Finding Freedom Boot Camp:: Monthly Cash Flow

by GettingFreedom on March 1, 2012

Are you ready to whip your finances into shape and get started with Finding Freedom Boot Camp?  I’m know I’m excited to share our story and hopefully encourage you along your financial journey.

Our Financial Journey

As I’ve  mentioned before, in 2007 my husband and I found ourselves in close to $40,000 in debt–and that’s not including our mortgage!   Neither one of us really knew how we got there, we just knew we didn’t like it.  We felt as if my husband was working to pay the creditors, and not for us to enjoy.  Which is not a fun place to be!

The hard truth is we weren’t being honest with ourselves. I became a stay at home mom in 2004, the mortgage on our new home was 3 times that of our previous rent and we were still living like we were bringing in 2 paychecks.  Instead of facing the reality that we couldn’t do that anymore, we faked it.

Our lives were a lie.  We owed people money, but yet we were still spending money on things we wanted.  Being honest about your financial situation, while it’s tough at times, is the most important step for you to take!


Why You Need A Cash Flow Plan

The first step in gaining financial freedom is taking a hard look at what is coming in and going out every month. You will not get anywhere if you are not honest about what is being spent and what is coming in.  If you honestly want to get on top of your debt and break the chains, a Monthly Cash Flow Plan is your first step!

Creating a Cash Flow PlanI find that physically writing out my bills every month makes me more aware of my financial situation and it gives me room to write out my financial thoughts and plans.  Obviously not everyone works the same way that I do, however I do encourage you to find a system that works and is painless {as painless as analyzing your finances can be!}.

The purpose of a Cash Flow Plan is to outline every single expense your family incurs monthly. My Home Management Binder includes the Monthly Cash Flow Plan that we personally use.  It includes all the spaces and categories you need, all you need to do is fill in the blanks!  Prior to using that form, we just used a spiral notebook and I manually wrote out all of our expenses by category.
While filling in your Monthly Cash Flow Plan, don’t forget to include those expenses that pop up  yearly, bi-monthly, or just periodically,  but write them in on a monthly level. For example, if you pay your insurance every six months, you need to divide that number by 6 and include it in your monthly cash flow plan.  This will give you an honest look at your finances and will help you create a plan of getting out of debt.

Once you have all of your expenses written out, add them all up.

While it is important to track what is going out every  month, it is equally important to track what is coming in every month. If you have multiple streams of income {think:: child support, side jobs, yard sales, etc} you need to be sure to include that.

Subtract your outgoing expenses from your incoming funds.  This is what you have left over at the end of the month.

Remain Calm

The important thing to keep in mind here, is that your ultimate goal is to be tracking your finances.  Your ending number may very well be scary when you realize that you have more going out than what you have coming in.  It’s okay!  That is our purpose with the Finding Freedom Boot Camp–to help you make it to where you have excess every month!  These first few months may be tough, but just keep your eyes on your ultimate goal.  Freedom!


Now what?

If you ended up with money left over at the end of the month after all of your bills were paid, that’s great!  However, do not just leave it unassigned.  This is when you tend to get yourself into trouble.  All of your income needs to be assigned to a specific purpose, otherwise at the end of the month you’re going to be left shaking your head wondering where in the world all of your extra money went!  We will address possible uses for your extra cash in another installment of Boot Camp.

If you were on the flip side and in the negative every month, do not panic!  There are many ways we can shave your outgoing expenses and help you find cash in your budget.  Your goal is to get that number to zero.

I recommend making a new cash flow plan every month for the first few months, until you figure it all out. After that, I still recommend you doing one about every other month, because things will change once you start paying off your debt and re-evaluating your expenses.  This all may seem tedious, but I assure you, it will all benefit you in the end! After implementing our cash flow plan,  re-evaluating our life, and becoming accountable for every last penny (literally) that we brought in and spent–we paid off that $40,000 without changing our income!


Our next Drill in the Financial Freedom Boot Camp is Using Cash and Cutting Up Those Cards and will take place on  March 5th.


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