Financial checkup

Financial Reality Check

by Jeffrey Kosola on July 14, 2010

Want to get out of debt but don’t where to start?  Do you really know how much debt you have, or do you THINK you know?

It’s pointless to try climbing your way out of debt if you don’t know how deep the hole is.  Everyone needs a reference point to start out with.  Without one you have no way of knowing if your efforts are paying off.  Getting out of debt is 5% common sense and 95% effort.

The Worksheet

Using the worksheet below (click on the big orange button), you will be able to capture the required information to calculate your net worth.  YES, this part requires a little effort (remember the 95% effort part?).

Net worth is a simple equation in which the result will make you happy, sad, or angry.

Total Assets – Total Liabilities = Net Worth

If you have never performed this calculation, I urge you to take the time.  This is the first step toward becoming debt free for life.

In the worksheet, you’ll gather all your financial data and figure out what your current debt load is.  Understanding your financial position in relation to ground level (debt freedom) gives you a target to aim at.  I was 101,000 feet($) below the surface when I started, within a year I’ve been able to climb over 40,000 feet($)towards the surface. Let me tell you, the air (and your stress level) gets much better the higher you climb.

Things you’ll need

  • Balance of all checking and savings accounts
  • Balance of all retirement accounts (IRAs, Roth IRA, 401K, 403b, etc…)
  • Balance of your 1st, 2nd, 3rd mortgages (if you have any)
  • Balance of any vehicles (car, boat, motorcycle, atv, RV, snowmobile, etc…)
  • Balance of all other debts (student loan, credit cards, personal loans, 401K loans, etc…)

Using the worksheet

The worksheet is extremely easy to fill out.  You’ll be recording the name of the lender, the reason you have the account, the amount owed, and any reference comments you may like to note.

Getting everything in one place is essential for streamlining your record keeping.  I spend less than 10 minutes per month updating my net worth.  That 10 minutes is the most important in keeping the debt destroying momentum going.  Being able to watch the change in your financial position is what helps you to keep working toward your goals.  Even if there are only slight improvements, you are still moving in the right direction.  You’ll being to understand how everyday financial choices effect the bottom line, and you’ll begin to make the changes you need to continue improving your financial position.

The PDF includes the blank worksheets needed to begin capturing your data.  I’ve also include a set of sheets that are filled in with my current data.  The data is current as of today.  I’ve been able to drastically improve my net worth over the past year by understanding my starting position.  If you want/or need to get out of debt, PLEASE take the time to figure out your starting position.  Do it for your family, they need you to get out of debt.