I Don’t Even Know Where to Start!
May 23, 2014I just got a new laptop and had to figure out what to do with all of my old files, work and personal, along with music, photos, and video. It was a chaotic mess. There was my old personal laptop, my old work laptop, an old desktop and an iPad all in one corner. It was like the land where technology goes to die. I wasn’t totally sure how to manage the craziness that had become my tech life.
Fortunately, I have friends (and kids!) who know far more about how to merge everything together than I do. So I ended up getting an external drive and moving all of my files on all of my various pieces of technology to the external drive. They are all accessible on my home wireless network and now my work laptop has only my work stuff and my personal one has only my personal files. It is now a very easy platform to manage and I feel so much better now than I did when I had stuff in a big hodgepodge all over the place. If you’d like to learn how to do this, here’s a cool video I found AFTER I did this with my computers: computer file cleanup video (Why do I find these things after the fact…….?)
When I sit down and talk to people about their financial lives, I often hear that they are in a position with their finances similar to where I was with my computer files. They aren’t sure what they have and where it is and what to do with it and it all seems so overwhelming that they don’t even know where to start. That’s a fairly common theme. “I don’t even know where to start!”
The easy answer always seems to be “just start” but that lacks a bit of direction. So then it becomes a matter of making the first thing you do a thing that actually has value so that you feel a sense of accomplishment and maybe stay motivated to do more. The best way I’ve found to get someone started is for them to see the aerial view, the big picture, and then move into more detailed things later.
The big picture is simply a list of everything you own vs. everything you owe. The first part of this Net Worth Sheet allows you to do exactly that. Listing all of your assets, then all of your liabilities gets you to the net worth figure. A great thing to do is to update this at least annually, either at the beginning of each year or on your birthday (my personal tradition, yep, you can call me a geek) or on any day that works for you. You can track your progress each year and after a decade or so look back and think “Wow, I’ve made a ton of progress!”
After you see the big picture, the next step is to see what’s going on in the smaller picture. That’s your monthly cash flow. That is what will drive the net worth higher in future years.
The toughest part of anyone’s financial life is answering this question: “Where does your money go?” People seem to know the big things like mortgage and car payments but after the big ticket items, the picture gets fuzzy. When you KNOW where the money goes, you are in the position of taking control over it and not simply just allowing it to go anywhere it wants.
I view your dollars a bit like a puppy on a leash. If you don’t assume control, the puppy will and she will take you in all kinds of directions without much of a plan. Your budget will do that if you don’t assume control.
And like the puppy, if you take control and train it, it can be a hugely important family member for a very long time. If you control your budget, train it to do the right things, you will be on a path to financial security. If not, well…you don’t want to be on that path. This Budget Worksheet (the last tab) and Mint are tools that I use regularly to make sure my puppy stays on the leash and doesn’t drag me all over town.
If you’re one of the many people who are paralyzed or unable to get started because you simply don’t have the foggiest idea what to do as step 1 or you don’t want to know what you’ll find, I hope this points you in the right direction. Sometimes, taking that first step is tough. Take it!!! You won’t regret it.