EPISODE 2: CONTROL
CONTROL YOUR CASH FLOW WITH SAM
EPISODE 2: -CONTROL
Charlie:
Hello again, we're back with Sam to talk about the second in a 4 part series.
Previously we looked at the first part which was strategic planning and our goal setting and now we are going to take a look at Control.
Sam we were talking about taking control of your financial situation. What exactly does this mean?
Sam:
Talking control really is about identifying what it is that you personally can control in your life and particularly when your talking about cash flow, by the money comes in via your wages and your pay and how it flows back out again.
So taking control and identifying how that works as opposed to things you really don't have control over.
And that just means, again, you've got to use a coach or at the same time have the opportunity to sit down and work out to start developing what I call a "living budget".
Charlie:
What exactly do you mean by a "living Budget"
Sam:
Well look, again, taking control is something that if you identify that you, for example, are spending a certain amount on fuel and you have no idea what it is then you need to be able to quantify it.
It's also about having a key or a bank account set up in a certain way so that it makes it easier for you to not over spend.
Charlie:
So this is all about being easy for the user?
Sam:
Yeah, absolutely and talking about a living budget that's something that most people, and the "Budget" word is a swear word to most people vocabulary
Its something that everyone shies' away from.
They know they have to do it, but they just don't do it for whatever reason or you know we get to the end of the year and its new years resolution time and they say well I'm going to do this. Going back to goal setting like I said previously.
So most people are working in the past and I always say well you should absolutely be not working in the past, you should be working towards the future.
Those goals that we sat down and wrote about put them in but at the same time plan what your expenditure is going to be over the next 12 months. What you actually want to do not what you think you have to do or you can't afford.
So again it’s asking better questions. It's about what or how can I better afford this, how can I do this better, that's when we are talking about control.
Charlie:
We've got this living budget and we've analysed what we have direct control over what other things should we take into account?
Sam:
Most people understand that to get certain things in life or to look good you do sometimes have to take on a little bit of borrowing.
Charlie:
Debt?
Sam:
Yes the "D" word - Debt that's another swear word. A lot of people don't realise that there's a smart way to do that and a really dumb way. Debt is a 2-edged sword. It can really cripple people.
So, we talk about good debt and bad debt.
Charlie:
What exactly do you mean by good debt and how can we use our debt for our benefit?
Sam:
I prefer to say that there's good debt and there's absolutely atrocious ludicrous debt.
It's Identifying, and it goes back to the idea of what is an asset? Or what is a liability? What is something that is going to put money in food and feed you? Putting money in your pocket so to speak or what is going to take money out of your pocket if you weren’t able to work.
So anything that you’ve borrowed money for that if you weren’t work you’d have to keep shoving money into it, for example we talk about credit card debt. You’ve got a credit card balance. If you weren’t working pretty soon the credit card company is going to go "hey, you’re not paying it. What's going on?"
Cars, holidays, things that depreciate in value or loose value. So if you’re borrowing to buy things like that. Even simple things in the house hold these days like laptops, furniture, tables, chairs, all that kind of stuff. If its borrowed money its ludicrous, its just stupid.
I quite often will sit with clients and say without waving a really big stick I say' Look why have you done that?" lets understand why and how can we turn that around? Cause when we talk about growing or borrowing things that grow in value, now we are starting to talk about things that...
Charlie:
Like Shares?
Sam:
Well all types of investment instruments, that kind of thing. That allows you to grow your asset base that eventually puts money back into your pocket without you having to work.
That's the idea about growing good debt. Getting leverage that way.
Charlie:
That's the conclusion, thanks again Sam, that's the conclusion the second part in the 4 part series and we looked at control, and in the next section we will be talking about discipline.
Thank you