The idea for this plan has been at least a year in the making, and it's finally come to the point where I've heard enough.  I want to lay out a step by step plan for any homeowner to follow, regardless of whether or not your are upside down on your mortgage, still have ridiculous equity, jobless, or even if you have no problems at all.

I can assure you that if you follow the sound advice in this blog post, you will be on the road to achieving the life of your dreams. There are so many different ideas of why people need more money, whether it be putting your kids through college, taking care of your parents, wanting to travel more, or even wanting to work less.  Each of them has its own merit, and by no means does this make a difference or not, so try not to deviate from the plan.

Step 1-Analyze your personal situation--Ask  yourself the all important question: "Do I want to simply become debt free or do I want to create wealth?" If the answer is the former rather than the latter, go ahead and stop reading.  Keep doing what you are doing and keep getting the same results.  In order for you to get to where you want to be, you'll need to break habits.  These habits can inhibit you from getting to where you want to go.  I like to call it, "The State of You" address because you're telling yourself where you are (you know, just like the State of the Union address or the State of the State Address where the president or governor talks about the condition of the matters of each respective unit).

A quick story. One day while I was walking around Barnes and Noble, I saw out of the corner of my eye, a book by Tony Robbins called, "Awaken the Giant Within".  Honestly, I had heard a lot about him, especially in the real estate and mortgage industries, but I didn't have a care in the world about self help stuff.  I've always believed that you are shaped and molded as you grow into the person you are today.  More of a nurture rather than nature type thing.  Self help, I though?  Yea, right!  But I went ahead and bought the book anyway and ended up reading it from cover to cover. I'll spare you all of the details, but the one main point that I have take from this book was that YOU have the power to change anything.  It's a matter of mindset...PERIOD!

Here are some situations that you can apply to the current state of the US (bad economy and all) in order from most severe to least severe:

Jobless, homeless, just divorced
Jobless, homeowner, upside down equity
Jobless, homeowner, still have equity
Have a job, homeless, just divorced
Have a job, homeowner, upside down equity
Have a job, homeowner, still have equity

Which one are you?  Chances are that if you're reading this, you are not jobless or homeless, but you might know someone who is.  Use the rest of this guide to help them.   If you're at the top of this list, there is still hope for you, but you'll need to dig even deeper.  Let the human spirit endure.  Thrive.  Make the conscious decision to make a change right now.  The difference is that you'll need to do more than the average individual who might not be as far in the hole as you are.  The worst thing to do is panic, because when you panic, you won't make sound decisions.  A friend of mine, went from being dead broke, no job, no home, and an unhappy family, to the head of a prominent real estate organization here in California.  He did it because he finally realized that enough was enough.  So, by analyzing your current situation you'll figure out where you need to go.  There's this quote that I always remember, "you can't get where you're going without knowing where you have been."  It applies here, doesn't it? 

Step 2-Take Action-OK, so now you know where you are and you need to decide where you want to be.  What is it that you envision for your life?  Again, if your answer is to simply be debt free, you've read too far.  If you want to be highly successful, rich, retired, doing what you want to do, now we're getting somewhere.

Since this action plan is for homeowners, the best advice that I can give for people who are not homeowners is to find a way to get one.  You're long term wealth actually depends on it.  Houses are dirt cheap right now, and by all means, buy if you can buy. If you try to chase the wave, I guarantee that you'll miss it.

If you're jobless, you'll need to go and get a job or make one.  Become an entrepreneur, but make sure that money is coming in some way, shape, or form.  Getting a bank loan depends on it.  I don't care how good the deal is, the bank will not lend you money if you don't have the ability to pay it back.  The other way would be through private money, which can be done, but not without a very detailed plan.

If you're a homeowner with upside down equity, keep making the payments.  Do whatever you can to save a little in the bank until you have twelve months worth of expenses.  By doing so, you are hedging against a potential job loss.  In which case, you can live off of your savings while you make every effort to find more work.  I would never advise someone to stop making their payments, because you won't be able to borrow money for a long time.  Borrowing money is actually the key to making real long term wealth, especially mortgage money.  Since you've got nothing else to lose, go ahead and try and have your mortgage modified.  Maybe you can get lower payments or maybe the bank will reduce the principal.  Also try and get your property taxes reassessed.  These are two ways to minimize your expenses.

If you're a homeowner that still has equity, REFINANCE right now.  The interest rates for various mortgages are still really good and the prediction is that they will be good for another month or two.  Take advantage of a lower payment so you can stock pile your savings account.  Take money out if you can, and use that to fill your saving first, then invest the rest.  Diversity is the key with investments and I'm not just talking about different types of stocks. I'm talking about stocks, bonds, real estate, gold, oil, and international securities.  Each of them creates a hedge, so when one is not doing well, another is.  This is the way to maintain a consistent rate of return year after year, without losing money.  Don't believe me?  Check out a graph of T-bills vs. gold.  They're almost mirror images of each other.

Step 3-Stick with the plan-You should always move forward.  For this last section, I've created a list for you to go about doing in order to create wealth. By analyzing your current situation and taking action, you'll soon find you're doing the right things to make real hard earned money in this world.

In order of importance (with 1 being the most important):

1.  Earn money-You have to make money somehow, or the rest is not possible.

2.  Pay off bad debt-(credit cards, car loans, auto loans, and personal loans). The faster you can pay these off, the better.

3.  Get a long mortgage-30 yrs or even 40 yrs, which ever has the lowest payments (must be affordable though...and don't extend yourself too far).  The slower you can pay these off the better.  Extend your payments for as long as possible.  Minimize your monthly payment as much as possible. This leaves more money to invest.  For other reasons, see my "Top 10 Reasons to use your mortgage to create wealth" blog posts.

4.  Build up 12 months worth of savings-Liquidity is key.  If you have 12 months in your savings, you have an entire year to turn things around should something bad happen.

5.  Invest-Find a financial planner and invest what ever you can after everything else is taken care of.  Why?  You can now grow your cash and this is what creates the real long term wealth.  Again, the key is to diversify.

And that's it.  It really is that simple.  Hopefully, these three simple steps will help you go from where you are now to where you want to be in your life.  As a side note, this isn't some get rich quick scheme.  It takes time and effort to make it happen for most people. Sure some people inherit money or come into money one way or the other, but this should help them reach their goals faster.  Be the change that you want to see in your life.

Jeff is the founder of Mortgage Wealth, a blog dedicated to helping homeowners build wealth through proper mortgage planning.