Two Easy Ways to Increase Your Cash Flow
Image sourced by Kenny Eliason @neonbrand
Good Day!
If you’ve been following Budget and Grow Rich®, you know that we Love systems – Processes and Systems – that save money – Save You Money while you sleep or go about enjoying your day.
Recently, we unearthed two easy ways to increase your cash flow and had to call them to your attention right away. Let’s get to it!
1. Switch your credit card payment due date to smooth out your cash flow.
The concept here is that the key to improving your cash flow is to match cash inflows with cash outflows – really to match income and expenses.
Most people receive cash from their salary – earned income and. . .
Get paid weekly or twice a month.
Typically, people’s larger expenses fall out on different days throughout the month.
For example, rent payments and mortgage payments are typically due on the 1st day of the month. And. . .
Your credit card payments, car loan payment, car lease payments and student loan payments for example are likely to come due on different days of the month.
Some companies, especially credit card companies, might let you move the payment due date to say the 15th or the 20th day of the month. Or another day you choose.
This way, for example, the paycheck you receive on March 31st, can cover the April 1st rent payment or mortgage payment; and the paycheck you receive on April 15th, can cover your debt service.
But make sure your credit card company or finance company won’t charge you interest expense on your outstanding balance or charge penalties or late payments.
You may have to clean up your account before you implement this moneysaving technique.
If you cannot move any of your payment due dates, tackle the issue by reducing your discretionary spending or deferring discretionary spending this month to create extra cash flow. So you have cash available to pay the amounts when they come due.
This way, you will have money on hand in your checking account to pay your credit card balance or other debt service payments on time.
In other words, get ahead of the curve and you’ll reduce or avoid credit card interest expense.
2. Make major purchases after your credit card billing cycle ends.
All credit card companies set a monthly billing cycle.
Purchases (charges) you make during that billing cycle will appear on the next credit card statement.
My Capital One Venture Visa card billing cycle runs 26 or 27 days depending on how many days there are in that particular month.
The billing cycle on my Capital One Venture Visa typically ends on the 26th or 27th day of the month.
Capital One pulls the statement balance from my checking account on the 21st day of the month.
Purchases you make After the end of this billing cycle fall into the next billing cycle.
When you make a material purchase and use your credit card to pay, before you make a major purchase call your credit card company to find out when the billing cycle ends.
Make the purchase during the next billing cycle, After the current billing cycle ends.
Suppose your current monthly billing cycle ends on January 26th. And the next monthly billing cycle ends on February 26th.
When you make the purchase on January 27th or January 28th, the purchase (charge) falls into the billing cycle that ends on February 26th, not the billing cycle that ends on January 27th or January 28th.
And if your credit card company offers you a grace period, then you won’t have to pay for your purchase until March 21st.
For the charges you incur / purchases you make between January 27th and February 26th, these payments would be due on March 21st.
BUT remember, if you already have an outstanding balance on your credit card when you make the major purchase or for that matter any purchase, you will incur more credit card interest expense from the day you make the purchase. Don’t do it! Don’t buy now; Buy Later!
BUT, this assumes that your credit card offers you a grace period. The grace period is the number of days you have to pay your bill before the credit card company begins charging you interest.
Typically, the grace period is 21 to 25 days.
Be sure to check with your credit card company or credit card companies to learn how they set their billing cycles and payment due dates so you don’t fall into the trap.
The actual number of days in your billing cycle may vary across credit card companies. And the number of days in your billing cycle may be different for different credit cards issued by the same credit card company.
Learn the policies for all the credit cards you hold. And organize your spending behavior and spending habits to avoid credit card interest expense, late fees and penalties.
And check this every so often because credit card companies change their rules of the game periodically.
Remember though, if you have an outstanding balance on your credit card, your credit card companies will charge you interest on your outstanding balance on your credit card – Including the Outstanding Balance AND New Purchases – UNTIL you pay off your credit card balance in full.
And keep in mind that your credit card balance INCLUDES your old balance and new purchases starting on the purchase date.
And even if you pay down your credit card debt or pay it off in full, it might take a month or two for the interest charges to stop mounting.
If you have an outstanding balance on your credit cards, STOP using your credit cards. Reduce your spending. And pay down your credit card debt as soon as possible!
As I’m sure you are aware, credit card debt is Never a winning game for we cardholders.
Credit card interest rates can run from 18% to as high as 32%. OUCH!
Let’s compare credit card interest rates to the long-term rate of return on the S&P 500 Index® (Standard & Poor’s) of common stocks. The annual return on the S&P 500® has been approximately 10% per year (per annum) – far less than the high credit card interest rates. To put it bluntly. . .
Credit card interest rates will ‘kill’ you every time! Very tough to build wealth when you have to pay your credit card debt.
If you have credit card debt, reduce your spending and earn more income to pay it off.
Make payments as soon as you can, throughout the month. DON’T wait to pay your credit card bill when the statement is due.
In the meantime, look into putting these two easy ways to improve your cash flow to Make Your Money Work for YOU.
And to Increase Your Cash Flow, Save More Money on Groceries – EASY – click here.
Please get to it now. Don’t delay! And. . .
Let us know how it goes.
Have a good week,
Arthur V.
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