In This Chapter
Determining assets, liabilities, and your (financial) net worth
Requesting (and fixing) your credit reports
Making sense of your credit score
Understanding bad debt, good debt, and too much debt
Calculating your rate of savings
Assessing your investment and insurance know-how
How financially healthy are you? When was the last time you took stock of your overall financial situation, including reviewing your spending, savings, future goals, and insurance? If you're like most people, you've either never done this exercise or you did so a long time ago.
This chapter guides you through a financial physical to help you detect problems with your current financial health. But don't dwell on your "problems." View them for what they are — opportunities for improving your financial situation. In fact, the more areas for improvement you can identify, the greater the potential you may have to build real wealth and accomplish your financial and personal goals.
Financial problems, like many medical problems, are best detected early (clean living doesn't hurt, either). Here are the common personal financial problems I've seen in my work as a financial counselor:
Not planning: Human beings were born to procrastinate. That's why we have deadlines (like April 15) — and deadline extensions (need another six months to get that tax return done?). Unfortunately, you may have no explicit deadlines with your personal finances. ...