Money Matters: Where Do You Stand?

by Susan Farrell

Do you know where you stand financially? I don't mean "in the hole" or "keeping my head above water" or "OK." I mean assets vs. liabilities, credit rating, retirement funds, insurance, etc. Women are often the money managers in a household, yet even though they may be able to tell you the day-to-day expenses and the basics on their bills and account balances, rarely do they know exactly how successful (or unsuccessful) their household finances are holding up.

Without knowing these additional details and organizing your finances, you really can't know where you stand financially. David Bach, in Smart Women Finish Rich (see book review), provides steps to achieving financial security and funding for your dreams. Bach not only is a financial adviser, but he also conducts investment seminars for women. His book provides some great insight about determining what financial security really means to you, how to determine what your present situation is, and how to set and achieve your financial goals, regardless of what your current situation is. Although I thought I knew my finances fairly well, his quiz "The 'Smart Women Finish Rich' Financial Knowledge Quiz" made me realize how much more I need to know. One example: Do you know what your Social Security benefits will be upon retirement? To find out, just call your local Social Security office (listed under "Federal Government" in the front of the phone book) or visit their Web site at www.ssa.gov and order your copy of your Estimated Benefits Statement. Be prepared, though, to be disappointed by the results. You certainly won't be able to count on those benefits to provide much.

So how do you prepare for the future? Well, the first step is to get a good solid grip on the present. Obtaining your Social Security Estimated Benefits Statement is a starting point. Request copies of your credit reports and find out your credit rating (see the resource list below for phone numbers, as well as http://www.seekingserendipity.com/MoneyTalk/WhatDoYouMean.htm.) Evaluate your debt situation by making a spreadsheet list of what you owe and the interest rates you are paying on those debts. Then create a debt elimination schedule by listing the debts in order by their interest rates, highest rate first, and determine how you can decrease each debt more quickly and what your options are to do so. Some of those options: second mortgages, consolidation loans, using savings or borrowing against your insurance or retirement accounts, a second income that is applied only to the debts, ensuring you pay on time/avoiding additional fees, cutting expenses you have and applying the saved amount to the highest-interest debts first. Even if this amount is only $3 a day, that amount adds up (more than $1,000 per year) and will make progress. There are many ways to cut expenses; you can check out the past "Penny Pinchin'" articles (http://www.momsrefuge.com/single/0001/penny.html) for some starter ideas, but the best way to start is to simply write down every penny you spend in a pay period or two, figure out what could have been avoided and spent more wisely, then force yourself to crack down and do it.

Another step is evaluating your investments and insurances. Gather all the documentation you have and organize it. Do you know how you could cash in on a policy or investment if you needed to? How accessible are the funds? At what rates are they invested? Do you have a will? (See article on wills at http://www.seekingserendipity.com/MoneyTalk/BeingPrepared.htm .) Do you have a designated beneficiary? If anything were to happen to you, does your beneficiary know where all your documents are, and is that person listed as the beneficiary or someone who can access these assets? Getting organized with all these documents and details can bring you a great peace of mind, and is an all-too-often ignored task.

"I don't have time to do all that," you may say. I can relate, believe me, but if you can't set aside one large block of time to do this, you can still take one step at a time and accomplish even just one task per week toward becoming financially fit. Start with the first task, right now, and just keep the momentum going!

Task List:

• Order your Social Security Estimate Benefits Statement (www.ssa.gov).
• Order your credit reports (800-685-1111, 888-397-3742, 800-888-4213)
• Write down every penny you spend in a pay period and find where you can save money -- even if it is only a couple of dollars a day or week.
• Create a debt elimination schedule -- apply the amount you saved in step 3 toward the highest-interest debt first to pay it off, then the next, etc.
• Create a list of real, obtainable goals. Break them down into reasonable steps. One goal should be to accomplish one step regularly, i.e. one per week.
• Organize all your insurance/investment and other financial paperwork. Check to be sure the beneficiary information has been updated on all accounts.
• Write or update your will. Be sure to provide a copy to your beneficiary and/or custodian. Include a list of items from steps 4 and 6.
• Investigate options on how to pay off your debts sooner and with lower interest rates.
• Read and learn more about finances. Keep current by reading at least one article per week. If possible, you may want to subscribe to an e-mail group/newsletter or magazine. (I keep a book or magazine with me in my bag or car at all times to read whenever I have a chance.)

The most important thing is to not lose your momentum. No matter how small, make a step or accomplish a task at least once a week. Keep a list of the steps you've accomplished and review them regularly as additional motivation. By getting organized, you'll gain control of your finances and know exactly where you stand financially -- just the first step to achieving bigger goals and dreams.

Resources:
Although financial advice books and resources are a dime a dozen, a few that I've found to be very helpful and well worth reading are:

Money for Women, a special issue by Money Magazine (May-June 2000)
Nine Steps to Financial Freedom by Suze Ormon
http://www.momsrefuge.com/career/0005/ledford/index.html
http://www.wfn.com
http://www.quicken.com
http://www.kiplinger.com
http://www.familymoney.com
http://www.money.com/money

To obtain your credit reports:
Experian, 800-685-1111
Equifax, 888-397-3742
TransUnion 800-888-4213