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World Bank chief warns of financial crisis World Bank chief Robert Zoellick on Saturday warned of a "new and more dangerous" time in the global economy...
US Recession Risks Rises The threat of a new recession is rising in the United States, economists say, as they slash their ..
Unsafe US debt remains safe haven US Treasury bonds remain a hot ticket for investors looking for a low risk investment in a volatile market despite the unprecedented ...
US borrowing tops 100% of GDP US DEBT shot up US$238 billion (S$287.2 billion) to reach 100 per cent of gross domestic project after the government's debt ceiling was lifted
Consumers consumed by debt The average consumer may feel far removed from the heated debates concerning the $14.3 trillion debt ceiling. But the truth is...
Financial Crisis II. Get out of debt now There is increasing talk among traders and financial analysts that the latest slump in global share markets
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Creating Positive Cash Flow in a negative economy

 

Scriptural Financial Freedom Obtaining God's blessings

 

 

 

 

 

Creating Positive Cash Flow in a negative economy

First there was a subprime crisis, then a credit crunch which is gettting tighter by the month, followed by a debt crisis and a credit rating downgrade, and now a likely Global Financial Crisis part II. A positive cash flow is increasing getting more important by the day.

A positive cash flow margin is also absolutely essential if you are to accomplish either long-term or short-term financial goals. Without a cash flow margin, you cannot accumulate in order to meet long-term goals. In addition, each of the four other short-term goals - tax reduction, increased giving, debt reuction, and increased living expense - can only be met by having a positive cash flow.

In order to reduce taxes, either additional expenditures must be made for such things as increased giving, IRA's, tax sheltered investments, and the like, or income must be reduced. Either increased deductible expenses or reduced income will result in tax reduction. However, both require that there be a positive cash flow to begin the process.

 

Without a positive cash flow, increased giving is not an option. Once there is a positive cash flow, however, and it is used to increase giving, that decision results in decreased taxes because charitable contributions are deductible. There are many people who plan all of their tax reduction through giving. However, they had to have a cash flow margin to begin the process.

Obviously, if you want to reduce your debt principle payments, you must have the excess cash to do so. If you are "going in the hole" by overspending, then there is no way to get out of debt until you generate a positive cash flow. After debt retirement that extra amount can be used to reduce debt further, which in turn increases the cash flow.

The first key to riding any financial crisis is to be debt free. The only absolute way to become debt-free, in the first place, is to have a financial plan prepared at the beginning of each year that does not allow for the use of debt, and that you will stick to through self-discipline.

The major problem most people face is how to get out of the debt that they are already in. there are only two ways to get out of debt after making the decision to avoid the use of debt: Examine the assets you have to see which ones could be sold in order to reduce debt; and in the absence of assets to sell to eliminate debt, set up a repayment schedule and strictly adhere to it.

Conclusion

Lastly, if a couple or individual has as a short-term goal to increase the level of their lifestyle through a new home purchase, a new car purchase, vacations, additional gifting at Christmas, or eating out more often, they must have a positive cash flow to have the additional funds.

The Bible does show many ways to overcome any financial crisis and reach financial freedom. Many of these principles are laid out in our successful course, the Scriptural Financial Freedom series. To learn more, you can download the Small Groups kit from our estore.

 

Today's Bottom Line

Living expenses and debt go hand in hand. Typically, debt is used to fund living expenses and, conversely, without the ability to borrow, the ability to increase the lifestyle is not there.

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Financial Freedom Tips & Toolbox

Today's Pick: Money, God and us Money, God and us by [Ian Goligher]

 

 

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