So How Do I Get There From Here?

My mother always told me that the first step is always the hardest. The same holds true for starting a budget. The first step is not hard, but it can be very time consuming. You have to gather at least 3 to 6 months of statements for ALL financial documents. These documents include, but are not limited to:

Pay Stubs
Checking and Savings Accounts
Mortgage/Lease monthly statement
Home Equity Line of Credit (HELOC)
Credit card statements
Insurance statements (car, home, disability) – amount and type
Retirement account (401k, IRA, etc.)
College savings accounts
Rental Real Estate income, etc.

Once you have gathered all of these important documents, the second step that you need to do is set up a proper filing system. This could be as simple as an envelope up to scanning into a computer. This is perhaps the most important step mainly because you will be relying on these documents on a monthly, quarterly and annual basis. If you don’t like the system then you will not use it. Putting in a box or a drawer is not a filing system.

Depending on where you are financially will determine the next step. If you are in debt and just can’t stay afloat, then please keep reading. For the individuals who are not in debt, but just don’t know how to go to the next level, check back in a couple of weeks.

Now for the folks who are drowning in debt your next step is to add up all of your income (paychecks, child support, etc). Your next step is to then add up all of your debts. These include, but not limited to, all credit cards, car payments, rent/mortgage and any other creditor. This even includes loans made by your family members, friends, etc. This will bring us to our next topic­ – Net Worth.