SIPS ‘n’ Tips: Fighting financial literacy

Sun., May 4, 2025

By Rhonda Leonard-Horwith The Black Lens

You often hear the phrase, “I live paycheck to paycheck.” Money is a constant topic of conversation. People dream of having enough to cover bills, fund education, enjoy relaxation and retirement, and – most importantly – have peace of mind. But the truth is: Money isn’t the problem – cash flow is.

Paychecks come in, but dollars seem to vanish just as quickly. As a society, we are bleeding cash. At some point, each of us must reflect: Which path am I on– the wealth path or the broke path?

The wealth path: earn > save > invest
The broke path: earn > spend > debt

Stop the Bleeding: Increase Cash Flow

To reclaim control, we must increase cash flow. How?

By reducing debt, developing healthy financial habits and increasing earnings. One of the most immediate ways to improve your financial health is through debt management.

The key isn’t how much money you make – it’s how much you keep. That means saving more and spending less. Start by:

Paying less for expenses through smarter purchasing
Creating an excess of cash by eliminating unnecessary spending

As debt decreases, more money becomes available for saving and investing. One of the biggest financial drains is credit card debt. Consider the following strategies:

Live below your means
Use cash, debit or prepaid not credit
Pay for essentials only – food, housing, clothing, insurance, utilities
Eliminate nonessential expenses (e.g., cable TV or unused subscriptions)
Call your credit card company and ask to freeze your credit limit
Stop carrying credit cards with you

Break the Cycle

We are creatures of habit. Breaking old spending habits is one of the biggest challenges. Many people develop the routine of using extra funds solely to pay off debt – without saving. The result? An endless cycle of debt and interest.

Interest never sleeps. It compounds over time, leading you to pay back double – or more – of what you owe.

To break the cycle, try the roll-up method:

List all debts from smallest to largest
Pay the minimum on all debts except the smallest
Apply extra funds to the small balance
Once it’s paid off, roll that full payment onto the next smallest balance
Repeat until all debts are paid

Consider keeping a few credit cards open to maintain your credit score, but perform “plastic surgery” on the rest – cut them up.

Build the Habit

Debt reduction must be paired with saving. If you have an extra $500, don’t put it all to debt. If you never build a saving habit, you’ll default to spending when cash flow increases.

Instead, split the funds – use half to pay debt, and invest the rest. This way, your savings grows as debt shrinks. You’re creating a subconscious habit for your future.

Pay Yourself First

Would you rather pay yourself and your family first – or try to save whatever is left after spending? Start putting your family and future first.

Here’s a simple exercise:

Track your spending. Carry a small notebook or use a phone app to write down everything you spend – whether it’s gas station snacks, groceries or online purchases. At the end of the month, add it up. What was a need, and what was a want? Redirect those “wants” toward savings and debt reduction.