Who Gets your money every month? Does it go into your Piggy Bank or does it go to the Piggy Banker? Most of us don't really know where all of our money goes every month. We can account for the big expenses, the regular expenses but how about the extra soda or cup of coffee. These little expenses, for many of us, add up to several hundred dollars a month without even thinking about it.
I am not going to lecture on the evils of not watching every penny. But the first step in making your debt work for you is to know where your money is going and learn to control it. I specialize in helping people turn debt into wealth in very short periods of time.
The first thing you must do is to take an inventory of all the money you have coming every month. This includes retirement plan matches by your company, interest, paychecks whatever the source you need to know and list it all.
Once you list the income make a quick list of all your expenses. Car, house, electricity, credit cards, you know the recurring bills. Then make a separate list of the recurring lifestyle bills, groceries, gas, entertainment. At this point just an estimate is ok.
Now you have it all listed out. Add up all of the income, add up all of the expenses and then subtract your expenses from your income. What is left is called discretionary income. Money that you can do with like you please. Got a lot, good for you. Got almost none or look like it is negative, got a little more work to do.
Regardless of your discretionary income now is the time to find out how much stuff you own. Make a list of your assets. You will have several different types:
Liquid Assets--cash in the bank for this purpose, savings and quickly redeemable stocks
Equity Assets--value of your house, value of your car, retirement pension plan, IRAs, jewelry
Other Assets--value of furniture and toys of the adult lifestyle
Take an estimate as to how much you owe on all of the above assets (ie: balance on car, mortgage balance) subtract that from the total value of your assets and you have a general net worth. If you are like most Americans that average number is about $7500. Which is terrible compared to what we make as an average wage in this country.
Today is also the day to order your free credit report. This is not a scam site. This is the site set up by the FTC and the Credit Bureaus in response to last years legislation. Go get it and then take the estimates you have and begin to firm up those numbers.
In the next step we will begin to analyze the data and to help brainstorm ideas to turn our debt into wealth.
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