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Woman sitting at desk working on her laptop.

Have you woken up one day, looked around, and wondered where all the debt came from? What have you got to show for the multiple credit card balances, student loans, and empty bank accounts?

Are you ready to take the proverbial bull by the horns and start cleaning up this financial mess in which you’ve found yourself?

Feeling overwhelmed about how to get started? If you’re struggling with your relationship and beliefs about money, you’ll also want to work on improving your money mindset.

READ MORE: How to create a simple monthly budget you can stick to

Next, you’ll take your financial inventory, grab a pen and paper, and get to work.

Much like they say about losing weight, so is cleaning up your finances.

This is going to take patience and time. This didn’t just happen overnight. Your current financial situation is a culmination of months, years, and maybe even decades of poor money decisions.

It took time to get yourself to this place, and it’s going to take time and lots of hard work to get yourself out. Just so we are clear, this will take hard work (repeating for dramatic effect), but it will be SO worth it!

What is Financial Inventory?

To get off on the right foot, it is imperative to get a solid picture of what you are working with.

Warning: this can be really emotional. Put on your big girl panties, grab your notebook, calculator, and maybe a strong drink, this won’t take long, but it is a very important step.

If you have a spouse or partner on board, ask them to join you for this, as it will be to your benefit to work as a team!

Total Your Bills

Gather all your bills together, and write them all down. Every single recurring monthly bill (not credit cards yet) any car leases, utilities, child support, alimony, and any other obligations that are monthly.

Just list the bill and the amount. For any loans, we are focusing only on the minimum payments due at this time.

Total Your Debts

Next, you are going to list all your debt. All of it. Get the total outstanding balance at this time. *Take a few sips of your drink if needed*

Be sure to include any deferred student loans, credit cards with 0% interest, and anything you owe to somebody else should go here.

Any mortgages on any properties except your primary residence belong here as well. Total it all up. *breathe*

READ MORE: How We Found Ourselves in $35,000 of Debt

Total Your Assets

Head to your assets now. Get the balance of any and all non-retirement accounts and investments.

Anything already in a retirement account will incur large penalties if withdrawn early, so we want to leave those alone!

However, we want to include any (non-retirement) single stocks, mutual funds, cash value of whole-life insurance policies, checking accounts, savings accounts, and any shoe-boxes-filled-with-cash under the bed.

Be sure to add up each column, and that’s it.  This is a simple exercise, but it can be really emotional.

Maybe your situation is more dire than you realized, or perhaps it’s not as bad as you had initially thought!

Either way, if you aren’t clear about where you are starting out, it will be hard to develop a plan for where to go.

Have you gone through this process before?  Were you shocked or already clear on your current financials? 

Kristin Stones is the owner of Cents + Purpose, an online community dedicated to sharing practical personal finance content. Her mission is to equip women with the necessary tools and knowledge to take back control of their money and live a more purposeful life. She creates actionable content to help her audience achieve financial wellness using her simple approach to managing money - all learned through her personal experience of paying off almost $55,000 of debt in under two years.

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