Yesterday, I gave you some homework which was to basically describe your ideal life and why it was important to you. If you missed that episode – Episode 662 – stop, go back and listen to it first because today’s episode builds on it.
Once you know what your ideal life looks like – your vision or your destination. The next part, is to analyze your current situation to see how close or far away you are from your destination. The difference between where you are now and where you want to be is the gap you need to fill.
So, what’s involved in analyzing your current situation? Some of the tools that will be useful here are a Net Worth Statement and a Budget. Your net worth statement because it will show you any assets you have available to help you get to where you want to go as well as any liabilities that could hold you back. So if in completing your new worth statement your find that you have some cash in savings, that could help you get closer to my destination. On the other hand, if you find that you have a great deal of debt, that could make it more difficult. So the next thing you would need to decide, if that’s the case, is if you can pay off the debt as you go along or if it would be better for you to stop and pay off the debt first.
One question I like to ask at this point is how much are you paying in interest on the debt. If it’s less than $50 a month, you can probably pay it off as I go along, but if it’s more than that, it maybe a good idea to a least consider putting a plan in place to pay it off because the more money you have to pay in interest, the less money will be available to get you to your destination. It’s all about choices.
And, that’s the minute for today. Tomorrow we talk about the budget. In case you need it, I have put together a net worth statement and a budget sample and template that you can download. To get your copy, visit www.mindingyourmoney.org and click on Episode 663.
Thanks for listening and as always remember that minding your money really is the path to a richer life!