It doesn’t matter if your financial goal is to get out of debt, create a passive income stream, retire early, retire at a normal age, or build a dividend investment portfolio, the first step should always the same – figure out where you are currently.  While creating a blog might be a bit of an extreme, but I think the most effective way to take stock of where you currently are is to write it down…somewhere…anywhere!

If you are trying to pay off consumer debt, a reasonable goal considering the average American has about $16,000 in credit card debt, how could you possibly begin the journey without knowing how far the starting point is from the finish line.  Writing down your debt is an eye opening and scary thing for most people to do. It is much easier to simply open up the bill, pay the minimum and lie to  yourself about “getting serious” next month.  With the widespread availability of Google Sheets not being able to create a spreadsheet is long gone.  WRITE DOWN HOW MUCH DEBT YOU HAVE!

Similarly, if you have a general goal of increasing your net worth, how could you even begin to plan for this goal without knowing your current (and honest) net worth? I used to find it amazing when clients didn’t know their net worth, but it seems that most people (again, that aren’t ridiculous enough to have a financial blog) don’t know it.  For me, it provides motivation knowing that I am going to be pissed if I open it up at the beginning of next month and it has decreased.

Lastly, how do you plan on saving money if you don’t know where it is going every month? Writing down everything that is going out for a month or two! or better yet let a program like mint do it for you.