Debt Reduction Assets and Liabilities Revisited

When I wrote the piece on being cheap a couple of days ago, I was reminded of my post back in late August called, “Tackling Debt 101 - Be honest about your assets and liabilities.”

As I re-read that column, I saw pretty quickly that I needed to revisit my "debt reduction balance sheet" so to speak – as I believe some of our items have shuffled around in a very positive way!

The original list is block quoted while my new thoughts are in regular text underneath:

Assets:
1. Me – I’m naturally cheap. In fact, the great irony of this mountain of debt I face is that, for years, I was exactly like my mother! I never paid interest, never missed a bill, always had a savings account, and basically lived debt free.

What happened? For me, I know exactly when it happened. I bought a house. Ever since my first house, I’ve surged in to debt and out again as I added window treatments, furniture, basketball goals, and the list goes on and on.

Frugality is still a part of my nature and having a budget has helped re open those old skills!

2. Intelligence – I know enough to know that we are in trouble.

I know a lot of brilliant people in debt...I don't feel too bad - and I now I know I know enough to get us out of trouble.

3. Business acumen – my job requires me to be on top of client problems like white on rice. I can improve processes, create status reports, understand gap analysis, make recommendations, etc. all day long. It’s high time I turn some of that back on my own business. That is the business of personal finance.

I'm treating my debt reduction cause like I treat a client challenge - burning the midnight oil, thinking creatively, and being diligent.

4. Support – my mom and grandparents are fantastic role models for debt free living. I know I can turn to them for advice.

I need to call them more often ;-)

5. Technology – I am computer literate, have laptops, desktops, internet access, etc. and the ability to figure out how to use these tools in my favor. You’re reading a perfect example of how I plan to make access to technology an asset in my debt battle.

Using it every day!

Liabilities:
1. Sports – first let me qualify. I love love love the fact my kids are involved in sport. By itself it’s not necessarily a liability, but the reality is, having a family is expensive. I have soccer and cross country dues, uniforms, balls, tournament fees, etc. Basically a whole set of variable costs that make budgeting that much more complicated.

As I said originally, sports are not a liability - in fact - I believe maintaining health is a critically important way to control your families' costs! Sports fees however still belong in the liabilities column - the big difference is that today, I have a "Sports and Extra Curricular" set aside in my "Cash Budget Box."

2. My sweet wife – right now my wife doesn’t work. Right now, my wife likes to occasionally engage in what she calls, “retail therapy.” This means that sometimes, when she may have a bit of the blues, she’ll hit Target or Costco and load up on CDs, DVDs, or other superfluous purchases which zap our reserves’ or push our credit card debt that much further out. This is what lands her in the liabilities column.

The flip side is that if my wife got a part time job, she would have less time to fret, feel more engaged and productive, and could become a part of the Kick Debt’s Butt solution rather than adding to the problem.

I know that until she is 100% on board, this effort will fail. And as soon as that happens, she gets moved to the assets column.

Oh what a difference four months can make! We had our prayer meeting right before the new year when I showed her the full picture of our consumer debt - and now I have a converted budget-a-holic on my hands!

She loves the idea of having a fund to use for certain things and, ironically, she feels much more secure now. For her, being frugal and spending smartly is psychologically more rewarding than spending at will!

Plus she started her own business, which she is growing organically so that she doesn't bite off more than she can chew. Her revenues are already helping to pay for her expensive car, petrol, and auto insurance. If she can sustain this level of revenue, then we will be able to ratchet up our debt snowball even higher.

I am incredibly proud of her efforts and now that the kids see she and I as a united front, they are starting to tow the line as well.

My wife's approach to personal finances now officially moves from a Liability to a major Asset and becomes a key to our success!