1. Session Three Diagnosing Your Financial Situation
Living Wi$ely
Session Three
Diagnosing Your
Financial Situation

2. Homework Review Personal financial statement
Personal cash flow statement
Expense category hardest to quantify
Reactions to your financial physical
What you learned

3. Diagnosing Your Financial Situation
Are we spending less than we earn ?
Are we saving for future needs ?
Is our debt under control ?

4. Making a Diagnosis Look at Steve and Jessica …
Spending less than they earn ?
Saving for future needs ?
Debt under control ?

5. Steve & Jessica’s Diagnosis
Spend more than they earn
No savings
Not giving
Too many credit cards
Minimum credit card payments
consumes 4 % of their income vs. a goal of 0
Consumer debt payments
consumes 12.5 % of their income vs. a goal of less than 10%
Student debt payments
consumes 7 % of their income vs. a goal of less than 5%

6. Steps to Writing a Prescription
If credit cards are being violated, cut them up
Examine cash expense and reduce as necessary
Repeat step two
Repeat step three
Sell assets
Downsize to reduce debt
Increase income

7. Prescription for Steve and Jessica
Cut up credit cards
Reduce expenses
Sell the boat
Sell a car
Increase Income

8. Summary Start with a financial physical Make a diagnosis
Write a prescription

9. Homework Do a diagnosis and prescription for your own situation
Read Three Simple Rules
Part 4 Living by the Rules