cash flow
Cash flow is is simply the amount of money you have coming into your household on a regular basis. Ideally, cash flow in exceeds cash flow out, and you’ve got extra cash flow.
When it comes to destroying debt, many of us are familiar with the two most common methods to pay down debt. Many choose the debt snowball method where you pay off your smallest debt first while paying the minimum on others. Once that first debt is gone, you roll that payment into the next.
One of our first moves with our extra cash flow will be to increase our emergency fund to a five or six month emergency fund.
Giving more to charity may mean giving your time or services to those who need it. You could even move to part-time work now that you can afford it to allow you to be more available for these opportunities.
Increasing your WAR (Wealth Accumulation Rate) is another option for your extra cash flow. Given that your savings rate is the most important determinant of your investing success for the first 10-15 years you invest, this is a wise place for many to put their extra money.
Even after paying off your student loans, car payments, and any credit card debt you may still find that there is one other large source of debt that many like to ignore. Your mortgage. Either way, you are doing something smart with your money, which means you are likely way ahead of your peers.
One way that you could spend extra money is to increase your annual vacation fund. That way, you could take a trip to Europe, go to Disney World, or whatever else floats your boat.