BOSTON (CBS) – You will need to figure out your net worth and then do a cash flow to figure how and where you are spending your money.

If you are coupled, do this together. You both want ownership of the end product. A net worth is a snap shot of where you are financially at a given moment in time. It is a list of your assets and your liabilities.

First list your assets; house, car, retirement money, savings, household stuff, boat, second home, jewelry etc. Break those assets into two categories, Use Assets and Invested Assets. The use assets are what you use every day and the invested assets are the assets that will help you achieve your goals.

Next list your liabilities. This is the money you owe; mortgage, school loans, car loan, Aunt Mary and credit cards. Then you need to subtract your liabilities from the assets. You want a positive number here. A negative number means too much debt and it’s probably credit cards or an upside down mortgage. House values are still down in many areas over 20%. Those individuals who took out mortgages for 100% of the value of their home find themselves today in an upside down mortgage. Their house is worth less than the mortgage.

Now for your cash flow. You’ll want to figure out where your money goes each month. What comes in is usually easy, your salary, child support, commissions, social security, unemployment. Now calculate what goes out and where it goes. Spend a month doing your cash flow. Don’t forget those annual bills and the ATM withdrawals. You subtract what goes out from what comes in.

And you want a positive number here. You want to have spent less than you earned for the month. That’s a positive cash flow. If you are living paycheck to paycheck that’s not bad but you will need to do better if you want to have money left over to invest or save. What is happening if you have more month than money and there is a negative number when you do the math? You are spending more than you are earning and using your credit cards to supplement your income. That is not good!

You have got to figure out a way to get a handle on your credit card debt and eliminate it. Carrying credit card debt month to month will not allow you to reach your goals.                                                        409

If you cannot do it alone seek some help. Consumer Credit Counseling is a good place to start.

Worksheets can be found on my website.                                                                                          433

To find a financial planner to help you achieve your goals and dreams in your area contact the FPA, the Financial Planning Association’s local Boston chapter or their national website. Check out the free events the Financial Planning Association of Massachusetts has planned.

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