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My Journey to becoming a Nobel Woman – Day 37

February 23, 2010

Calculate Your Assets and Liabilities

Scripture to Memorize:

She opens her arms to the poor

and extends her hands to the needy.

When it snows, she has no fear for her household;

for all of them are clothed in scarlet.

Proverbs 31:20-21

Passage to Read: Matthew 6:24 Today’s passage deals with serving two masters — it can’t be done.  You will either love one and hate the other or you will be devoted to one and despise the other.  Which will you serve, God or Money?

Guided Prayer:

Thank God for speaking the truth about money.  Be glad that his Word is practical and shows us how to live.  Confess how you’ve tried to serve two masters and how it didn’t work very well.  How easy it is to get caught up in the rat race (either in the pursuit of money or the nagging of your husband to earn more).  It is so easy to become a slave to money (or your job so you can earn that money).  Ask God to give you the wisdom it takes to be free from serving money.  Choose to serve God not money today.

Personal Observation:

We are learning that the Proverbs 31 woman had no fear for her household.  How many of us can say that today?  Today’s climate has many who felt they were in secure jobs fearing what tomorrow might bring when it comes to their job situation.  How many of us live paycheck to paycheck?  The facts speak for themselves only 20 percent of American families have enough savings to survive for two months if the breadwinner would lose his/her job.

Do you have an emergency fund?  Dave Ramsey, author of The Total Money Makeover, recommends you start by putting aside $1,000 in an emergency fund.  Do this before you do any type of debt repayment.  Once you have the $1,000 in your emergency fund begin paying off your debt (credit cards, unsecured loans, etc.).  Once you are out of debt, build your emergency fund up to three months salary.  You need to be serious about the commitment to get out of debt (within a fixed amount of time) and getting that reserve built up.  If you’re not, you’re just fooling yourself.  Dave Ramsey says if need be get a second job.

In Rich Dad, Poor Dad Robert Kiyosaki wrote:  “The poor and middle class work for money.  The rich have money work for them.”  Interesting observation.  Which group is more focused on money?  I would imagine the poor and middle class focus more on the lack of it than the rich do on the abundance of it.  I’ve often heard (to paraphrase), That which we focus on will show where are heart is.  Where is your focus?  I’ll be honest, I don’t typical focus on money until bill paying time and then I get super-stressed out over how to juggle what needs paid each paycheck because inevitably something needs paid before the next paycheck arrives and there isn’t enough money to cover it before the next paycheck arrives.

Donna suggests the easiest way to understand money is in terms of assets and liabilities.  Anything that brings you money = asset.  Anything that costs you money = liability.   The primary difference between the rich and the poor is the rich focus on acquiring assets while the rest of us spend our money on liabilities.

So what are some examples of assets?

  • stocks
  • bonds
  • notes
  • real estate
  • intellectual property

So what are some examples of liabilities?

  • mortgage
  • loans
  • credit card debt
  • taxes
  • insurance
  • household bills
  • Disneyland (vacation trips)
  • gadgets, toys, electronics to play with, etc.

Now, I’m just as guilty as the rest of the general population at choosing to spend money on liabilities versus investing it in assets so don’t think I’m better than anyone else in this situation.  I’m just reading this study and sharing what I’m reading with everyone who reads this blog.

Do you have a finance software program?  (Quicken, Microsoft Money or something similar)  Donna recommends you get one.  Once you do, take the time to set them up.  Many of the financial software programs will work with banks, credit card companies, etc. so you can easily download from one site to your software (saving you from having to type the information in).  What’s nice about these programs is they will even show you in nice pretty colored pie charts exactly where your money is going.  They even have a budget feature if you decide you want to create one!

Practical Application:

Create an overview of your current assets and liabilities.

Notebook: Place your completed Assets and Liabilities Worksheet in the financial section of your Personal Notebook.

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