The Total Money Makeover by Dave Ramsey talks early on about denial, specifically, denial about what shape my family finances are in.
I see this all the time in my business.
People who contact me uniformly do NOT have any kind of family budget.
The first step in figuring out what to do with your finances is, what the hell are my family finances?
What is the income I have, for sure, with no overtime or bonuses or profit sharing.
(Not a lot of that going on these days.)
Many people contact me wanting to keep their house, and or everything else.
These days, I ask what the value of the house is, and how much is owed on each mortgage.
Over half the homes in Michigan are underwater, that is, worth less than what is owed on them.
Lots of folks tell me, but home prices have to go back up, don’t they?
So what if you could only get $150,00 for it now, it is really worth $300,000, and in another ___ years, it will be again.
So, what is your main asset, your home, worth, and your main debt and payment, any mortgages on that home?
Pull out those pay stubs.
There are plenty ofaround, if you are mathematically challenged as I am.
Now the hard part.
Where is that money going?
Mea maxima culpa on this one.
Hey, lawyers use to use Latin all the time.
Just fancy for I am guilty, me too.
As I read Ramsey’s book, I realize I have not had a budget, in, well, decades.
Have not gotten to the self employed section, as both me and my wife are, so income is uncertain.
That is an excuse for not committing to a budget.
Just not valid excuse.
So, next time, I will look more at what goes into a budget that will be the foundation of healthy family finances.