Take Stock

The Big Financial Picture

Before we tackle budgeting, we need to first know what we are up against. We need to see the big financial picture. I call this “taking stock”. Especially if you share your finances with a spouse or significant other, it is important to be open with each other and to lay the cards honestly on the table. Here are the top things to know before starting.

  • The Existing Assets Available
  • The Existing Debts
  • The Motivational “Why” For Each Individual Involved
  • The Roles and Goals for Each Person

Budgeting involves teamwork, and it can easily fail when one member is not a part of the team. Imagine one person trying to control spending in the household, while their spouse continues to spend on a hidden credit card account. As awful as this sounds, it happens. People have a severe dislike to budgeting. But you have to get them motivated. Try to give them some incentive to budget too. Maybe they want to accomplish something in their life but have not yet been able to. Show them how money can help them get closer to that. I’m not advocating manipulation. I’m advocating a true desire to be helpful. So before we go into the HOW, let’s look at your overall financial picture.


Gather All Accounts

It is important to gather all your accounts. This includes every single credit card, every single checking and savings account, every retirement and investment fund, even your HSA if you have one.

I liken this to Marie Kondo’s method of de-cluttering. In her book, she requires that each client take out every item of a particular category and lays them out on the floor. It does not matter if you have three closets full of clothes. You cannot take full stock without everything visible and right in front of you.

You see, accounts are like books on a shelf. Even though the spine may be facing outwards, a book on a shelf becomes invisible once it has been sitting there for too long. In order to become fully aware of each book, Kondo recommends pulling each and every book off the shelf and laying them flat on the floor. Each. And. Every. One. Same goes for accounts.

I have attached a checklist for some accounts you might consider gathering. This isn’t all possible accounts, but it’s a start. I would recommend printing out the account’s current balance, even if it’s negative, and making a note of it somewhere. Only then will you know how much money you have.

Know Your Debts

Just like knowing your accounts matters, so does knowing your debts.

I once asked a colleague of mine about his dental loans. I asked him how much interest he is accruing per month by being in the Loan Forgiveness Program, a program that takes 25 to 30 years. Under this program, his minimum payment does not cover interest, so his loan continues to increase over the program’s course. What he says next was shocking.

He said, “I don’t know.”

To which I said, “HOW could you not know?”

“It’s easier for me to deal with,” he responds. “I close my eyes to it and pretend it’s not there. My hope is that by the time I have to face it, I would be earning enough money to pay off the taxes.”

I was flabbergasted. I highly do not recommend this method. You can’t just wish things away or run away from your problems, without creating more problems in the future.

You can’t just hope, without doing anything.

I understand that sometimes it’s scary to face your debts. The realization that your life choices have led you to have debt can be hurtful to your ego. Sometimes, the debt is so overwhelming, you’ll feel like you want to cry.

I get it.

I was 26 years old when I faced more than half a million loans in student debt alone. My credit cards were maxed out, and I have been living month to month, occasionally borrowing money from my then-fiance for the four years that I was in dental school.

But looking at all of my debts was part of what shook me from my bad habits. In fact, the shock most people feel when facing their debts could be used as motivation to “never again”.

So I would highly recommend laying out all your current debts on the table, Marie Kondo style. Stare at them in the face. Add up the totals. And do not be afraid.

Use the worksheet that I included below to make a note of all of your debts.