Manage Cash Flow Shortages on Your Road to Debt Recovery

Do cash shortages send you running to your credit cards? Learn how to weather financial hardships without racking up new debt as you work towards debt recovery.

Anticipate Cash Shortages Early
It's never fun to deal with a cash shortage, but there are steps you can take to lessen the blow. The first step is to learn to anticipate shortages well before they happen. Checking in on your finances regularly is the best way to accomplish this goal. Monitor your account balances on a weekly basis, and you'll stay alert to potential shortfalls well before they affect your finances.

Correct Cash-Flow Shortages
When one of your balance inquiries turns up a potential cash shortage, it's time to take action. Brainstorm ways to come up with the money before it is needed. Can you scale back on eating out? Have a yard sale? Take on an extra shift at work? Determine exactly how big the shortage is, and then take the steps that are needed to correct it.

Frequent balance checks afford you the time needed to correct a shortage, so make sure you put that time to good use.

Identify Shortage Patterns
Once you've been monitoring your finances for a while, you should start to notice patterns related to your shortages. Are you coming up short every month? Is there a certain bill that leaves you short when it comes due? Figure out what is leading to your shortages and then correct the problem. Do you need to cut back on expenses? Maybe get rid of cable for a while? Do you need to set up a special savings account to sock away money for large expenses that come once or twice a year, such as twice-a-year car insurance premiums?

Anticipating your cash shortages a month or so in advance is good, but if you can learn to avoid the shortage, you'll be in even better financial shape.

Adopt a No New Debt Policy
Even with careful planning, there are still bound to be times when you find yourself hopelessly short on cash. This is not the time to pull out the credit card, but the time to get creative. Challenge yourself to come up with a no new debt solution. You may have to dig deep for the solution, but it will be well worth it if it keeps you from racking up new debt.

Remember, it takes creativity to overcome cash-flow shortages, so put your creativity to work and kiss those shortages good bye.

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