The word evaluate means “to ascertain the value or worth of” something. It also means, “to examine and judge carefully.” In order to unlock free cash in your budget, you must first evaluate your situation.
Evaluating your situation means gathering up all of your monthly bills, all of your bank statements, as well as your check register and investment statements (retirement accounts, if any). You’ll need the bills to find out how much you owe each month, as well as key information about your debts. The bank statements and check register will help you remember what you actually spend and where you money goes each month. The investment statements will help you
determine how much you are worth. The key numbers you need in order to make wise decisions with your finances are as follows:
• Net Worth (add up everything you own one page, subtract everything you owe)
• Income (how much money are you bringing in each month?)
• Expenses (how much are you spending?)
Once you know these two, you can find out how much of a surplus or a deficit you have each month by subtracting your expenses from your in- come (Income – Expenses = surplus or deficit). The key to good steward- ship is to turn every shortfall into a goal. That means if you are short by $200 each month, then start by set- ting a goal to unlock $200 of extra cash each month. Then add a second goal to unlock enough extra cash you can use to make extra payments on your debts.
The Miriam-Webster dictionary defines the word investigate as follows: “to examine in detail” or “to search out the particulars of in an attempt to learn the facts about something hidden, or complex, esp. in an at- tempt to find a cause, or culprit. What should you investigate? Everything in your financial picture that could cause you to go under.
God placed dreams in your heart that represent your divine purpose. As you go through life, you are either moving towards those dreams or moving backwards toward your past. Stewardship (that is, how you manage what God gives you) is one of the most important things that determine how fast you can the dreams in your heart.
Picture yourself in a rowboat. You’re using the oars to row yourself across a medium- sized lake. You’ve just left a small island where there wasn’t enough space for you in order to travel to a larger, more beautiful place that has everything you need to live a happy life. The small island you departed from represents your past and the large beautiful island represents your abundant future.
With the sun shining down on you, things are looking good. However, a few minutes later, you begin to notice water accumulating in the bottom of the boat.
You’ve also determined that you’re in the middle of a lake
and that if there is enough water in the boat, you’ll go down! In an effort to use wisdom, you realize that the island you left is closer than the larger, more beautiful island. Thus, you begin to turn the boat around, facing the opposite way. You figure that you’ll have a better chance to make it back there safely. Right now, the most important thing you can do is Find the leak in the boat!
Of course, the story I just told you is an example of the way we manage our finances. The rowboat represents our financial life today, and the leaking water (as it comes in) represents your spending.
You need to investigate every ex- pense you incur each month in order to locate the source of the leak in your financial boat. In order to help you with this task, you need to get a spiral notebook small enough to ca- rry with you, and begin writing down every single time you spend money. You’ll never be able to fix the leak if you can’t first identify it. You can- not manage what you do not track! When you take one or two months to record everything, you’ll be amazed at how every little expense adds up. This is a good exercise at any time, because the more you’re watching what you spend, the less you will spend. This is of great benefit too!
To Consolidate means “to make so- lid or firm; solidify; strengthen.” It also means, “to discard the unused or unwanted items of and organize the remaining items.” You’ve recently evaluated your situation by gathering all the right information and looking at the big picture. You also investigated the cause of the leak in your boat. Now you have enough to start a list of expenses you can discard.
The most important thing to re- member about consolidating is that you are reducing your expenses for a season. The changes you make today don’t have to be permanent changes. But if you want God’s divine blessings on your household, you’ve got to prove your- self faithful with what you’ve got. If you have to cut some things you don’t want to cut in order to prove yourself as a faithful steward, then so be it. Consolidating expenses will strengthen and solidify your finances. This is definitely worth the cost. God’s principles always bring fruit.
When you follow God’s principles today, you always win in the end. When you reduce your expenses for a sea- son, you may be disappointed now, but the money you save will be used to pay off debts faster and once you’re out of debt, you’ll be able to build the dreams God placed in your heart! Never give up on the dreams God gave you, but become a better steward by implementing these keys in your own life.