27 Apr Know Your Dreams Before Using a Line of Credit Part 2
I’ve Got More Dreams Than Money – Now What?
Rest assured, you are not alone! After you’ve written down and priced each of your dreams, there’s a very good chance that the total dollars you need to save each month is more than what you have to spend. This means you don’t have the dollars to accelerate paying off any debt or to boost your savings. What do you do? To see the example that I created, click on the link and view the template that I’ve created. View the tab at the bottom of the page labeled ‘Example’ and look at row 28 in column I. You’ll see I’m short by $64.05.
By the way, I’m assuming that I have an emergency fund totaling $16,100. This means if the unexpected happens, I have already saved six months of living expenses.
Four Potential Solutions
To solve your problem, you can choose from any one or all of the following alternatives.
- Earn more income;
- Reduce your expenses;
- Adjust your dream and lower its cost and;
- Postpone the date for some of your dreams.
Creating Your Positive Cash to Use in Your Line of Credit
Your first priority is to create positive cash flow. Begin by reviewing your income and expenses. It’s ideal if you can increase your income and reduce your expenses. Next, review each of your goals and ask yourself, “If I don’t achieve this goal how will I feel?” If each goal is important, take a second look at your current living expenses.
- Save your receipts. At the end of each week, ask yourself if the item you purchased more important than any of one your goals.
- Your answer will enable you to either reduce your expense or adjust your goal.
In the worksheet labeled ‘Example 2’, the following changes were made. These changes created $350.53 in positive cash flow.
- By either reducing my expenses or increasing my income, my positive cash flow in the green box increased by $200.
- I postponed my vacation one year and reduced the cost by $1,000. This reduces how much I need to save each month from $214.48 to $116.28.
I now have $350.53 to use to either accelerate getting out of debt or to boost my savings. For either alternative, I’ll use my line of credit to keep my dollars working for me 24/7.
Working Lazy Dollars Using a Line of Credit
What difference will $350.53 make? My 30 year 4.15 percent mortgage of approximately $240,200 will be paid off 14 years early and in fifteen years I’ll have saving totaling $291,560. Take a look at the CashMap. (Note: For those of you looking at this solution after March 2014, with each succeeding month, CashMap recalculates the savings using the current date loan schedule.)
If you’re more comfortable investing the $350.53, no problem! The important point is you’ve created positive cash flow and you’re keeping every hard earned dollar working for you.
Thanks for joining me. I’d love to hear from you. Please send your questions, topics or suggestions to firstname.lastname@example.org. You can also follow me on twitter at cash_map.