This is where your finance takes place

I taught I would start with the easiest way according to me; cutting down on the fix payments.

Negotiating my insurance premiums

We all have many types of insurances. Renegotiating your policies for a lower premium could be an easy way to increase your monthly cash flow. I already have a term life insurance policy and I do not expect to perform any modification in regards to the amount of the policy. Our insurance policy covers our need if anything bad would happen to my wife or myself. Therefore, there is nothing much to save on this part!

However, I do have a car insurance that came up for renewal in September. When the customer representative called me to renew my policy, I asked him how I could decrease my premium. There are many factors that kick in the calculation of your premium. To name a few, we find your age, sex, marital status, driving tickets, if you ever had any car accidents and your beacon score. I am already over the magic bar of 25, I am married with kids, I did not have much driving tickets since last year, no accident and I already have a great beacon score. Hum… it looks like I can’t do much on this side either…

But wait, the insurance deductible is another factor, the guy says. Well, I have been insured for the past 10 years and I never collect anything for my car. I decided to increase my deductible from $500 to $1,000. To my opinion, even if my car repair would go up to 2K, I would still not declare it. From many friends I know, the insurance company increased their premium significantly the year after their accident. Therefore, I decided it was worth it. I was able to save $18/month by increasing my insurance deductible. Unfortunately, I was not able to save on my house insurance premium as no modifications could be made.

Power saving

You already know that, I am not big on frugality. However, I am still able to make smart sacrifices. I moved into my house a year ago, back in November. I had a monthly plan of $199 per month for my electricity bill. I did very small modifications in my house since then. The first thing I did was to install electronic thermostats in every room. I paid about $250 for the whole kit and received a rebate of $50 bucks from our power company (it was link to some kind of promotion). We didn’t heat much during last winter (Mind you, I live in Quebec, Great Country of Cold Winter!). In fact, our thermostats were working a couple of hours in the morning and when we used to come back to work.

Each time a regular light broke, I replaced it by a more energy efficient one. Finally, I decided to turn off our AC system as much as I could. I just received my new monthly plan for the upcoming year; $189 a month. Another $10 bucks saved.

While it is not the end of the world, I still managed to create $28 per month at my first attempt. I have to find another $1,472 and I will be good to go! I’ll be working more on being frugal and find better ways to cut down my expenses on a steady base. However, I still have to wait a few months to see my other tricks works. Stay tuned for more updates!

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However, I do have a car insurance that came up for renewal in September. When the customer representative called me to renew my policy, I asked him how I could decrease my premium.

I am still working on my $1,500 objective.

I was able to find different categories where you can get more money.

Reducing your expenses

- Get rid of debts or potential debts:

Monthly fixed payments related to debts consist into the biggest cash flow killer. Their huge, steady and you can not make them disappear in a single day. Mortgage, car loans, personal loans, unpaid balance on credit cards or lines of credit, student loans etc. Basically, everything you could get from a bank. You can use a debt elimination process to get out of the high interest mess. I do not have much debt that I can eliminate for now. I do not have credit cards owing balance (I pay the full balance every month). However, I could maybe look into refinancing and do a consolidation to lower my payment a bit. This would result into a bigger interest payment overall but having my wife to stay at home would be priceless.

- Become more frugal:

It is surely not the most fun thing do to (not in my case anyway!) but collecting coupons, looking for bargains and buying in bulk could result into big savings. This could be another trigger to free up some cash flow and increase your debt elimination process. I will surely try a couple of tricks in the next few months in order to drop my expenses.

Increasing your sources of income

- Working on promotion and bonuses:

It seems pretty easy to say but doing it is another thing. Getting a promotion or a better year end bonus does not always falls into your hand only. The relationship you have with your boss and the financial profitability of your company might affect your results. What is your option then? Work hard, and then worker harder and then, go back to school (and do a MBA!). If you know that you are not in the right environment, then I suggest you quit your job. However, I do not suggest you quit until you find something else!

- Create a side income:

This option can be achieve by many ways. You can offer sporadic services such as filling tax reports, house cleaning or consulting (by deriving from your day job experience). You can also link your side income to your interests or hobbies. It could become a great and fun way to make money. As it requires more effort on a daily basis, you need an additional motivation than money to be able to achieve your goals. If you think your side income could become bigger, you should create a company and therefore benefit from all the tax advantages offered only to company. Therefore, you could earn most of your income “tax free”. Please make sure to visit a good accountant before you start.

- Increase passive investment income:

High paying dividend stocks is the path to financial freedom many individuals are walking on. While it requires a lot of money to be substantial, dividend payout represents a decent source of steady income. Good companies are offering yield of 4% to 5%. Also keep an eye on companies that increase their dividend on a regular basis. After a few years, you could earn dividend yield of 8%to 10% from your original stock price.

- Increase passive rental income:

I always wanted to become a landlord. The problem these days is that rental properties require huge cash down to start. Banks will usually require 10% to 15% of the purchase price. If you are looking into a triplex worth 400K, that’s 40K minimum you have to show your banker before you start talking. This is a lot of money that I don’t have in the present time.

Do you know other techniques? I plan on developing most of them later on as I would like to try several things in order to achieve my goal of $1,500. I already find a way to become more frugal. Stay tuned to find out!

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During this summer, several events happened in my life. The first one was to quit my second job about two months ago. I needed to free up my mind and my schedule for the next things that were coming up in August. Then, I became a father for the second time on August 5^th. This new baby brought us a lot of happiness and great moments. However, this will also result in additional expenses. Recently, I started a MBA in financial services. This is a great step for my career considering the fact that I am only twenty-five. When everything happens at the same time, it is always a great moment to take a step back and look at where you are and where you want to go.

This is when I realized that I was still pretty far away from one of my biggest goal; offering my wife the possibility to stay at home and take care of our two kids. For all feminists of this world, don’t worry, I am not one of these guys who want to have control over their wives. In fact, this idea came from my wife. As she is working in a daycare, she does not think she makes sense by taking care of other’s children while her own are two doors away.

On top of that, we must admit that when we both come back from work at 6PM, nothing has been done in the house and supper is not ready, it is quite a mess! I lived it during four month before my wife got pregnant for the second time and we did not like it at all.

So our solution is to keep her at home so she can take care of our children. She nets about $1,500 a month. So in order to keep our same life style and investment plan (our Smith Manoeuvre and Retirement Plan), we need to either drop our expenses or increase my income. Another alternative would be to create alternative source of income. We can look at passive income or also make money from a sideline such as starting a small company or my wife could work part time from home.

I would like to reach this objective within the next year. My wife is scheduled to go back to work in September 2008. This is when her maternity leaves ends. This would be an awesome gift to tell her that she does not need to go back to work again!

I’ll write more on ways to make this happen (although I don’t have a complete plan yet!). I thought that if I blog about it, it will force me to be more creative and realize my goal faster. In the meantime, I would like to hear back from readers if they found ways to make it happen or how they increase their income or reduced their expenses.

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