Cashflow is King

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It doesn’t matter what the specifics of your numbers are. If your outgoings are greater than your incomings, You’re broke.

And you wouldn’t be alone. While the exact percentages vary depending on who commissioned the survey, it’s generally agreed that 6 months without cashflow would send most of us to the wall. So while all the marketeers frolic around espousing the benefits of negative gearing, and capital growth, most bankers would agree that there comes a time when they’ll just stop lending you money because your ability to repay has detrimentally impinged.

If you’re one of those who has been told it’s ok to go backwards because you’re getting great capital gains in your investment please remember that you cannot eat unrealised capital growth without taking on increased liabilities.

I thought this was a lesson well learned after 2007 but it seems many have short memories. So whether it be through careful financial management and debt reduction or taking on additional income streams such as finding more referral sources for your business or starting a side gig, remember the number 1 rule.

Spend less than you earn.

Your debts and outgoings will not fix themselves, you cannot keep spending like a drunken sailor on toys without there being ramifications for your future.

A future that is closer than you think.

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