The Turnaround Plan

One way to look at this situation is to approach it the same way a management consultant deals with a turnaround case – detached and analytical, not personal. It’s difficult to face up to failures in decision-making or admit to a 4-year laissez-faire attitude toward personal financial management. *sigh*

In the great spirit of moving onward, I consider this to be my first post-MBA turnaround project. Somehow, I’m going to find ways to move those big numbers from the right side of the balance sheet to the left, while at the same time keep the daily practice of beating my head against the wall to a minimum.

Consultant Hat:
In looking at my case, I’ve found a few pieces of good news:

• I’m cash flow positive. Barely.
  
• Over 70% of my total debt is kept on excellent terms (4% or less).
  
• I have investments in real estate.
  
• I am 9 months away from satisfying 1 auto loan, which will free up $600 in cash every month.

On the flip side, there are some major problem areas:

• Zero contribution to company 401k plan. I am not getting the tax benefit and I’m forgoing company matching.
  
• Servicing a second auto loan at 12%, way above market rates.
  
• Old debt weighing down FICO, preventing the ability to secure favorable financing terms.
  
• No emergency savings account.
  
• Carrying credit card balances.

My Hat:
The obvious advice from folks like Suze Orman and all the indistinguishable columnists on X-Y-Z-financial-web site goes something like this: Pay down high interest debt first! Build 6 months worth of livings expenses in a savings account! Then, begin to invest! Living Trusts! Index funds! Lawyers! Financial planners!

Others like Robert T. Kiyosaki seem to think real estate is the way out, and becoming a Rich Dad is easily doable.

Steven Pollan and Mark Levine have more radical ideas about what to do, opting for a plan that allows you to Die Broke.

Joe Dominguez and Vicki Robin are philosophical, threatening Your Money or Your Life in dealing with matters of personal finance.

At some point or another, I’ve browsed these authors’ books, but fell short of fully integrating any of one of their ideas for one reason or another. I’ll have to get at the root of that issue on my own time. For now, I’ll brush off the dusty covers on all of these texts as a measure of my own due diligence. Looks for updates in future posts.