BROADCASTS.com

It is hard to argue that reducing expenses is not the least exciting episode of this season.  Nevertheless, this is an important part of our passive income strategy.  Debt is a killer of any income.  Also, any funds we free up can be used for investing and other income streams.  That makes this an essential part of the move to being a master of passive income.

Reducing Expenses Adds Up

Investing income builds over time.  On the other hand, debt reduces our funds over time.  Think of it as a form of negative passive income.  That means any obligation we have will automatically kill our passive income attempts and what that provides.  Of course, we could generate passive income to kill off our debt, and that would be an approach that snowballs quickly.  The more we can chip away at the principal portion of the debt, the better.  This can be supplemented by reducing expenses in general and moving those saved dollars to debt reduction or investments.

Regular Reviews Help

We often talk about periodic financial reviews of our businesses.  These not only help us see where our money is going, but they can also be a time to cut costs.  We might find a lower cost solution or haggle our way to a better deal.  In either of those cases, we have managed to reduce expenses.  This type of thinking is equally important to our personal finances.  Just as we can get into a spending habit for our business expenses, we can do the same for our personal ones.  Thus reducing costs may be as easy as changing a few practices.

Plan on a personal financial review at least a few times a year.  Go over the line-item expenses and category totals for a few months.  You will be amazed at the kind of insight this can provide.  You might even find several bills that you paid without getting anything out of the service.  Cut back where it makes sense and do a little shopping to attempt to reduce the cost of some of the "needs" on your list.