Your Quarterly Checkup

Now, before you can get into things like setting financial goals and such, you need to know where you stand. I am big believer that you can’t check up on your finances every now and then, you need to do it on a regular basis, several times a year. Personally, I do it quarterly. Aside from the first time you do this, it will only take maybe 15 minutes of your time, once every three months. 

I do mine the last day of March, June, September, and December. I like December most because it rolls around in time for you to make a Financial Goal for the Year. Basically what you are doing on these days is you are calculating your Net Worth. Your Net Worth is how much money you have that is not tied up in debts. I look to see if it would be possible for me to pay off all my debts and still have something left over.  

Here’s how I go about it. There’s this wonderful program called Excel. I opened up a spreadsheet, and use one page for debts, one page for my bank, retirement, and investment accounts. This sheet also has a spot for my Disaster Cash (which we will talk about in another post). The final sheet I use for my ‘hard assets’. These are things like your bedroom set, how much could you reasonably sell it for if you needed the cash? Anything that you own outright, and could sell if you really needed the money. Do not include your house or cars if you are still making payments on them! Those balances, the part you still owe, should go on your debt sheet. 

On my sheet, column A lists the different accounts or assets. On your asset sheet it would be things like, “Savings” “Checking” “401k”, etc. On columns C, E, G, I, and K, I have the date of each check up. I start mine with the last one from the previous year, so mine are Dec. 31, 2012, March 2013, June 2013, September 2013, and December 2013. This way I can see my progress over the course of a full year, I can see how much I’ve improved (or still need to work on) since last year.

First, you calculate how much debt you have. And I mean total debt, not just what your monthly payment is. If you have a student loan for $5,000 but your monthly payment is $20, then you put the $5,000 into the calculator, not the $20. Any credit card balances, student loan balances, mortgage amounts, etc. as they are the day you are doing this. If a payment hasn’t cleared, don’t calculate that in! If your student loan balance is $3,523.12, enter $3,523.12, not $3,473.12 because you are going to make a $50 payment tomorrow. 

If you own your home or car, and are no longer making payments on them, they go on your assets sheet, not here.  Make use of those little automatic calculations that Excel does for you.
Make sure at the bottom of each column you have a total debt amount. You will use this later!

Next calculate your money! On another sheet of the Excel spreadsheet, list all of your bank accounts, retirement funds, emergency funds, Disaster Cash, and I include my investment account here as well. Again, enter the totals for the specific day you are filling out. Look at the current account balances and insert them into the sheet. Don’t put in your next paycheck unless the paycheck has already deposited! A hard thing with this one, is that sometimes my investment account doesn’t update because the stock market info isn’t available or it’s a weekend. I just check back each day, a couple times a day sometimes, and once a total shows up, I enter it in. 

Again, get a total dollar amount for all of your accounts added together.

Finally, this is the one that took me the longest, BUT only the first time I made the spreadsheet, sit down and calculate your ‘hard assets’. These are all of the things you could sell should you desperately need the money. Things would include furniture, appliances, books, etc. Be sure you are realistic in your estimations, in fact, estimate low. Think yard sales, where people price things but then buyers come along and haggle them down. My list includes items like my headboard, my sewing machines, tv, antique desk, and dvds. If you own your home or car, include them on this list! Again get a grand total dollar amount. 

Then what you do is you add your hard asset dollar amount to your bank account amounts. Then you subtract your debt amounts from this number. If you end up with a negative number, no worries you’ll just have to set some goals and build some assets!

If you have a positive number, congratulations! You have a positive net worth and are doing pretty good financially. 

I'm off to get started on my 3rd quarter total, and see what needs to be done between now and the New Year ;)

In the next few weeks we’ll cover some things you can do to help you set financial goals, keep track of those goals, and even start saving some money!