Hard to believe that we are half way through the fourth month of the year. Older folk are always talking about how time speeds up, and younger folks are always ignoring them, but I'm here to tell you whippersnappers....

I always liken the stretch from Christmas to the middle of June as the stretching of the rubber band, almost to the breaking point. Normally, in fact, I do go into the red and spend half of summer just catching back up again.

This year has been down in sales, but probably the best cash flow I've ever had, which just goes to show that the level of sales isn't necessarily the most important statistic. One of the interesting things I've learned is that I can make just as much profit with lower sales, if the inventory is ordered correctly. You just have to be more efficient.

I've been reading with interest the problems that pizza places and such are having with higher prices of materials. I don't really have that problem; ironically, I make more money off of price increases, off of Suggested Retail Prices, since I make a percentage of the sale and that doesn't change. The pizza places and such are in the unenviable position of having to decide whether to eat the difference, or pass along the price increases.

So it's really a matter of keeping overhead down, and profit margins up.

Don't get me wrong. I love having higher sales, but not at the cost of margins.

It's startling to me that I'm only 2 months away from the kick off to summer, which is where I usually make money. Which means I am well over the hump.

Native optimism is my downfall, so I've taken the occasional negatives to heart. The withdrawal of my HELOC was surprising to me, since I've been so good at paying off my equity, but it was a sign. Paying off and canceling one of my two credit cards threw me into negative cashflow for a week or two, but in the end inspired me to be more disciplined.

This month has been great with sales -- at last years levels, so far. I'm further along with bill paying than I expected, and I'm thinking -- would it really be breaking the budget to take the 'extra' cash and buy inventory?

So I start watching George Soros on Charlie Rose last night, and it was like a splash of cold water.

I know it seems strange that I'm finding it hard to find negative news to motivate me. It was easy to see the housing bubble a couple of years ago, and to be alarmed by it. But once it burst, it's been much much harder to get a lay of the land. This current season is when a lot of what matters will happen, but we won't really know the results until it's over.

But when I look at all the underlying factors, nothing has really changed. I have to remind myself what I said at the beginning:

Bubbles burst sooner, harder and longer than you think they will.

In effect, I've been cutting back and hedging my bets ahead of events all year long. And it's worked out great. If I over correct in the hedging side, it's not very difficult to take on more risk later on. But if I take on too much risk, try to leverage, tie up cash in inventory, it's very difficult to correct with a slowdown.

So I'm sticking to my mantra of: cash is king. Eliminate debt. Keep the cash flow in the black, and if there is a recovery, it will turn into profits.

It's agonizing to me not to order everything I want. I got very spoiled over the last few years, just like everyone else. But unlike most people in business in Bend, I've experienced a deep recession before and I never want to go there again.