With the increase in gas prices, people are feeling the pinch of higher expenses.  It puts pressure on your basic needs like food and shelter, as well as your choices for entertainment.  As you complain about the higher cost of things, one question to ask yourself is “why is my cash flow so tight?” 

Hint: The answer is only partially due to gas prices.

Let’s examine some decisions you may have made:

• When you bought the house – did you buy to the limit of what you qualified for, or what was reasonable for your income?
• Did you buy the expensive car?
• Do you have several student loans?
• Do you consistently spend more than you make?

As we consider these choices, the common theme is debt, though not all debt is created equal.  A mortgage allows you to invest in a home since most people don’t have the resources to pay cash for their house.  If you chose a home and mortgage that’s reasonably affordable for you, it’s probably a good choice, and the same measure of reason applies to the car.  A student loan is debt, though it’s an investment in your future, and is usually structured with reasonable interest rates.

That leaves us with spending decisions.  If you have every penny already spent, plus some pennies you don’t actually have, you’re now in the red and getting deeper.  
Your life feels restricted by your income, or more likely, your outflow.  It’s like you’re behind bars with dollar signs on them.

Get the keys to the cell - Start by making a log of ALL your expenses right down to the pack of gum you bought at the gas station.  That will help you track your spending.  You may discover your credit card debt accumulated from daily decisions that added up!  Unfortunately, many people complain about the debt as being the problem when in fact it’s the mismanagement of your cash flow that’s the issue, not the debt itself. 

Here’s what can happen.  Own the choices you made, put them in the past, and get on with your life.  Get real about your income and expenses and make different choices with saving and spending.  Consult with your financial advisor or credit counselor to examine your cash flow and budget.  The sooner you do a reality check, “own your debt”, and take action to change your situation, the better you will feel and the sooner you can spring yourself from “money jail.”