Understanding Cash Flow

Cash FlowCash flow is a simple concept, on paper. Cash flow is the net result of the relationship between your income and your expenses. If you have more income than expenses, then you have a positive cash flow. If you have more expenses than income, then you have a negative cash flow.

When I counsel people and talk about the “Math and Discipline” approach to financial health, the “Math” part is all about cash flow. We all have cash flow happening, whether we think about it or not, pay attention to it or not, or manage it or not. That’s one more reason why having a budget is so important, because it sets up structure for our cash flow. A budget sets expectations and goals in order to create positive cash flow each month; and if our cash flow is positive, there’s a good chance we’re at least doing OK, financially.
Continue reading

Netflix and the Proper Usage of Credit Cards

Netflix Credit CardI had a conversation today with someone all about credit cards. There’s an awful lot to be said on the topic of credit cards but let me start by saying this one thing: credit cards are generally a good thing. (A hammer is a good thing, too– unless you’re trying to use it as a screwdriver. We’ll circle back around to that.) Having a credit card helps your credit score, which in turn helps you to not only get loans, but to get better rates on those loans, too. But, on the other hand, if you use that card irresponsibly, then it won’t help you, at all. It won’t help your credit and it won’t help your overall financial health. In fact, it could end up being a significant contributor towards the path of financial destruction.

So what does using a credit card “responsibly” look like? Well, let’s talk a little history. When credit cards first came about, they weren’t meant to be used how many people use them today. When they first came about, they were meant to be used as a short-term loan. In fact, they were only offered to folks who had great credit to begin with, because the credit card providers knew those people would be the best candidates to repay the debt. But in time, as more and more people began to use credit cards all the wrong ways, and as credit card providers started to make a pretty penny off of interest, credit cards started getting offered to seemingly everyone. You didn’t need great credit anymore to get a card. In fact, you didn’t even need to have good credit. So, the credit card industry today looks decidedly different than it once did.
Continue reading

Work Smarter, Not Harder

worksmarterIt seems to me that one of the biggest deterrents to taking control of one’s finances is that it takes some work. Most people really dislike change, in large part because change can have some icky phases in the process. (Contact me and I’d be happy to e-mail you some great information about the process of change.) Often times, we do what we do simply because we’re used to it, whether it’s good for us or not or working for us or not.

Starting a new exercise routine is hard. Dieting is hard. At least, it’s a lot harder than the alternative. It’s a lot easier to just sit on the couch eating potato chips than it is to run on the treadmill and then slice up some fresh fruit to snack on. Well, managing and taking care over our finances can be hard, too, compared to not managing them. It’s a lot easier to just spend wherever we want, whenever we want, as much as we want. But, of course, those choices aren’t without consequences… If we sit on the couch and eat potato chips all day, every day, our health will suffer greatly in time. We won’t look good and we won’t feel good and it will be MUCH harder to repair all the damage we’ve done to ourselves than it would have been to work out and eat healthy in the first place. The same is true of our finances. If we spend without any thought or without any plan, our financial health will suffer greatly, too. We start to get behind in our payments and maybe start to rack up credit card debt to try and bail out our sinking ship and it gets MUCH harder to get our finances back under control.
Continue reading

A Word of Encouragement

walking-into-sunshine“Be Well” is just about a month old now and eight posts in to what I hope will be a long, educational road. If you are reading this, thank you for taking the time to stop by here. If you find what you read here to be useful and/or beneficial to your financial life and financial health, please invite others to read here, as well.

When I’m counseling people, I share with them that I come to this line of work from what I call a “checkered” financial past. In all transparency, I was a total mess. I was a reckless overspender who did so without either thought or a plan. I know what it’s like to have utilities turned off. I know the weight of carrying a mountain of debt. I even know what it’s like to have your car repossessed (hint: it’s not fantastic.) Though I can’t relate to everything that every, single person might be going through, financially, I certainly feel like I can relate to a lot of it.
Continue reading