You gotta have a plan!

Sometimes, I can hear my father's voice in my head. No, I do not normally hear voices, unless you count the latest pop tune on my internal ipod, but I digress. I hear my father saying stuff all the time, because he is my finance guru. No Ramsey or Suze for me, I have Daddy. He schooled me in the ways of making good financial decisions from the time I was able to start counting quarters. He was my teacher and I was an eager student who hung unto his every word....well, you get the picture. He taught me a lot. I'm truly grateful for everything he took the time to explain over and over in minute detail until my eyes glazed over. Just kidding, if you know my Daddy you know he can talk...a lot.

Anyhoo, one of the things that I remember him saying, is how important it is to have a plan for your life. He would lean over, look me in the eye and almost whisper "Baby, you have got to have a plan. It doesn't make a difference if nothing goes according to the plan, you have got to be clear about what you want to do. Write it down. Think about the end first. What do you want to accomplish? Work out how to get there step by step. If you don't do it, then life will do it for you."

I did what he said, I planned, I set goals. I pretty much became a planning fool. I had short term plans, long term plans. Nothing could compare to my crowning achievement, "my master plan". At age 25, I created a detailed 15 year plan. Looking back, this was nothing but pure foolishness. At the time, however, it seemed smart (specific, measurable, attainable, realistic and time oriented... yup, I'm a nerd).

What happened to my "master plan"? Life dropped a series of bombs on me, laid off from my banking job, cross country move, change in career fields, and chronic illness. I was barely on year 2 and my plan completely morphed into a figment of it's former self.

5 years later, while cleaning out old boxes, I find a copy of the "master plan", and laugh at my silly ol' self. Then it occurs to me, my end goal hasn't changed. What has changed is my method of getting there. So what if the plan has changed, I still know where I want to go. Now I see the wisdom of the plan and ultimately, of my father. Plans are not set in stone. In this world, circumstances can change in a heartbeat. However, life is about forward movement. When we consciously chart our life's direction, we have an opportunity to choose our own adventure. (I loved those books, btw). Whatever happens we have no one else to blame except ourselves.

I encourage everyone to write down what they want out of life. Think about how are you going to get from point A to point B. Make it as detailed as you want. Realize the plan is a working draft. The point is to put your vision in writing. Life is so much easier with written instructions.

Debt To Income Ratio: Yet another number you must know

Everyone knows how important it is to have a decent credit score. Many actually know what their score is. Others not so much. How many people do you know who can calculate their debt to income ratio? As a former mortgage lender, I remember explaining over and over, it is not just your credit score that affects your loan approval and rate. Many factors are considered and one of the more important is how much debt you have as a percentage of your income.

DTI is based on your total monthly obligations. (Credit card payments, mortgage payments , auto loan payments, student loan payments, etc. Yes, the word of the day is payment. Be sure to use the monthly payment amounts and not the total balance of the loan.) The totals are divided by your gross monthly income. It will tell you who you work for every month. The higher the percentage the more of your money goes to creditors every month. For most perople, calculating their DTI is an eye opening experience.

Once again, the brains at Bankrate have created an easy to use calculator. Check it out and let me know if your DTI percentage was news to you.