O Be Wise

2009-06-20T20:17:00.001-07:00

We all want to accomplish something wonderful with ourselves. Financially, that is really a struggle for some people, but I tell you that any one can be in control of their finances. Today I have a few suggestions about step

#2. Develop your own cash-flow statement monthly or quarterly and compile them into an annual statement each year.

Cash Flow- Income/Expense Statement

This is a great tool to account for if you are living with in your means. The average American household owes 20% more than they make each year. Newsweek Feb 2008
By tracking your cash-flow you're able to get a good idea about how your journey through life's going to be. Is your income increasing? As it does, do you increase your savings? or your expenses? Are the majority of your expenses necessities or items that could be cut out of your budget with some sacrifice and discipline?

Step #3 Calculate your financial ratios periodically and use them to assess your financial progress.

Financial Ratios Worksheet

Debt Payment -To-Income- Ratio, Debt-To-Asset Ratio, Basic Liquidity Ratio are all very important to ascertaining your financial stability as well. On these notice the recommended ratios... BLR- 3.0 or more DTAR- the further below 1.0 the better, (because 1.0 is insolvent) DPTIR- below .36 is adequate, .36 to .41 is marginal, above .41 is risky.

So as we fill in our personal numbers try to asses where you are.

If you are out of the safe limits, we'll be covering soon- how to reduce your expenses, increase your income, improving your budget and much more to make sure you're Ratios are where they need to be!

Coming next is Steps 4-6! Is this helping any one?

Golden Rules

2009-06-01T21:22:00.000-07:00

How did every one do on their goal setting? I hope you took honest thought to where you want to be in the future and what you'll have to do to get there. I know that if you don't have specific goals written down where you'll see them often, when times get rough, you may fail...

Here are the golden rules of financial planning we're now going to follow to set our selves up to succeed!

1. Develop a list of your goals. Start with the short -term goals and then expand your list to longer-range goals. Update and revise your goal annually.
2. Develop your own cash-flow statement monthly or quarterly and compile them into an annual statement each year.
3. Calculate your financial ratios periodically and use them to assess your financial progress
4. Develop a Balance Sheet
5. Develop specific financial strategies so you can always keep a balance between spending and saving.
6. Start an uncomplicated personal financial record keeping system that meets your needs!

I will cover 2 of these next week and the last 3 the following, so if you don't understand all the terms or have the resources, worksheets or know how tune in next week! (we have already done step one and set our goals!) I hope you'll stick with me and together we'll do something great. It won't come all at once, but run the mile one lap at at time and you'll finish!

First Step

2009-05-25T22:23:00.001-07:00

Hello everyone and welcome to step one!

The first step to fixing a problem is identifying the problem! So that's what we're going to do with CNN Money, this link is a great place to start finding out how "healthy" your finances are. It will take you through the areas of housing, debt, emergency savings, diversification, company stocks, life insurance, and retirement savings. As you enter each of your personal #'s in, it will explain if your in control of that area or need improvement! Red circles are areas you need to improve on and blue circles are the ones where you need to keep up the good work!

CNN Money

How did you score? If all your circles didn't turn out blue in the end, here's a start...
1. Set Financial Goals- Have realistic short and long-term goals. If you don't have something you're working toward you're not going to see the point of the next steps of achieving financial success.
*So take a look at your Financial Health and set some goals to improve in the areas of your finances that are lacking! Here are some guidelines to setting goals. If you have any questions or need additional info send me a comment and we'll clarify! Happy Goal Setting!

Welcome One and All

2009-05-17T12:15:00.000-07:00

I am creating this blog to share financial knowledge in a very easy, professional manner so that you can take control of your financial lives instead of it taking control of you. Please spread the word about this blog to anyone you think would benefit from it!
How many of us went to school semester after semester learning things like... pi to 4 decimal places (3.1416), or that the square of the hypotenuse of a right triangle is equal to the sum of the squares on the other two sides (Pythagorean theorem), or the fact that the world has an Inner core, an Outer core, a Mantle, an Asthenosphere, a Lower region, a Mohorovicic Discontinuity and a Lithosphere? Jupiter has how many moons again? Don't get me wrong, these things are all useful in their respective place and field. However, how often do we use these things? Daily? Monthly? Yearly? Once in our lives (just to pass the test, right?) Are these facts and knowledge pertinent to functioning normally in our society? Mostly I'd think not. Yet, we use money EVERY DAY and how many of us learned in school things like The Rule of 72? Estate Planning? Budgeting? Net Worth? Investment Philosophies? Insurances? Time-Value of Money? Credit? Loans? Taxes? Debt-to-Income Ratios? Inflation/Deflation? Dollar-Cost Averaging? The Economic Cycles? IRAs? Net and Gross Income? Passive Income? Personal Financial planning? Contracts? Qualified Retirement Accounts? Financial Independence Number? Risk? Simple Interest? Deductions? Vesting? Writing a Will?
These things can affect us every day, but we are not taught how! We are not taught where to find this knowledge! We're not taught what these things mean or why they are!
"A lack of financial literacy can result in a person falling prey to investment scams, buying the wrong kinds of life insurance, incurring excessive levels of consumer debt, paying too much interest on debt, spending money unconsciously or frivolously, delaying saving for retirement and ultimately being unable to reach his or her financial objectives!" - Personal Finance Gorman pg 3.
So, come along with me as I learn and be wise in your finances! What can I say more?