Financial Freedom Step 1
“If you live long enough, you’ll make mistakes. But if you learn from them, you’ll be a better person. It’s how you handle adversity, not how it affects you. The main thing is never quit, never quit, never quit.”
I don’t know what your financial situation is and you might not either, but if you are like the average teacher, it is not pretty. However, not knowing your fiscal status quo is the biggest blunder that you can make. It is easy to think that you have everything straight in your head or that you will just keep track of your bank statements, but the average household has more financial plates spinning than they realize. This leads to people sticking to a monthly routine that was not made with purpose or logic but instead was haphazardly slapped together over time out of immediate necessity.
The very first step in getting your financial house in order is to figure out where you are, and by that, I mean you have to figure out your debts, assets, and expenses. If your eyes just rolled back in your head or you just realized that you have something else to do and that you will be back later… STOP! We all know that you are not going to come back to something that you don’t want to do. Don’t worry; I am not going to have you jump through silly, ephemeral hoops for kicks. I truly believe that getting your bearings is essential. However, I don’t want to give you a tedious and time-consuming hourly chore. SO I am going to share a web service with you that is free, safe, and automated.
Mint.com is a game changer! You should sign up right now, before you finish this article. Go ahead; you don’t have to put everything in yet, just sign up… I’ll wait…
I am going to assume that you signed up for Mint but have not done anything else yet. I am proud of you! You have made a huge first step toward financial health. Let’s strike while the iron is hot and keep going. The rest of this blog is going to be a to-do list for you to take care of at your own pace but in order:
Your primary bank account should be your first step here. We will talk soon about getting the best bank account you can, but for now you should enter your current bank. If you have multiple accounts at a bank, they will all be entered for you when you connect that bank. If you have accounts at multiple banks, enter them all. Think about anywhere you have money in all of its forms. Checking Accounts, Savings Accounts, CDs (Certificates of Deposit), Retirement Accounts, etc. Enter them all in Mint.
Other possible assets are things like cars, homes, and investments. Mint will connect to a huge number of accounts and will also find a value for things that do not have accounts. For instance, you put in your address and Mint will look up the current market value of your home on Zillow. Cars as well; however, they are valued through Kelley Blue Book.
Next up is the dirtier side of your net worth – your debts. This part is even more important than entering your assets so really get your mental magnifying glass out and pull up everything you can. Home, Student, and Auto Loans, Major and Store Credit Cards, everything you can think of. Dig deep and be thorough! Our final step is to start setting goals, and if a debt is missing, we might not make the best plan.
Depending on your current financial state and how well your bank identifies your transactions, your alerts section of Mint.com might be blowing up. You should take some time to polish your financial landscape. If you have a lot of unrecognized transactions, you should fix those. For instance, there is a little milkshake and snowball stand by my house that my family frequents and it used to always show up in Mint as an unrelated steakhouse, I fixed that by opening the transaction in Mint and telling it to always categorize that location as desserts. Take care of Mint and it will take care of you! Once everything is set up here, you will only have to spend a few minutes a week to keep all of your transactions “cleaned up.”
The other big thing that you might see here are alerts of fees. You should take note of these. You can erase the alerts for these for now, but you should look to our other posts about the best banks and credit cards to get away from these fees.
You now have a solid financial base and understanding of your finances. You might not realize it yet, but this is HUGE! There are more steps to take to financial freedom, but it all starts here. We will come back to Mint and there is more to do here, but for now you can take a break. Good job!