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By Jessi Fearon 9 Comments
Before you get out of debt, you need a positive cash flow. You will not succeed in paying off your debt if you do not first have a positive flow of money every month.
Back when I was struggling with my debt, I had zero positive cash flow for the month because my bills and minimum payments were taking all of my cash. I had to put groceries and fuel for my car on credit because I had absolutely no cash to purchase them with.
In The Total Money Makeover *, Dave makes baby step number one, establishing a $1,000 emergency fund before you even start attacking the debt monster. It is crucial that you have money ready and waiting for emergencies before you start paying off your debt.
This is where the concept of paying yourself first comes in. You pay yourself first by putting money away in your emergency fund, retirement, investment accounts, or other savings before applying money elsewhere.
It is all about baby steps, and if you are joining in on my 90-Day Savings Challenge, you will be taking baby steps toward saving more cash for that rainy day. That rainy day will happen, it absolutely will and do not think for a second that it will not.
If you are struggling as I was with zero cash flow, you will have to work hard, and by hard, I mean you will have to work your butt off. You need to find ways to generate enough cash to throw into your emergency savings by:
- Selling items that you no longer use.
- Picking up extra hours at work.
- Getting a second job. (See my Work that Side Hustle post)
- Letting go of items that are costing you too much.
- Using tax refund or other “free” money.
- Finding ways to save money on everyday expenses.
I started with selling off items I no longer needed and no longer used to jump-start my savings goal. I tore through my apartment finding all sorts of goodies that I could sell off. I did not make a large profit but it started the process.
I picked up extra hours at work when my office was remodeling and needed extra hands with painting and moving furniture. It was anything but fun but it helped me get a little bit closer to being able to breathe without feeling the weight of my financial burden.
I even got a second job for a short while. You do not need to work at a second job forever. Go into the job knowing that it is only temporary and set a goal for yourself that once you reach it you can quit the second job. I only needed to work at the second job for a month before I was able to reach my goal and quit. Make sure you are kind enough to the employer to let them know that this is a temporary job for you.
Just this year, I had to give up something that I thought I loved in order to take one big stab at the debt monster, my Mac-Daddy Tahoe. It was a difficult decision to give up that Tahoe, my dream car, but I knew that it was only hindering our debt-free strategy. Getting rid of my Tahoe allowed us to slash over $18,000 of debt in a flash and freed up so much money every month that it felt like my hubs got a raise.
There really is no such thing as “free” money but there is money that appears to be and it can be a great jolt towards reaching your savings and debt free goals. Start applying any and all extra money towards your goals as soon as you receive it. (Think bonus money from work, cash back earned from Ebates *, Swagbucks *, tax refund, etc.)
Lastly, you can start trying to save money on your everyday expenses by calling your utility providers, cutting coupons, meal planning, or making commonly used items homemade. Saving money can sometimes be no fun but it is a means to an end, not the end itself when trying to slay the debt monster.
Take control of your money and start bringing your money out of the red by having a positive cash flow. This is where the debt-free journey starts, without a positive flow of money. Your debt-free journey will fail before you even leave the starting line.
What are ways that you bring more positive cash flow into your budget?
Check back tomorrow for another post in our 31 Days of Real Life on a Budget series!
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