New Year's Resolution: To Become Debt Free
Dear Accounting Professor:
My New Year's Resolution is to become debt free. What advice can you share with me?
So Broke That I Cannot Afford to Pay Attention
I recommend that everyone who wants to become debt free establish a benchmark for their current financial condition. This involved creating a detailed list of all of debts and assets. Some examples of debts include credit cards, lines of credit, signature loans, student loans, mortgage payments, car loans, payroll advances, unpaid medical bills, etc. Some examples of assets include cash, checking & savings accounts, money market accounts, brokerage accounts, retirement accounts, cars, homes, etc. For asset valuations, one has to use objectively reasonable fair market valuation sources less any fees to determine a net realizable value. Examples of these sources include the most recent close price for a stock less any transaction fees, Realtor.com's selling estimate for a home and then reduce that value by 10% because of closing related costs, etc.