Get $50 Cashback Bonus | Lending Club vs. Prosper Free Report                         

Loan Calculator | Mortgage Rates

About Me | Contact Me | My Ramblings  


Home | Car Loans | Credit Cards | Credit Repair | Credit Reporting | Education | Insurance | Financial Tips | Personal Loans | Taxes        

Credit Repair Education     |      Personal Loans Education      |      Debt Reduction Education



Debt Reduction Education

1 - Your Debt2 - Your Budget3 - Reducing Your Debt4 - Debt Consolidation5 - Federal Student Loans6 - Avoiding Debt7 - Resources




Your Cash Flow

As stated above you cash flow is simply how much money in took in (your income) vs. how much money you paid out (your spending).  

To determine your monthly cash flow you and your spouse (if married) will need the following information from the past 12 months:

• Income statements
• Investment statements
• Bank statements
• Credit card statements
• Cash receipts
• Estimated expenses

Some expenses will have to be estimated, especially if you spend cash.  If you know you spend approximately $10 per day on lunch and you work 49 weeks per year, then lunch will cost $10 X 5 X 40 = $2,000 per year.

The first thing you need to calculate is your annual income.  This is your take home pay and not your gross income.  However, your income may include child support, alimony or income from investments (stock, bonds, CDs, real estate).

Below is a simple work sheet:

Annual Income Worksheet

Annual Income

Household take-home pay $_______________
Child support income $_______________
Alimony income $_______________
Rental income $_______________
Investment income (CDs, stocks, bonds, mutual funds, etc) $_______________
Other income $_______________
Total Annual Income $_______________

Add up all your income you received during the last 12 months to determine your Total Annual Income.

The second is to calculate your annual expenses.  Most people underestimate how much money they spend, especially if they use cash.  You’ll be surprised how spending $5 here, $10 there, $1 over there ads up to hundreds or thousands of dollars in a year.  Also, you may have to estimate some expenses if you pay cash.  Be honest as possible when determining your expenses.  Your expenses include Fixed Expenses and Variable Expenses.  Fixed Expenses are costs that stay the same every month like your mortgage and car payment.  Variable Expenses are costs that fluctuate every month, like food and entertainment.  Most people also incur periodic expenses, which may include auto registration and magazine subscriptions.

Below is a simple work sheet:

Annual Expenses Worksheet

Fixed Expenses

Rent $_______________
Mortgage $_______________
Home equity loan $_______________
Condo or homeowners’ association fee $_______________
Car payment $_______________
Other loans $_______________
Homeowner’s insurance $_______________
Renter’s insurance $_______________
Health insurance $_______________
Auto insurance $_______________
Life insurance $_______________
Other insurance $_______________
Childcare $_______________
Dues and fees $_______________
Cable/satellite service $_______________
Internet access $_______________
Child support obligation $_______________
Alimony obligation $_______________
Other fixed expenses $_______________
Total Annual Fixed Expenses $_______________

Variable Expenses
Groceries $_______________
Cigarettes $_______________
Alcohol $_______________
Home gas $_______________
Electric $_______________
Cell phone $_______________
Car Gas  $_______________
Public transportation $_______________
Tolls and parking $_______________
Newspapers, books, and magazines $_______________
Allowances $_______________
After-school activities for kids $_______________
Babysitting $_______________
Entertainment $_______________
Restaurant meals $_______________
Personal care products $_______________
Clothing $_______________
Body care (haircuts, manicures, massages) $_______________
Laundry and dry cleaning $_______________
Out-of-pocket medical expenses $_______________
Lawn care $_______________
Home repair and maintenance $_______________
Other $_______________
Total Annual Variable Expenses $_______________

Periodic Expenses
Insurance $_______________
Auto registration and inspection $_______________
Subscriptions $_______________
Charitable donations $_______________
Tuition $_______________
Dues and fees $_______________
Income taxes $_______________
Property taxes $_______________
Other $_______________
Total Annual Periodic Expenses $_______________

Total Annual Expenses $_______________
Total Annual Income $_______________
minus -
Total Annual Expenses $_______________
equals =
Total Cash Flow $_______________

Add up the numbers in each category (Fixed Expenses, Variable Expenses and Periodic Expenses)

When you are complete, a good check to see if your numbers are correct is to look at how much money you had at the beginning of the year, vs. the end of the year.  This should be easily found on your bank statements.   For example, if “Your Bottom Line”  = $7,500, that means at the end of the year you should have about $7,500 in extra cash.  If your number is far off (i.e., $7,500 vs. $1,500), you need to go back and look at the worksheet to determine if you missed anything.

If your Cash Flow is negative this means you are spending more money than your household income.   If you are not paying all your bills or financing your lifestyle with credit cards or cash advances then you may be further behind and your negative cash flow is much larger.

If your Cash Flow is positive you maybe in decent shape, however, if its positive by a “small” amount, you may need to change in improve it.  If your cash flow is positive, but you are only paying the minimum on your credit cards or you have stopped paying some of your bills, you are not in good shape.  Additionally, if you were to lose your job or had to pay for an expensive illness, you could be very close to financial disaster.


Share |


Have a financial question or comment? Please leave it below.

  Money Cake - Copyright 2017


Contact Me  | About Me Privacy Policy