Cash flow planning: Bumpy road ahead

It’s frustrating when your well-intentioned debt repayment plans don’t result in perfectly linear repayment patterns.

When a lending professional helps you reorganize your debt and free up cash flow, you expect your financial situation to improve in the following year.

It’s not uncommon, however, to discover that you simply haven’t made as much progress as anticipated.

To head off problems, use the following tips:

Set yourself up for success. Before you even start dealing with your debt, you should know that the results won’t unfold smoothly and that you’re not expected to perfectly follow your plan. No matter how well you follow prescribed steps, you’ll likely have to deal with unexpected expenses along the way. Nonetheless, stay positive about your progress by always comparing where you are now to where you were, rather than looking at how far you are from achieving your final goal.

Get all details. When you sit down to review debt repayment results, first consider any major or additional expenses you’ve had to cover recently, and whether you’ve had to deal with a change in income. You may owe $10,000 more at the end of the year than predicted, for example, but may also have had to deal with a $12,000 emergency. In reality, that means you’re $2,000 ahead of your initial projection.

Tweak your plan if needed. If you aren’t on track to reach your goals, but you haven’t dealt with any unexpected expenses, you’re likely increasing your spending. In that case, don’t be afraid to make adjustments and start again. Practice makes progress.

And remember: Though failure can be frustrating, cash flow management isn’t easy. That’s why your advisor and other professionals offer help and advice.

Stephanie Holmes-Winton is a Halifax-based financial services educator and speaker.