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 […]

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DIY Financial Plan: Step 2

The second step of the financial planning process has been to analyze my cash flow. Advisors recommend aiming for a 50:30:20 ratio. This means that 50% of your after tax income is for living expenses or needs (mortgage, utilities, food, gas, etc), 30% is for working toward your goals (savings and debt payoff), with the last 20% used for fun […]

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DIY Financial Plan: Step 1

As I learned, when I interviewed financial planners and in my research afterward, the steps of a financial plan are standardized and I’m going through all of them here. The first step is to layout clear financial goals. This will shape our plan and guide how we direct our money to work toward making our goals our reality. Examples of […]

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