There are many important factors to consider in personal finance. Opportunity cost, rate of return, interest on loans or investments. But if you asked me to select the single most important factor in making decisions, what would my answer be?

My answer would be cash flow.

This is really what all of our efforts boil down to. Generating the largest amount of free cash flow so that we can retire when we want to. Now there are really three ways to increase your cash flow, assuming you have debt. One is to decrease reoccurring expenses, another way is to invest, and lastly pay off your debts.  So lets go over some of these areas and talk about the advantages and disadvantages of these things when trying to increase the spread in cash flow. Continue reading →