Debt reduction, cash flow and budgeting

Your cash flow is the money you have coming in (salaries, rental income, interest and dividends) and the outgoing expenses are costs you incur running your business. Having a healthy cash-flow means your income is greater than your expenses. When cash-flow is not healthy, this prompts people to seek personal loans and credit cards to fund expenses. It is these personal loans and credit card loans that carry very hefty interest rates which starts the vicious cycle of debt.

We believe that a strong financial plan must address debt and cash flow, whether it is paying off the mortgage, personal loans or credit cards. Many of us want to pay off our home mortgage, and build sufficient superannuation so that we are not forced to sell the family home to fund our retirement.

However, for many people the pressures of household expenses and debt, or the impact of divorce or job loss, can interfere with these plans. Sometimes minor adjustments to lifestyles and proper management of cash flow can make all the difference to managing debt.

So how can families cover the costs of everyday living and still manage to put some savings aside? One way they can get ahead is by treating your finances like a business with assets, liabilities and cash flow as key indicators of financial health.

It takes a lot of commitment to maintain a budget and avoid consumer traps. The purchase of a new lounge, or another pair of shoes and hand bag may seem essential but people who are financially successful don`t buy things until they can afford it.

At Investlink Group Pty Ltd we ensure our clients complete a comprehensive budget and cash flow analysis. We believe this forms a solid foundation to building a healthy financial strategy to enable our clients to meet their financial goals and objectives.

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