Tracking what you spend is the second step in organizing for financial freedom. In this step you organize your expenses. The most basic level of this is making a list of the money leaving your hands each month on big things. The most revealing level of this is to categorize where the money is going.

For this step you need paper, pen, and calculator. Copies of your statements from your checking account, credit cards, mortgage, and other expenses will help.

Make a list of where your money goes with the monthly amount of each payment.

Examples of items to put on this list:
Mortgage  $2,080
Car payment  $552
Tuition  $800
Credit Card(s)  $__________
Charities $_________
Professional services such as cleaning, accountant, or childcare. $______________

Total these expenses.
Now is a good time to compare your income to the expenses.

The dream is to know that you will retire with enough assets (savings) to do what you want to do while enjoying life between now and then. Financial Freedom is knowing that you don’t have to rely on anyone but yourself to make ends meet.

The foundation for financial freedom is organizing your financial picture.

There are just two steps in this basic organization. And, like many skills, if you have the basics down well, you’ve got a solid base for building your next levels.

Step one – keep a record of what you own and what you owe.

Step two – keep a record what how much you spend on what.

Today’s entry focuses on step one.

A pencil, two pieces of paper, and calculator are all you need for this step.

Write “Own” on the top of one page.

Write “Owe” on the top of the other page.

Now, write a list of every thing you own and owe under the appropriate heading. And, list how much those things are worth if you had to sell them or pay them off, now. Limit this list to things that are big (not clothing, electronics, or furnishings).

Examples of what you might own:

A car               $17,000  (what you could sell it for –not what you paid for it)

Your house   $300,000

Stocks            

- Company A            $3,000

- Corporation B         $12,000

401k

IRA    

Jewelry

Examples of what you might owe:

A loan or lease on the car  

A mortgage

Credit cards with balances

Student loans

Finally, add the numbers on each page.

What you own minus what you owe gives you the first piece of information toward financial freedom. It’s call your net worth.       

Do you have a filing cabinet or file drawers that are not full?

When working with clients I am often surprised that they don’t have usable filing space. They may have a filing cabinet or a couple of drawers in their desk but this space is often packed with papers that are old and irrelevant. Sometime the drawers have things the ‘previous owner’ left behind. In many cases there is simply no place to put anything.

Why have usable filing space? A few reasons:

1. By filing you can clear off your desktop.
2. By filing you can create order that allows instant retrieval.
3. By filing others can assist you in maintaining order.
4. 4. Filing is fun (I couldn’t resist – filing is useful, not really fun for most of us – I say throw out as much as you can so you have to file as little as possible).

How to empty file drawers:

First, pull everything out that hasn’t been used for more than 5 years and trash it without leafing through every paper except if it is tax or law case relevant.

Second, handle each remaining folder/paper and quickly answer these three key questions:

1. When is the last time I used this paper?
2. What specific benefit will this paper brings in the near future? [If your answer: “I might need it someday” – throw it out. Someday you’ll find a better resource on the internet, someday you’ll go to a colleague to get a copy of it, and someday you’ll create something new and better. ]
3. What’s the worst that could happen if I get rid of this? Chances are you can clear out 50% of your filing space. Give it a try.

If you don’t have filing drawers or a filing cabinet, get a deep good 2-drawer filing cabinet. If cost is an issue, go to a used office furniture store where good furniture is lower than buying new . Be sure it has full-extension slides and is about 27” deep.

In another post we’ll talk about filing approaches.

Getting in line early is a strategic choice that has many benefits. The biggest benefit is that you usually get what you hope for. This week this benefit was manifest in choice seats at a Cirque du Soleil show for me. The show is 3 months from now and my seats are ideal – ideal view of the stage at the price I wanted to pay.

Lower stress is another worthwhile benefit of getting in line early. Tim is able to get the best field marketing rep (FMR) to accompany him on important sales calls because he gets ‘in line’ on the FMR’s calendar weeks or months in advance. This lets Tim be confident that the FMR is available when the client has time. It also means the FMR has time to prepare for the meetings resulting in the right information being presented and sales closed.

Maria’s story revolves around vacation. Maria submits her request for vacation the first week of January each year. As a result she gets the time off from her employer that she wants and she is able to reserve a room at her choice of accommodation before they’re booked up and sold out. When she buys her airline tickets early, the price is lower and matches her ideal schedule.

Sure, we miss a bit of the thrill associated with working right up to a deadline by getting in line early. There is plenty of opportunity for that stress.

Get in line early and enjoy accomplishing things others miss.

Stressed spelled backwards is….

Desserts. . .

Sitting with Mandy over dinner at an up-scale Chinese restaurant – a café environment all the way –  we talked about our position as part of the sandwich generation. You know the signs – taking care of our parents or preparing to take care of our parents and having kids come back home to live as they launch their careers. Sometime there is physical support as parents ail, sometime it is financial support as their retirement funds are insufficient.

Being in the sandwich generation does not always let us feel like being the cream in the Oreo cookie – the most desired center. Rather, we feel like the rope in a game of tug of war being pulled distinct opposite directions.

It seems to us some frank conversation is a great starting point to being responsive and responsible to all the parts of our sandwich. I’m asking my dad what he likes about facilities he’s exploring for his ailing uncle. Mandy voices the need for her sister to get involved as mom needs an allowance to make ends meet.

At another table John’s daughter is selecting a college and the financial as well as physical arrangements need to be evaluated and negotiated.  They cannot afford her college of choice. Is it time to get realistic and lay all the cards on the table? Would having all the facts in the spotlight relieve some stress? Wouldn’t clarity close some doors yet simplify the planning?

Mandy & I conclude that acknowledging that we’re in the middle of some tricky situations is a start to being an enhancing part of it without losing ourselves amid the many ingredients.

Yesterday I worked at a client with the lightning quick help of a college student, Charie. Our coordinated effort and focus on the project allowed us to zoom through a significant stage of the project in one day rather than 3 or more days. We are cataloging and organizing a corporate video library in the video services department. We are managing 3,000+ tapes on-site and that number again off-site. The key here is that Charie is relatively inexpensive resource with the exact skills needed to get the job done. (She allows me to have 16 hours in an 8-hour day!) She rapidly understood the steps we were taking. Her intelligence coupled with her fast typing skills accelerated the progress. She contributed observations that will enhance the project in the whole.

As the summer break is in full swing what could you use help getting done? Have you considered the skills and background computer-savvy and success-oriented students could bring to help you get things done? How about students that are good with mechanical projects or painting?

A business owner friend hires kids with computer expertise and passion year-round to help him with his e-commerce business. A manufacturer’s rep gets her address book and data base fully updated and useful. A homeowner gets paperwork filed and the ‘honey-do’ list shortened. The options are broad.

I found Charie during a conversation with her at a Memorial Day picnic. Another student who has helped is a bicycle rider in my bike club (not to be confused with Harley bike riders). Yet another is a friend’s son. And a computer wiz was recommended to me by the computer teacher at the high school (her success means she isn’t available enough – ah well).

These kids are success-oriented and reliable. They all arrived up to 10 minutes early each day. They’re smart. They’re likable. They are project oriented. They work hard.

Now where is that to-do list for the next thing….

Where do you turn when you need blank file folders? pens? scissors? Do you visit a neighboring cubicle? If your office is in your home do you get up from your desk and find them somewhere else in the house? If you can locate items you need within a couple seconds, you’re being efficient. If you have to dig for these things or go on a scavenger hunt you may be wasting time or energy and creating stress that we’re trying to avoid with productivity café strategies. Be sure to have your own desk basics listed below within easy reach of your seat. (Use your label maker to mark your supplies if they are frequently missing. Think cowboys branding their animals so they can be retrieved).

• Book Ends (1 set minimum)
• Calculator
• Clock
• Correction tape Envelopes – business size & shipping sizes
• File Folders
• Hanging folders
• Label maker
• Letter opener
• Pads of paper
• Paper clips
• Post-its (variety of colors)
• Rubber bands
• Ruler
• Scissors
• Stamps
• Stapler & staple remover
• Stationary including:
• Business stationary (Post Cards, Note Cards, Thank You Cards)
• Tape – invisible & packing
• Telephone with headset
• Trash Cans (recycle paper & trash)
• Writing tools: pens (2-5 colors-blue, black, red), pencils, highlighters (2 colors), thick marker for labeling boxes, medium felt-tip pen for writing file labels, eraser
• Blank diskettes, tape backups, and/or CDs 
• Hole punch – individual, 2 hole or 3 hole
• Printer Paper  Printer toner or ink
• Planner refills