The Top 10 Steps to Understanding Your Financial Situation
Category: Money, Financial (BH34)Originally Submitted on 6/14/98.
Most of us know that we should have a clear idea of our financial situation (or predicament, as the case may be). For many, the prospect is too overwhelming and we do not know where to start, so we don't. If the process is broken down into steps, it becomes more manageable.
1. Balance your checkbook to the penny every time you receive a bank statement.
2. Know the total value of your assets, including cash, investments, and property.
3. Know your total liquid worth.
This includes cash, money market funds, and anything you could immediately convert to cash for its full value should you need to.
4. Know how much you owe.
5. Know how much you pay out monthly for essentials.
6. Know how much you pay out monthly for everything, and exactly what you are spending your money on.
7. Know the rate of interest you are paying on all your debts.
8. Calculate monthly how much you are paying in interest on your unpaid debts.
This is not the rate of interest (above) but the dollar amount. (Better be sitting down when you do this one!)
9. Have a debt reduction plan that you can stick to.
Choose one bill, and make significantly more than the minimum payment on it each month until it is entirely paid off. Then apply that amount to the next bill, etc.
10. With all of the above, decide where you can cut your spending.
Investigate how to pay less in interest. Commit to saving, not spending, the extra cash that you save from following whatever plan you develop, and use the cash to further reduce your debt.
About the Submitter
This piece was originally submitted by Diana Robinson, Ph.D., Personal Development Coach, who can be reached at Diana@ChoiceCoach.com, or visited on the web. Diana Robinson wants you to know: I offer a Financial Organization program which covers guidance on items #1, #2, #4, #7 and #8 of the above. This service does NOT involve financial advising. You will not be advised what to do with your money, or how to 'get rich quick.' (If you figure that one out, please let me know!) You WILL develop the security of knowing exactly what your financial status is from month to month so that you can develop a realistic plan to improve your financial position. I also offer coaching to people in transition, and to those who are looking for an edge in the way they present themselves and interact with others. What is common to most of my clients is that they are already on the way up, but want to become more organized, and would like their abilities to become more visible so that they can be even more successful.
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