I've had a few conversations with my sister recently about our impending move and running two households for awhile. She has a big expense coming up in the next year also. One that she can't put off. So it brings up the issue of how to handle cash flow when a storm is on the horizon.

Step number one may be obvious: do not take on more debt. This should be easy for her. However, we already made plans to purchase a new to us truck, possibly borrowing at least half of the purchase price. We will need to look at this carefully in the next month. We need another vehicle. But do we need another loan or can we handle a larger loan to keep the cash flow available?

The next step is to stop paying extra on current debts, to set aside more cash for that storm on the horizon. Easy for us, as our only debt is our mortgage. For my sister, she has credit card debt that she has been focusing on. Luckily at very low interest rates. She will keep making minimum payments.

Finally, sock away the cash!! We have at least 6 more pay periods before our storm starts...paying for DH to move to school and paying for his living expenses. My sister her time frame is not as clear, thus more reason to hang on the cash when she can. If at some point in time she sees they can pay down some debt with cash they have saved and still have some for the storm then she will do that. Oh, and for my sister, her big expense isn't really a storm, but a joyous celebration!

As I write this, I realize that if someone had debt they could pay off before the big expense arrives and have time to save for it then would be the best situation.

The ability to save up cash for a future expense is a good way to avoid more debt. That is what we are both aiming for. Once the storms pass, we will definitely refocus our efforts on debt reduction and cash savings.

In the end it is all about cash flow. Keeping cash on hand to handle the expenses forth coming to avoidl more debt. Any other advice for those in this situation?