Budgeting is first.  It is the foundation for all of your planning and will make everything else easier.  A budget is simply accounting for income and liabilities (bills, what you owe). You have to know where your money is going before you can control it. Use one of the budget Tools on the Tools page that works for you.

Account for all income
Account for all liabilities (Bills)
Sum should = $0.

If you cannot resolve to $0, you either have not accounted for all income or all liabilities. Don’t forget to count your recreational money! (Coffee, butts, scratch tickets, dining out, lottery, take out).

This is so easy!  You’ll feel so much better when you do it.  Once you have a clear picture you can easily make changes.  Now you are in control!


Debt is money you owe. mlss_mario-hammer2Ideally you don’t want any debt, but it is a part of life.  You need to manage it before it stops your progress. Look at Mario here, always ready to smash debt when it starts appearing! Some examples of debt are..

  • Credit Card
  • Auto Loan
  • School Loan
  • Mortgage
  • Personal Loan

You need to manage your debt like a nuisance.  Can you eliminate it? Can you get better rates and manage the pain in the meantime?

Track your Debt in your NetWorth Tool.  No matter what, pay off the monthly minimums on all debts.  If you don’t, this can affect your credit score and future finances.

There are two popular strategies for erasing debt.  The Snowball strategy:  Pick the smallest balance of your debts and work to pay that off first.  Celebrate the achievement.   Now go for the next smallest balance. Credit to Dave Ramsey for sharing this strategy.  The Avalanche Strategy:  Pick the debt with the highest interest rate and work on that first.  This will you save you all the high interest you are paying.  I learned of this from Scott Alan Turner.  The Good Sleep Strategy: I just made this one up.  Pay off the debt that bothers you most.  The one you worry about most and would sleep better if it was gone.  Mmmm sleep.

Net Worth

Net Worth = Assets – Liabilities.  It is a measurement of your assets (savings or equities) – liabilities (debt). Is it growing or shrinking?  You can calculate your net worth using one of tools on the Tools page.

While its nice to know your Net Worth, the final number doesn’t mean much. It’s not a contest.  But in order to calculate your Net Worth you have to have a list of all your assets and liabilities.  Thats the good stuff!  Filling in the blanks is the process where you discover what you do and don’t know about your finances. This gives you a clear picture of your finances and the tools you need to make improvements.

See the person in the image on this page? They have a pretty clear view of the landscape.  It is hard to get directions when you don’t know where you are.