DIY Financial Plan: Step 3 & 4

The third step of the financial planning process has been to analyze my balance sheet.

A balance sheet will help you to calculate your net worth.

Things to include in your asset column are:

  • Cash
  • All investments
  • Home value
  • Vehicle value
  • Personal property value
  • Other assets

Next, consider your debts and liabilities, such as:

  • Mortgage balance
  • Vehicle loan balance
  • Student loans
  • Other loans
  • Credit card balances

The difference in value is your net worth which can be negative or (hopefully) positive.

The purpose of determining your net worth is so you can not improve your situation and you will see incremental progress.

I began a consistent written budget in April 2018. At that same time I began tracking my account balances and net worth at the bottom of my spreadsheet.

During that time (28 months) my net worth has increased 25%. I went from having debt on two credit cards, one auto loan and a mortgage to having just a shared mortgage.

I feel comfortable that I know where my debt is, where my money goes and what my asset allocations are.

The fourth step of the financial planning process has been to analyze our insurance policies.

This month Mr. Cabbage and I reviewed our home and car insurance policies and found we could save money on both. In a rush to close on our home last year we maxed out some coverages that we didn’t need and hadn’t shopped the policy around. Before it renewed this year, we found areas to save by taking just an hour or two to review it and make a few calls.

We combined our auto insurance policies this month as well. This saved so much and no, you don’t need to be married to do it. I am driving one of Mr. Cabbage’s cars (since my car was totaled) and I was still paying like I owned a car. What a dummy!

By making these two small moves and maybe four phone calls total, we saved enough for an extra monthly mortgage payment every year.

Later this month I will also spend some time reviewing my health insurance policy though I already have a great high deductible and HSA plan with my company contributing 50% of the deductible.

Categories: money

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