Motivational books and seminars will always start with the dream. Sorry folks. But we are not living in a dream world, at least not yet. From experience, dreaming will get the wrong idea, they will be highly motivated but the excitement will never last. Only a few lucky ones which already get into their senses will make out of these books and seminars. For the rest of us, we must anticipate balance. So lets talk about reality first. Dream later.
First, sit down; put some pen, papers and a calculator in front of you. The dining table would be a great place to start. Put all your WIFI enabled laptops, Instant Messenger capable GPRS PDA phone, handphones, kids and maids AWAY for a while. If you have kids, get them to sleep. If you have a partner, please, let the partner sit next beside you unless you want to settle some ‘along’ debt which you don’t want to involve your wife and family. If your partner is busy getting the kids to sleep, then it’s good to start first and get your wife/husband later when they are not so busy. The rule is to at least start. Don’t wait and give excuses that you have a lot of other things to do. That’s why, you are left behind financially.
Accountants will appreciate what I am trying to do. I’m not from an accounting background. So If I do any mistakes, please do correct me. And yes, your house is your asset, your mortgage is, your liability.
Next, draw out a T-account style here in your paper. Mark the left column: debit and the right column: credit.
|House Value, RM102,000||Car Value, RM53,000|
|House Mortgage, RM100,000||Car Loan, RM30,000|
If you’re reading this and you didn’t draw the T-account above, please stop here and continue when you’re really ready. Or else, you are just wasting your time.
In the left column, enter your balances of each savings account that you have to the very penny. This will include your assets as well. An example of the list are:
- House (current value)
- Savings account
- Unit trusts
- Car(depreciating asset current value)
And you will put your liabilities in the Credit column:
- Your house mortgage balance(Link: calculate your mortgage balance)
- Your car’s loan balance(Link: Autoworld's loan settlement calculator)
- Credit card outstanding balances
- Personal loans
- Study loans
- Anything that you owe other people money with
You get the idea?
Once you’re finished, total up both the debit and credit column. Substract your debit with your credit. If you have a +ve value, congratulations, you’re at least not debt ridden. If you have a –ve, I’m so sorry my friend. You’re in deep trouble. If you have +ve the chances are you shouldn’t read my articles anymore because you are on the right track. Maybe you can contribute to my column as well.
The good news is, this is what I’m here for. To help you get from –ve to +ve. To be honest, Im not totally debt free. At least I’m doing something about it. How about you?