- Take Control of Your Money
- Identify Leaks in Your Personal Finances
- Keep a Record of Your Cash Expenditures
- Gain an Understanding of Where Your Money is Going
- Begin Using Financial Software
- Read – Chapter 4, Conduct a Financial Inventory
- Complete the activities
- Gather all your personal financial records and enter the required information into the Financial Inventory Worksheet
Lesson 2 – Money Values
One of the struggles most people face is that they have no idea where they are financially. Before you can create a plan to get out of debt and build a wealthy life, you must determine exactly where you are financially and identify some of the things that got you into that position in the first place.
This step can be a painful one, as some people don’t know exactly how deeply in debt they are until the evidence is on paper. While it may be discouraging to see the real magnitude of your situation, the activity of gathering and listing your obligations is a necessary part of the process if you really want to change your behavior and get on the path to a debt-free wealthy life.
It’s Your Money—Time to Take Control
Use the form on the next page to conduct a personal financial inventory. Be as accurate as possible and include all debts and expenses. In order to eliminate all your debt, you will need to know exactly what debts and expenses you have.
Gather your most recent statements from your credit cards and other monthly obligations. Most will have the current balance on the statement. If not, you may need to call or contact the account holder or company.
Although the content in this lesson may seem brief, your assignment to gather and enter accurate financial information may take some time to complete. However, it’s very important because this financial inventory will become the foundation for the debt elimination plan you will create in Step 6—Build and automate your plan.
Activity 4.1: Your Personal Financial Inventory
Identify Leaks in Your Personal Finances
Remember Ross’s example about water slowly leaking into his basement? This exercise is designed to help you identify the leaks in your personal finances. Everyone has a few leaks and we want to find them and plug them as quickly as possible. If you are like many of the people who complete this simple exercise honestly, you may discover several hundred dollars that is slipping through the cracks in your personal financial plan each month.
Keep in mind that the goal of The 60-Day Money Miracle program is to get you out of debt using just your current income.
In order to make the program work, you need to identify where every dollar is going. Some of the categories on your personal financial inventory might be hard to determine. If you spend cash, you may not have an accurate record of your purchases—such as soft drinks, snacks, lunches, entertainment. To get an accurate total for each expense category you need to keep track of your cash expenditures as well as your checks, credit and debit card charges. Account for every single penny!
Activity 4.2: Record Your Cash Expenditures
So starting today, begin keeping a record of your cash expenditures for the next 30 days. You may think this is impractical, but it’s an essential part of learning to make wise money decisions.
In order to find the extra money you will need to pay off your debts faster, you must identify where the money is going right now. Take this seriously and it will be a great learning experience to help you accelerate your debt elimination.?
Keep an Accurate Record
You need to record what you spent it on and how much you spent. The easiest way to do this is to carry a small note pad with you for the next 30 days and write down every time you spend any money. Or, use the Daily Tracking Form included in the PDF workbook for this lesson.
Once you complete the 30 days of recording your cash spending habits, you need to categorize all expenses into some basic groups to help see the leaks and identify areas that need immediate attention. This will help you begin to prioritize your expenses to bring them back into balance with your income and create a realistic budget to guide you through the rest of this seven steps.
Many people who complete this simple exercise honestly, discover several hundred dollars that are slipping through the cracks in your personal financial plan.
At the end of your 30-day tracking period you’ll have a good idea where all your money goes. Be prepared for a few surprises. This exercise can help you identify leaks in your own personal finances, and possibly other areas of your life as well.