Moving forward

How do you feel? Empowered? Confident? Positive? You should...

This week's exercise was to recite, out loud, that you are taking control of your finances. We will be adding to this task, so don't forget to tell yourself every day that you are in control.

By committing to take control of your finances and reiterating that to yourself throughout the week, you've begun the journey to monetary harmony. This road will vary in length and course for all of us, because the journey is essentially personal. It will not be the same for any two people. However, I would encourage you to hold hands with your partner and take this journey together.

Allow money to be a tool which helps you encompass your values and live out your dreams. What is it that you've been wanting, more than anything, to do or be? What do you want to do with your partner in life? Start dreaming, because we'll be carving out your dreams soon. To begin on this journey, you must have an idea of where you'd like the road to lead you.

Before we do anything, though, we must take a tough step. We've got to put it all out on paper and figure out where in the world we are in the vast ocean of finance. That's right. Pull out your paperwork - every credit card statement, every receipt, your checkbook, your bank statement, your retirement and savings statements, life insurance policies, (if you have those accounts, if not, don't fret, you will later)... Everything that has to do with you and your wallet and your financial life must be pulled out. Separate everything according to type and take a look at what you've got going on.

Get a couple of file folders or an accordion file together and start making an organized system in which to house your documents. I would like to borrow David Bach's system of organization for this exercise. In his Finish Rich series, Bach asks that you use hanging file folders and a big box of folders to fill up the hanging folders. I use a large three-ring binder for all of my information. Again, make it yours and something that you will actually USE.

Bach says:

1. Label the first hanging file folder "Tax Returns." Put eight file folders, one for the last seven years plus one for this year, in the hanging folder and mark each year on their respective files. Put everything related to taxes in their folder - W2s, 1099s, copies of your return, receipts for deductions, etc.

2. Label the second hanging folder "Retirement Accounts." Create a file for all of your separate retirement account statements, 401(k), 403(b), IRA, Roth IRA, etc.

3. Label the third hanging folder "Social Security." In this folder, put all of the annual Social Security statements that you receive in the mail.

4. Label the fourth hanging folder "Investment Accounts." put all investment account information in this folder (other than retirement accounts). This includes mutual funds, stocks, bonds, information from your broker, etc.

5. Next, label the fifth hanging folder "Savings and Checking Accounts." Make a separate folder for each account you have and house all statements here.

6. The sixth hanging folder should be labeled "Household Accounts." Put information on your mortgage, lease or other household related information in their own folders. Make a "home improvements" file with receipts and dated information about updates and repairs you've performed.

7. The next hanging folder, the seventh, label "Credit Card DEBT." Make it big and ugly so it really tears at you each time that you see it. This way, you'll want to get rid of that folder as fast as you can. Create a separate file for each credit card account.

8. Label the eighth folder "Other Liabilities." These files will house anything other than debts associated with your mortgage or credit cards. Include student and personal loans, car loans, etc.

9. Label the ninth folder "Insurance." Create a separate folder for each policy, including health, life, car, homeowners, renters, disability, long-term care, etc.

10. Label the tenth folder "Family Will/Trust." Put in this folder the most recent copy of your will and/or trust (yes, you will be making a will if you have not already. Go ahead and make the folder, even if you don't yet have one) and contact information for the attorney who set it up.

11. Label the next folder "Children's Accounts" if you have kids. House here all the statements and records pertaining to their college savings accounts, CDs, and other accounts or investments you've set up for your children.

12. Finally, create a folder called "Net Worth." That's right, we're going to calculate exactly how much you've got and we're going to track it and watch it GROW!

You've got 10 days, even though this whole exercise should not take more than half an hour. Wedge in some evening time, some weekend time, any time - just put it on your calendar and keep this appointment JUST LIKE YOU WOULD A DOCTORS APPOINTMENT. No, you won't be charged a no show fee if you don't do it, but what we've been doing with our money thus far hasn't been working, so we must CHANGE and do things differently. We've committed to doing this now. So, let's get started.

I'll see you in 10 days. Here's to financial independence!

Cheers,
Shannon