Planning to Conquer Your Finances? So Am I

Posted by Jeremy in frugality, personal finance, self-reliance, simple living

I keep meaning to approach the subject of finances here. Mine aren't very pretty, but then again whose are? I recently lost my business to the flailing economy and as such have seen our household income plummet and our debt load increase.

Add to all that the new baby, maternity leave, and life in general, and our finances are a mess. So, I have decided that it is time to tackle the financial monster lurking in my office and here is how I am going to do it.

1. Organize the paperwork. I must admit, it takes a lot of apathy to let the bills and statements pile up like I have. But, first things first. I am going to invest a couple dollars in file storage boxes and file folders and I am going to sort through and file every piece of important financial paperwork that is cluttering the office space in the house.
   
   


2. Input balances and transaction to financial management software. I use Intuit's Quicken and Quickbooks for business matters. While these programs have a lot of bells and whistles any ledger you keep will help you not only rein in the financial monster, but stay on top of it in the long run. I used to be pretty obsessive about keeping track of everything, but somehow I let that go. It is time to get back on it.
   
3. Set and prioritize financial goals. This seems pretty basic. Things like: get out of debt by [insert date], save [insert amount] for a planned purchase such as a home or car, purchase [insert investment] for passive income by [insert date], etc. Then prioritize the goals.
   
4. Write out a plan to accomplish the top goal on the list. I say focus on just one goal at a time. If multiple goals can and should be worked on simultaneously then do it, but focus on one at a time for planning sake. take debt elimination for example. Your plan could be to pay off the highest interest rate card first then roll your payments to the next, or pay the lowest payment debt first then roll into the next. A savings plan could be as easy as: put $100 per paycheck into a savings or money market account.
   
   
5. Make a budget. This may be a little time consuming, but it is invaluable. Start with a list of your income streams and the frequency you receive them. Then list all of you expenses, and try to be as detailed as possible. If the income doesn't exceed the expense list, then you need to reevaluate your spending and adjust the expense list until you come up with something workable.
   
6. Decide to take action. In theory this is the easiest, yet in practice it is by far the hardest step. It is so easy to get derailed from accomplishing our financial goals. A car breaks down, a water pipe breaks, the fridge dies—the sky's the limit when it comes to roadblocks to financial success. Part of making the decision to take action on your financial goals will be to identify some of those roadblocks and include plans on overcoming them in your overall financial plan. The more prepared you are to meet those challenges, the easier your decision will be to follow through on.
   

Now, I admit, I am not anywhere near the most qualified person to be handing out financial advice, but these are the steps I am committed to taking to get myself on the road to financial stability and, one day, security. In the meantime, I recommend checking out these folks for great information on personal finance:

• The Simple Dollar
• Frugal Dad
• I Will Teach You To Be Rich
• Get Rich Slowly