Years ago, I took the time to look over all of my statements for the previous three months.
I went over all of our financial transactions to see three things:
- How much we were spending over or under our income,
- If and where we were wasting our hard-earned money (see what we could cut out and how we could save) and,
- What we were spending on (to determine how best to set up a budget).
This next challenge is a three-day/three-part challenge. Proceed only if you are ready for some serious financial shaping up. It may hurt, but the results will be worth it!
Challenge #7– Get all of your financial statements you have for the last 3 months. Tally up your income for each month. Next, add up all of your purchases, payments, cash spent, etc. for each month and subtract them from the income of that month. What is the total? How much did you overspend (debt), come out ahead, or come out even for each month?
When I did this, the results were painful. Despite having a savings plan that we put money into each month, we had overspent our income (by using credit cards). This was when we both had full-time jobs, no mortgage, and no children. When I think back on it, I wonder what in the world we were spending our money on!
We decided then and there that we weren’t going to keep digging a hole of debt for ourselves. And within eight months we were able to pay off the credit card debt, our vehicle, and begin saving for our home.
The very realization of the exact number of debt we were racking up on a monthly basis facilitated change. That’s why these numbers are so powerful.
A well-known financial advisor told me that the majority of people he worked with who had debt, overspent their income on an average of $800.00 a month! That’s almost $10,000 of debt they were going into each and every year!
It’s important to know exactly where you are. Just like stepping on a scale, taking your measurements, and seeing how laborious aerobic activity is for you are good indicators of your current fitness level, looking at your spending and where you are at financially is vital for financial fitness.
Challenge #7 is the foundation for Challenges #8 and #9. These challenges are some of the most important in the boot camp. Please don’t guess. Take the time to look at the real numbers. And make sure not to skip these next three challenges!