Good debt bad debt using credit wisely: Introduction

Good debt bad debt using credit wisely are another one of those financial terms like Balloon Payments, APY – Annual Percentage Yield, Expense Ratios and Cash Flow that are often misunderstood. As we continue our series of confusing financial terms we thought that the holiday season seemed like the opportune time to explore the concept of good debt.

Good debt bad debt using credit wisely: Is good debt a myth?

The old adage that there’s no sure thing except for death and taxes is true. Although taking out a mortgage to buy a home and investing in your education seem like sure things, sadly that isn’t always the case. If you take out a mortgage that’s the maximum you can handle and the interest rates go up, how will you pay for your house? What would happen if you lost your job? Would you lose your house as well? Investing in your education isn’t a sure thing either. There are many PhDs waiting tables. A good education is no longer a guarantee of a good paying job. Good debt is a myth, unless you are also using the credit wisely. At the end of the day, debt is still debt and must be repaid.

Good debt bad debt using credit wisely: What to do about your debt?

Canadians are struggling with debt like never before. Whether you’ve taken on what you consider to be good debt or bad debt, it still needs to be dealt with. And, to deal with debt you need the help of a debt professional – a trustee. Dealing with debt is not a DIY project. Call Ira Smith Trustee & Receiver Inc. today and make an appointment for a free, no obligation consultation. We can give you back peace of mind and put you on the road to debt free living Starting Over, Starting Now.

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HOW TO GET ON A CASH FLOW BANK ROLL TODAY

Cash flow bank roll: Introduction

By the nature of our work, we deal daily with people and companies that have not built up a sufficient or any cash flow bank roll.

Do you ever feel like you have a hole in your wallet? Does your company keep needing to borrow more and more? Where did the money go? Understanding and managing your cash flow, both in your personal life and for your company, can answer these questions for you. Cash flow is another one of those financial terms like Balloon Payments, APY – Annual Percentage Yield and Expense Ratios that are often misunderstood.

Cash flow bank roll: What is cash flow?

Cash flow is the money that moves (or flows) in and out of your account. Cash inflow can include anything that brings in money – salary, sale of assets like a house or car, interest from savings accounts, dividends from investments and the like. For your company, it is the sale of the goods or services that it supplies.

Cash outflow represents all expenses – mortgage payments, rent, utilities, car expenses, Smartphone, Internet, groceries, entertainment, transportation, (and for your company wages paid and other corporate expenses).

Cash flow bank roll: How can you calculate cash flow?

Cash flow can be calculated by a simple equation:

Total Income – Total Expenses = Net Cash Flow[1]

This equation will tell you if your cash flow is positive, negative or neutral.

Cash flow bank roll: Types of cash flow

Positive cash flow tells you that you have more money flowing in than flowing out. This is generally an indicator that you are living within your means. This is what produces the cash flow bank roll!

Negative cash flow tells you that you have more money flowing out than flowing in. This is a good indicator that you are living beyond your means and are accumulating debt – never a good sign and definitely no cash flow bank roll for you.

Neutral cash flow is more of a theory than a reality. It’s pretty impossible to have exactly the same amount of money flowing in as flowing out. This will produce the cash you or your business needs, but won’t make a cash flow bank roll for you.

Cash flow bank roll: Where did the money go?

Cash flow can tell you how much is coming in and going out but to decide where the money’s going you need to keep a detailed budget. This is something we strenuously recommend for everyone. A budget is a key element for maintaining financial health.

If you feel like you have a hole in your wallet or your company keeps needing to borrow more and more and are in a negative cash flow situation, give the Ira Smith Team a call immediately. With immediate action and a solid financial plan for managing your debt problems you’ll be on your way to financial health Starting Over, Starting Now.

NOTE: [1] Income and expenses have to be adjusted for non-cash items such as depreciation, amortization and items either sold or bought on credit. When you receive or pay out the cash, it then hits your cash flow formula.

GOOD DEBT BAD DEBT USING CREDIT WISELY