Know Your Point “A” To Get Where You Want To Go

“If you do not change direction, you may end up where you are heading.” Lao Tzu

I have a friend who is an avoider, a money and financial avoider. As a result, she has had her utilities turned off several times because she didn’t pay attention to the due date on the bill. She has paid countless amounts in her lifetime in late fees and overdraft charges because she never balanced her checkbook or paid attention to her account online. She runs from bank to bank trying to open and close accounts before the overdraft charges catch up to her. She rarely pays any attention to her bank account or finances. Actually she is afraid to because she always has a late fee to pay, or a bill that is overdue, or an overdraft charge that has been taken out of her account. It all feels “icky” to her. Well of course it does! If she only knew that if she paid attention, those late payments, over due bills, and bank charges would be a thing of the past. She never has any idea at any moment of what her financial point A is – her literal starting point. Now knowing this has caused her to avoid even setting goals or trying to plan for her financial future. If she is not careful, she will end up exactly where she probably does not want to go – older, unable to retire, and broke! How sad is that?

It is a sad story but unfortunately it’s echoed several times over in this day and age where people are pretty much programmed for instant gratification. They want what they want and they want it now. That is great when it comes to Internet speed, ordering food, and other things that have nothing to do with money or wealth. However when it comes to your financial future, setting and achieving goals, building wealth, and retirement, you have to be willing to do the “not so great stuff” like saying no, saving money, paperwork, planning, and making sacrifices.

Before you can plan for a different financial future (Point B) you must get very honest with your current financial situation (Point A). Sitting down to take inventory of your current financial situation is a key component of future planning and building real wealth.

  • How much income do you produce – monthly, yearly?
  • How much money do you spend – monthly, yearly?
  • Are you making money or losing money? Do you live above your means or below your means?
  • What is your “monthly nut” (fixed bills)? How much does it cost for you to live monthly – mortgage, car, gas, utilities, phone, Internet, food.
  • Where do you spend your money?
  • How much credit card debt do you have?
  • Are you saving money? Consistently?
  • How much money do you tithe? (See tithing blog)
  • What is your current credit score?
  • What is your current net worth? Net worth = Assets (what you own) – Liabilities (what you owe)

If you don’t know the answer to any of these questions, take the time to find out. Sit down with your significant other and answer these questions together. I realize that being honest about your Point A can be inconvenient and uncomfortable. Building wealth is inconvenient and uncomfortable, too. That is why most people don’t know their Point A, and also why most people are not wealthy. Many people are interested in being wealthy; few people are committed to being wealthy.

If you are new to all of this, start slowly and take small bites at a time. First bite would be getting clear about Point A.

Renee Cermak

“World peace rocks and so does being rich.”   Mike Dooley

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