’t be afraid to ask your employer for a raise if you feel that you deserve one. Even if your true motivation is to help improve your family’s cash flow, your appeal needs to be based on real world job performance, and you should be prepared to state your case as eloquently as possible.
Slash Your Expenses
The first three examples referenced above are all related to finding ways to increase the amount of money flowing into your budget, but just as important in the process is finding ways to cut your spending. We dedicate a lot of time here at See Debt Run talking about the ways that we have driven costs out of our monthly budget, and nothing should be off-limits. Take a look at your bills one by one, and comparison shop where applicable. Are you really watching all of those television channels you are paying for? Is there any reason why you keep your home phone line around, when you and your wife both have cell phones? Would you consider keeping your home a few degrees cooler in the winter in order to save some money?
Of course, the cost savings opportunities extend far beyond these fixed costs. When it comes to your expenses for food, gas, clothing, diapers and more, take a long hard look at where your money is going to see if you can find better and cheaper ways to get things done. The archives on this site are full of great ideas if you need help getting started.
Refinance Your Home Loan
We recently wrote about how we ended up refinancing our home twice in just over a year, because the savings and overall effect on our monthly cash flow was just too good to pass up. If you haven’t considered this option for yourself, I cannot recommend strongly enough that you at least take the time to look and see what rates are available. It only takes a few minutes to check out a site like Mortgage Rates Canada, to help and see what effect a refinance could have on your family’s cash flow.
When we first refinanced over a year ago, we were amazed at how low the interest rates had dropped. When we looked again just a few months ago, they had dropped considerably further. The net effect of our refinance was that we were going to save over $50,000 in interest payments over the life of the loan. If you combine the mortage savings (MortageRates.ca) with the additional income and spending reductions discussed earlier in this article, your cash flow situation can start improving rapidly, and then you will be well on your way.
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We’ve done almost all of these things. The raise was a ‘sorry, but nobody is getting them now’ answer but other than that, we have done everything you suggested. Hopefully they’ll come through with the raise soon which will definitely help
Michael @ So You Think You Can Save recently posted..Keep The Outside Air Outside
Sadly, that is fairly common in today’s world. Hopefully the next time raises come around you get hooked up, Michael!
We thought about getting our home refinanced, but now that we know that we want to move out in 2014, we are not going to. We need to start saving for the next house!
Michelle recently posted..Buying a House at 20 (How I did it)
Are you leaving the STL, Michelle?
These are all great tips and I think I’ve completed all of them except selling my stuff. I know I should really get on this one! Maybe around Christmas when I’m off work I’ll get some stuff together to sell.
Jordann @ My Alternate Life recently posted..My Debt By Numbers
It has certainly been a combination of all of these that has allowed for us to make the progress that we have!
I have the appraiser coming over today! After that then hopefully the rest of the refinance process will go quickly. We won’t be saving a ton (as we’ll be adding PMI to our payment which we didn’t have before due to the USDA Rural Development loan rules) but even after adding PMI we’ll still save $75/month (and we don’t have to pay anything for our refinance).
It’s pretty cool knowing people that can offer no-cost refinance options (which is only a viable option in certain situations…most of the time you’d just want to pay the refi costs out of pocket).
Jason @ WSL recently posted..US Bank FlexPerks® Travel Rewards Visa Signature® Card
Oh heck yeah, Jason!!.. I am happy for you guys! It feels good to look at the numbers, and realize how much you will be saving long term.
We’ve done almost all of these things. I think that too often we focus on just the cutting expenses as a way to have extra money when you need that & bringing in extra cash to really make some headway.
John S @ Frugal Rules recently posted..10 Ways to Stretch Your Grocery Budget
Totally agree, John… Earning in extra money, especially if you can do it regularly, is a very effective part of this!
Nice tips Jefferson. I have done all of these except for the refinance. We have plans on moving within the next year or so and the break-even point with closing costs does not go in our favor.
Grayson @ Debt Roundup recently posted..Save For Retirement or Pay Off Debt?
I can understand that.. We have to stay in our house into next summer to reach the break even point..Of course, we already got to skip a mortgage payment, so we may already be there..
I love the “sell your stuff” tip. The people who have the most to gain from this tip are typically people who have been around long enough to accumulate a lot of stuff… and those are the same people who typically have no idea how to use sites like Craigslist! Oh the irony. Thanks for the great tips!
You are so right, Joanna.. If you are one who accumulates “things”, chances are this habit has gotten you into financial trouble.
I try to check in every couple of months and see where I need to adjust my budget and plug the leaky holes. Grocery is one of my biggest challenges, but it gets better every months so that’s something. And of course there is my rent..that looming expense, but it’s the hardest one in that I love where I live so much. Sigh…
Budget and the Beach recently posted..Week in Review 12/11/12
Groceries is our biggest challenge as well.. Because it is so variable, and we try to keep it healthy (and we don’t really eat out).. It is certainly the one that we pay the MOST attention to, as has been well documented here at SDR
I agree about doing both. Raising income and cutting expenses are both equally important. You won’t get anywhere by doing one without the other. Our income is lower this year, but I’m working to increase it.
Midlife Finance recently posted..Dealing With The Holiday Guilt
Exactly.. A balanced approach is the right way to tackle any of these types of problems.
You forgot to say “BECOME A RICH AND FAMOUS BLOGGER!” Lol. But seriously, there’s no money in blogging…
We just ReFi’s and are saving $205 a month! And once PMI is gone, we’ll be saving over $500 a month. It definitely worth the effort, not to mention the long term interest savings!
Jacob @ iheartbudgets recently posted..iPad 3 Giveaway!
Yeah.. Not so much, Jacob
If there was serious money in this game, we would be out of debt already!
That will be great when you guys finally get to ditch the PMI.. that is nasty stuff.
Congratulations on the savings from refinance. That’s a significant amount! We didn’t want to refinance because we only had 11 years left on the loan and didn’t want to start over paying mostly interest. Fortunately, the credit union that holds our mortgage had a program to drop the rate of the existing loan for a one time $750 fee. Our payments instantly dropped which was wonderful!
Kay Lynn recently posted..Take a Vacation…For Your Health!
Wow.. what a great program that is, Kay!!.. I wish all loans had a similar option to help cover you in the event that rates continue to drop.
I am ebay whore. Selling lots of little things really adds up!
L Bee and the Money Tree recently posted..December Goals
We go through phases… I have some “Ugly Christmas Sweaters” that I am hoping to list in the next few days..
Selling your stuff is one that works for us. I think we would be lost without Craigslist!
Mackenzie recently posted..Caramel Apple Cookies
I love Craigslist as well and have certainly made some pretty decent cash on there in the past!
Nice tips. I would throw in selling products on Etsy. If you are handy or crafty in the slightest, you can make a lot extra money selling stuff on Etsy, especially around Christmas.
Kyle James recently posted..4 Ways to Finish Christmas Shopping and Avoid the Mall
Yeah.. Great tip, Kyle. Many folks have skills that they can convert into extra cash in their free time, and etsy is an excellent platform for that!
I don’t have much stuff to sell (living in big cities has forced me to rent small spaces and thus not acquire much) but I definitely agree with using your talents to earn extra money! It’s a double bonus if you can make money doing something you love like, in my case, writing.
Shannon-ReadyForZero recently posted..Introducing Two New Resource Centers… for Career Tips and Relationships/Money Advice
I think that many of us bloggers hope to convert something that we love (writing) into a bit of extra cash. It feels great to get paid to do something that you love.
Good tips! I always love the advice “sell your stuff.” It’s so freeing to start getting rid of things. I have empty cabinets and I couldn’t be happier about it!
Holly@ClubThrifty recently posted..Club Thrifty: Turning Our Dreams into Reality
Us too, Holly. It always feels great to get rid of your stuff and pass it along to someone who needs it (and lighten your load in the process).
I find the best place to start when it comes to improving your cash flow is to work out where your money is going in the first place. I do this by tracking my expenses daily and then auditing my own spending monthly. I find it is the easiest way to keep your finances on track and remove any of those pesky spending leaks.
Glen @ Monster Piggy Bank recently posted..Has Christmas Become too Commercial?
Yes, Glen.. Step one has to be a detailed examination of your cash flow, to find out where you are. You might be surprised at how much you actually spend on some things.
These are all great ideas that can, as you say, drastically improve your cash flow. Long-term cash flow may not be an issue, but short-term there are many reasons people may need a bump. I am big on side income right now, especially since I do not have children and we are both young adults looking to set a solid financial foundation.
DC @ Young Adult Money recently posted..Is Collecting things a Waste of Time and Money?
Side income has been huge for us throughout this journey, and we never stop trying to find new income sources!
Asking for a raise is one thing people should do more often, as long as they’re prepared with facts and not just an emotional argument.
AverageJoe recently posted..The Worst Gifts Ever: Crystal Frogs, Re-gifted Candy and More Bad Holiday “Fun”
Most people seem scared to do this, in my experience.. What are they afraid of? Being told no? It is certainly worth an honest effort.
Great tips. Already doing my side hustle and with a little effort I cut my phone bill in half ! Woo hoo!
Nicely done, Gillian!.. You can cut many of your bills in half if you set your mind to it.
50k savings in interest payments from refinancing? Now there’s something to be very happy about
I’ve done all of the above, still trying to figure out the side income hustle.
Veronica @ Pelican on Money recently posted..Has Your Boss Been Naughty or Nice?
The side income hustle is something that we are always working on.. Don’t be afraid to get creative!
I would have never guessed that blogging would be my side hustle someday. But I treat the money as extra, so our budget remains the same and we are able to bank it all. Money in, money out is such a simple formula – it makes me wonder why people get it so confused.
My Money Design recently posted..Retirement Saving Starts Now! Where to Begin
I realized long ago that writing online wasn’t going to any real wealth, but any and all extra income can help accelerate your goals
These are awesome ideas, and I’ve done most of them. Right now I am working on the ‘extra income piece’ and will look to refinance again here in the winter (for the 2nd time) if rates are lower.
Jason Clayton | frugal habits recently posted..50 Side Business Ideas – You Can Start Today
Yeah, those rates aren’t going to be climbing any time soon, Jason, with the economy still in tatters. But I wouldn’t wait too long!
Great tips! Budgets get a bad rap, but I find them freeing. I’m a financial advisor, so maybe I’m just weird.
Earning a side income and selling your stuff are definitely a good way to raise some cash fast. Plus, whenever I go through my things and see how much stuff I don’t use – it serves as a good reminder that I already have a lot and don’t really need more “stuff”.
Shannon @ The Heavy Purse recently posted..A Few Good Posts: A Weekly Roundup
We are still in the midst of a massive purge of things that we don’t need. We have already sold/donated a ton of things this year, but I still feel like we are just getting started.
When my mom started to fall behind on some bills she refinanced her mortgage and began saving almost $400 a month on it! Especially with the internet there are plenty of side projects you can get involved in with whatever skills and talents you possess, very important if you’re working toward paying off debt and such.
Kelly@Financial-Lessons recently posted..5 Simple Tools to Make Business Email More Secure
Very well said, Kelly… If the math doesn’t add up, then you just have to make some changes..
We’ve done all except re-fi, we’re only 2.5 yrs into our mortgage so it just doesn’t make sense yet. I do need to sell some more stuff though! I would also add selling gold jewelry. I had a few broken necklaces, and old band from a broken ring and some pieces from my childhood that had no sentimental value to me which I sold for almost $200.00.
Catherine recently posted..Fun and Frugal Dinner Parties
If you aren’t using things.. Sell them. If they aren’t worth anything, give them away. It is easier for me than some people, because I don’t really get all that sentimental about material things, typically.
Yep, we’ve done all except refinance and I’ve never asked for a raise in salary but every penny counts. Having something on the side that can earn you a bit of cash is not a bad thing at all.
Canadian Budget Binder recently posted..Winter Vehicle Maintenance… Costing You Less In The Long Run
You have NEVER asked for a raise in your salary??.. Well, you certainly ought to give that a try, my friend. I assure you that co-workers are probably being more assertive.
Asking for a raise and refinancing my mortgage are on my to-do list for the new year. With rates the way they are today it can’t be a bad idea to try and refinance no matter how long you’ve had your loan!
The First Million is the Hardest recently posted..How To Save $700 By Switching To A Prepaid Smartphone
It doesn’t cost anything to run the numbers to find out what kind of an impact a refinance can have. It never hurts to take a look.
Finding a side hustle is something that my wife and I are working on. She’s thinking of selling some scenic vacation photos online. I’ve got an idea for a low capital side business that I really would like to take a stab at.
Justin@TheFrugalPath recently posted..Finding Your Path To Financial Independence
And of course, your blog is on the way to being massively successful, amirite?.
Having ideas like this and the ability to carry them out is what makes this country great.
I’ve done most of these but have not asked for a raise. My Boss woud laugh me out of his office! I teach Middle School Science and because of cuts in funding to education at the State and local levels have not received a raise in 6 years! Having said that, everyone has their own situation and I am trying to develop a business so that I can have an additional source of income.
Paul @ The Frugal Toad recently posted..The Ultimate Gift: Teach Your Child Problem Solving Skills
Yes.. I feel you, Paul.. That is the sad reality of this terrible economy. Many industries are feeling the pinch and don’t feel the need to offer financial incentives to keep their employee happy. That is especially true for many government jobs.
I asked for a raise once. My immediate line manager agreed, but couldn’t get his Director to sign it off…was a little disappointed.
I also need to get organised a sell a bunch of my junk. More for my own sanity, than the cash injection.
Great tips, keep up the good work.
Jamie Dickinson recently posted..New Christmas Deals and Vouchercodes
Corporate politics play a lot in whether or not raises are granted.. It can be quite frustrating having to play the game up the various levels of management!
I definitely need to sell my stuff, especially my clothes. But I don’t want to bother with selling everything online. I might check out consignment soon.
Christa recently posted..Investing in Health: Losing Weight Post-Baby
Hey this is a great post. I think everyone could use some more cash in their pockets, especially this time of the year. Happy Holidays.
Tahnya kristina recently posted..My Wish List and Holiday Shopping Tips
This is something really valuable.Thanks and keep sharing.
Finance recently posted..5 Ways to Take Control of your Group Insurance Quotes and Renewals
Jeff,
I really enjoyed your article, you certainly have valid points and suggestions which I endorse.
Guillaume recently posted..The proof of the pudding is in the eating, so ……