Now That We Are At The Mercy Of Washington, What Do We Do?
Tim Geithner speaks, President Obama Speaks, our senators speak and our congressmen and women speak. Whether you think that they are saying anything worthwhile or if you think that their plans have no merit is all well and good.
The reality, however, is that at the end of the day it is up to each and every one of us to make sure that we are the captains of our own financial ships because no one else will be. At the end of the day much if not all of the macro picture is out of our hands and beyond our control. Therefore, we have to paint a picture of where we are now and where we would like to be down the road.
Our ability to reach those goals will depend on many factors, but they still have to be articulated and planned for.
Some Simple Steps
You 1st have to set-up a checklist and file of your key financial information:
- Income: Most recent tax returns, current pay stubs, alimony you pay or receive (if applicable), any and all other sources of income (i.e. rental income you receive).
- Home ownership records: All of your mortgage records for 1st, 2nd and even 3rd if you have them, any statements if you have a home equity loan or line of credit.
- Your current liability statements: This includes your account payables such as credit cards, charge accounts at stores, other vendors you may have credit with, car loans, student loans, boat loans and any other payments that you have to make.
- Assets: Your mutual fund statements, brokerage statements, money market fund statements, bank statements and even assets you may have in a safe deposit box such as savings bonds or gold coins.
- Retirement and College Savings: Your 401k statements, IRA statements, 529 Plan statements, annuity statements, Uniform Gift To Minors statements.
- Insurance: Policy number and company's (with contact name and phone number) that you have your life, health, disability and car insurance with.
- Key Business Documents: If you have your own business your corporate book, stock details, partnership agreements and anything else that will give a snapshot of important information.
- Estate Documents: Collect your wills, powers of attorney, health care proxies, information on your eternal resting place if you have one, trusts documents if any have been established.
The 2nd step, once you have determined your assets and liabilities is to calculate your personal net worth, or assets - liabilities.
3rd try and establish an accurate cash flow statement which will take all of your recurring income and subtract from it all of your recurring expenses. Using this you can try and determine if there are periods during the year when you have cash flow problems and account for them.
4th and last look at the overview of your financial picture and decide if any immediate steps need to be taken. In the current environment some steps may not be feasible, but take an objective look and do what you can.
For example do you have retirement accounts all over the place that can be consolidated in one? Although difficult today, are you saving enough for retirement or your kids education? Insurance, particularly disability is key as the statistic goes that you are far more likely to be disabled than die.
Overall we are all stressed in a variety of ways, but sit down, do a little research and be aware of potential problems or totally comfortable because you have everything under control.