The greatest lesson I learned during the recession of the last few years is that cash is king. Property values are still down over 40% in many parts of the U.S., and this heavy supply of homes has led to a dream scenario for cash rich investors. I have always been convinced of the necessity of building substantial cash reserves, but the recession drove that conviction much deeper. In this article, I want to discuss 5 creative ways you can increase your monthly cash flow.
Frugality is the Key:
The word “frugal” scares some people. It immediately conjures up images of shopping at Goodwill and riding a bicycle all over town! But living frugal is much different than living cheap. The real goal of sound personal financial management is to find that balance between cutting expenses while still maintaining a comfortably lifestyle. Life is simply too short to live a monastic life of self-denial.
With a little creativity and willingness it is possible to significantly cut back on monthly expenses, while still maintaining an enjoyable lifestyle.
Cancel the Cable:
The average American watches up to 4 hours of television a night. Consider cutting the cable bill altogether. In today’s world of high speed internet, almost every show is available to watch for free on the internet on Hulu or the network website in full HD quality. If you have a nice flatscreen television and a laptop computer, there is basically no point in paying for cable or satellite television. You can use all of that extra time each night reading, studying to gain new knowledge, and spending time with family and friends. Cash Flow Savings = $50/month
Buy Bulk:
For a small annual fee, consider joining Sam’s Club or a similar discount grocery store. The grocery bill is usually one of the largest monthly bills for a family. You can cut down on this bill substantially by buying in bulk at a discount store. Instead of buying one box of cereal for $4.99, you can probably buy five of them for $14.99. Cash Flow Savings = $100+/month
Carpool:
Gasoline prices will never return to the glory days of $1.50 per gallon! With this in mind, it may be a wise investment decision to consider cutting back on gas expenses as much as possible. If you are married and it is practical to cut down to one vehicle, then do that. If not, then consider car pooling with friends to work every day. It may not be the most exciting thing to see Bob the accountant earlier than you have to every day, but if it saves you some cash every month, it may be worth it! Cash Flow Savings = $50+/month
Refinance the Mortgage:
Interest rates are incredibly low right now. Consider contacting your mortgage lender to see if you can apply to refinance your mortgage. Depending on your current interest rate, this could cut $100’s off your monthly payment and/or significantly reduce the number of years on the life of your loan. Refinancing may sound difficult, but it is much easier than trying to predict the direction of EUR USD. Cash Flow Savings = $100+
Analyze Expenses:
Another step to increasing your monthly cash flow is to objectively analyze your spending habits and determine where you are spending cash that is unnecessary. For example, you may love Starbucks, but do you really need a grande Americano every morning? Cutting back does not mean eliminating. If you love Starbucks, you don’t have to eliminate it to increase monthly cash flow, you just need to reduce it. Consider visiting Starbucks just twice a week. The visits will be something of an even to look forward to and you will be saving money. Cash Flow Savings = $50+
These are just a few ways to significantly increase your cash flow without significantly altering your lifestyle. All it takes is a little creative thought and willingness to change and you will be well on your way to increasing your monthly cash flow.