Demystified Blog Archive #46 – Increase Your Cash Flow

In a world full of reckless and extreme monetary policy, Japan no doubt takes the cake.

The country has total debt of more than 1 quadrillion yen (around $10 trillion) pushing its debt-to-GDP ratio to a whopping 224%.

Greece, on the other hand, has a debt-to-GDP is around 180%.

Japan spent 24.1% of its total revenue (appx. 23.5 trillion yen) last year servicing its debt which includes both principal and interest.

Keep in mind, this is the world’s third-largest economy.

The country’s economy is so screwed up that the Bank of Japan (BOJ), the central bank, has been conjuring trillions of yen out of thin air to buy government debt.

The BOJ printed yen to buy basically all of the $9.5 trillion of government debt outstanding.

When it ran out of bonds to buy, BOJ started buying stocks. Now it’s a top 10 shareholder in 40% of Japanese listed companies.

Most recently, the central bank has started “yield-curve control,” which basically means they’ll do whatever it takes to make sure the government doesn't have to pay more than 0.1% interest.

If interest rates in Japan went to, say, just 1%, the nation’s annual debt service would literally exceed all of government tax revenue.

Here’s why this is a really big deal…

Remember how crazy things got in June, when that Italian Finance Minister didn’t get the job.

Markets around the world completely freaked out, including here in the US.

The potential downfall from what’s currently happening in Japan would be 1,000x worse.

Again, this is the world’s third-largest economy.

This won’t end well.

However, there are sensible actions we can take now.

Increase your cash flow

First and foremost, increasing your cash flow requires your focus. You cannot expect higher cash flow by turning your money over to someone else. Building your wealth must be your primary focus if you want to achieve higher cash flow.

This doesn't mean you have to spend all of your time building your wealth - that's where leverage comes in to play. It does, however, mean you must be involved and your wealth building must have your attention. You cannot simply hand it over. No one cares more about building your wealth than you.

In addition, leverage is the use of borrowing time, money, knowledge, contacts, and technology. All of which can increase the cash flow from investments.

If you look at applying leverage in a general sense, we do it all the time in our daily lives to increase time, human resources, effort, money, tasks, contacts, and so much more.

For example, when you are moving, you call family and friends to help you lift, carry, and transport all the heavy furnishings and all the boxes that have been packed to the final destination of your new house. In doing so, you have leveraged human resources (physical strength and effort), time, and machinery (vehicles) in order to minimize the effort that it would have taken you, had you done it yourself. Or, you call a moving company to do it all for you, leveraging even more of the effort it would have taken you.

Leverage is a normal part of our lives. Think about how you can use it to increase your cash flow.

Also, one of the fastest ways to increase your cash flow is to reduce your taxes.

Then you can use that increased cash flow to make additional investments. The tax law favors investors and business owners so continuing to make investments means you continue to reduce your taxes.

There are many who miss the opportunity to take advantage of the tax benefits the government has in place. These tax benefits, when applied correctly, make it very possible to legally reduce your taxes and build tax-free wealth.

Increasing your cash flow requires your commitment!

Take action!

Of course, there is always additional information you should consider when setting up any type of business, finance, or taxation strategy plan. And, you should always be working with a team of professionals to help mitigate the risk of any investment.

To your investment freedom