Getting Your Financial House In Order

Most people's financial lives are spread across a patchwork of accounts, loans, insurance policies, and retirement funds — some forgotten, some incomplete, some never quite dealt with. Getting your financial house in order means bringing all of it together in one place so you can finally see the whole picture. Tim walks through the process he uses at the start of every financial planning engagement: gathering all of your important financial information, reviewing it to make sure the details are accurate and complete, and then evaluating how the pieces fit together using a series of financial scores that show where things stand right now. Because before you start making plans for the future, you need a clear, honest baseline for where you are today.

One Key Takeaway: You can't make a plan for where you're going if you don't know where you are right now.

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What is The Thing We Never Talk About?

The Thing We Never Talk About is an educational podcast about personal finance for creatives and other weirdos. We'll discuss managing cash flow with a lumpy income, when to save & when to invest, and how to reduce stress & build confidence when it comes to your money. No hot stock tips, no complicated strategies, and no finance bro jargon. We'll hear from artists, musicians, creative professionals, and other weirdos about how they navigate these questions for themselves. The Thing We Never Talk About is hosted by Timothy Iseler, CFP®, a former recording & touring audio engineer with 18 years experience in the music industry.

Timothy Iseler: Welcome to
The Thing We Never Talk About.

My name is Tim Iseler.

I'm a certified financial planner,
and I run my own independent financial

advisory business, helping musicians,
artists, and other people with

weird jobs make smarter decisions
with their money through investment

management and financial planning.

You can learn more at iselerfinancial.com.

If you have suggestions for things you'd
like to hear about or a question you would

like me to answer in a future episode,
please visit iselerfinancial.com/podcast.

I would love to hear from you, so
please send me those questions.

And if you like what you hear, you can
subscribe to my Keep It Easy newsletter

at iselerfinancial.com/newsletter.

I write about exactly this kind of
stuff, and I share it there most weeks.

Have you ever noticed how there are
some things you only do when people

are visiting from out of town?

We just had back-to-back visitors
and did all kinds of things that we

could do anytime, but for some reason
seem to only do when people are

visiting, like going to museums or
botanical gardens or local attractions.

That stuff is always available,
but it takes someone from out of

town to make it feel important.

Guess what else you tend to do
when you have out-of-town guests?

That's right: you clean your damn house.

We cleaned our house from top
to bottom, and I'm not just

talking about normal stuff like
dusting, vacuuming, and mopping.

We also washed the walls, we washed the
baseboards, the light fixtures, just all

kinds of deep cleaning that is easy to put
off when you're in your day-to-day life.

But I'll tell you what, even though it was
really hard to do, and it's the kind of

thing that only my wife and I will really
ever notice, it makes a huge difference.

Everything is just a little
bit nicer than before.

When you put that kind of
work into getting your house

in order, it feels great.

Just like visiting all those great museums
that you kind of forget about in your

normal life, giving your house a thorough
spring cleaning, if you want to call

it that, helps you appreciate all the
little things that you take for granted.

Like looking around and just saying,
"Wow, this house is really great.

We have such a nice life."

It was one hundred percent worth
all of that hard work, not because

the house was clean for our guests,
which was very nice, but it was worth

it because it made us feel so good.

And even though you know it will
get messy again in the future, it's

still worth getting your house in
order from time to time just to feel

better and more at peace in your life.

Plus, when it is time to do that
normal stuff like dusting and

sweeping and mopping, you'll be
starting from an already pretty

clean, pretty organized house.

That makes it a lot easier,
and that is a huge relief.

Today, I want to talk about how
you can do the same thing for your

financial life, a, a virtual financial
spring cleaning, if you will.

If you're like most people, the
different elements of your financial

life are kind of spread out.

You've got your bank accounts over
here and your credit cards over

there, and your mortgage is from
a different lender completely.

Then you've got your insurance policies
and your retirement accounts, and

don't forget about those retirement
accounts from those old employers that

maybe you kind of meant to do something
with but haven't really done it.

And what about your estate plan?

Does that need to be updated?

The point is that even for very
organized people, it's hard

to stay on top of everything.

It can feel kind of fractured.

Even if you know what all those pieces
are, they're kind of spread out.

But when you finally do get all of
those different elements organized

and you can see the big picture,
man, oh, man, that feels great.

Instead of kind of knowing what's
going on, you can really see

how the pieces fit together.

You can tell right away what's
going well, what areas need work,

and the kinds of conversations that
you should be having going forward.

And just like giving your house a deep
spring cleaning, it's okay that it can't

stay neat and tidy and perfect forever.

That's just how life is.

Circumstances change, people switch
jobs, the stock market goes up and down,

priorities shift, et cetera, et cetera.

But that doesn't diminish how good it
feels when you've done all the work to get

your financial life organized and in one
place, and you can see the whole picture.

This idea of getting your financial
house in order is the first step

in every financial plan I work on.

You might have a very clear idea of
what you want your future to look

like, but we can't make a plan for
how to get there until we really

understand where you are right now.

I'm gonna tell you what I do with
every planning client to help them

with this part of the process,
but you can also use my ideas as a

framework for doing it on your own.

The first step is just to figure
out where everything is and

then collect it in one place.

We gather information on all of
your different accounts, loans,

insurance policies, investments,
your tax return, and other important

documents into one location.

I use my financial planning software
for this job, but you could also use

a custom spreadsheet that you build
yourself or use an app like Monarch.

I have no affiliation with Monarch.

I have no financial interest
in you using them, but I think

they do a pretty good job.

But having all of your information
in one place is just the first step.

Next, we need to walk through it
all to make sure the details are

there and that they make sense.

This helps you clarify that everyone
understands the same information

the same way and fill in any
missing or unclear information.

If I'm working with a client, I
might ask about the purpose for

different bank accounts and give them
corresponding nicknames so that we

can keep them straight in the future.

Or I might notice that some
details are missing from a loan

or insurance policy and ask them
to find that information for me.

I can tell you from experience that
lots of people realize during this

process that they totally forgot about
an account or notice that something

they thought they had taken care of a
long time ago actually didn't get done.

Earlier this year, a client realized
that a bunch of old workplace retirement

accounts that she thought had been
rolled into her current 401(k) were

still right where they were before.

It just hadn't happened.

That's not necessarily a pleasant
surprise, but it is super helpful.

So collecting everything in one place is
step one, then sifting through it to make

sure everything lines up is step two.

Just those things alone can
bring a huge sigh of relief.

Like I said, most people, even people
who feel like they have a handle on

their financial lives, don't have a way
to bring it all together in one place.

When you do this for the first
time, it can feel like a big

weight off your shoulders.

But we're not done.

We have everything organized.

We made sure all the details make sense.

The final step is to see
how the pieces fit together.

For example, you might look at
your retirement accounts and

think, "That's good, right?

Wait, is that good?"

Or maybe you have some life insurance,
but you're not sure if you have enough

or even how to tell what enough means.

This is our opportunity to do that.

I use a series of financial scores that
tell you how you're doing right now.

We're not looking into the future.

We're not saying, "If you do this
and this and this for the next

thirty years, you'll be fine."

Instead, we're looking at a series
of scores that let you compare

and contrast different important
areas in your financial life so

that you can make sense of it all.

Because again, we can't make a
plan for where you're going until

we have a really solid baseline
for where things stand right now.

We look at scores for where your
income goes: how much goes to

spending, how much to saving, how
much to debt or to taxes, and then

talk about what those scores mean.

Is a savings rate of ten percent good?

Is a debt rate of twenty percent bad?

Once you have a handle on what these
numbers mean, You can make sense of

it all, and it makes it much easier
to track your progress going forward.

You have a solid baseline from where
you are right now, so if you see those

scores going in the right direction,
you're doing the right things.

Then we look at how your
net worth is spread out.

We look at liquid assets like cash and
non-retirement accounts, non-liquid

assets like retirement accounts or
property, and if you're a business

owner, we look at how that fits in.

For people who don't think about
personal finance all day long, your

net worth is the difference between
what you own and what you owe.

So if your house is worth five hundred
thousand and you still owe four

hundred thousand on your mortgage,
then only one hundred thousand of

that counts towards your net worth.

Does that make sense?

I hope so.

Reviewing these various scores that tell
you how your net worth is distributed is a

really simple way to identify which areas
are underweighted or overweighted when it

comes to your overall financial picture.

If you've got a ton of your money in
retirement accounts, but hardly any

of it in liquidity, that's a problem.

That's good to know.

Or if most of your money is tied
up in property, but you don't

have anything set aside for
retirement, that's also a problem.

We can spot these things right away when
you have a consistent way to assign a

score to the different types of assets.

Finally, we'll look at how long your
net worth could support your current

level of spending if everything
stayed the same as it is right now.

Obviously, things will not stay
the same as they are right now, but

this final score gives us a pretty
good approximation for how close

you are to making work optional.

Here's one example.

If you are fifty years old right now
and your life expectancy is eighty-five,

which is statistically a reasonable
assumption to make, and your net worth

could support your current level of
spending for twenty-five years, then we

can be pretty confident that with some
good planning, you'll be on track to

retire in about ten to fifteen years.

These scores are not projections.

They're not telling you what will happen
in the future, and that's the point.

They're telling you what's
going on in your life right now

and how it all fits together.

And once you know that, you can make a
plan for how to build the future you want.

So let's wrap it up for
today with a little recap.

Just like doing some spring cleaning
in your house, getting all of your

important financial info collected and
organized in one place helps you know

where you stand right now and makes it
easier to make a plan for moving forward.

Life will change and priorities
will shift, but establishing solid

baselines for where you stand right
now will make it easier to keep

up when things inevitably change.

And if you're like most people I
work with, you will just feel a lot

better once you can see all of your
important information in one place

and begin to make some sense of it.

The first step is to gather your
important information, Which you

can do with a financial planner
like me, or a spreadsheet or an app.

All of those can do the trick.

The next step is to review it all
and see if there's anything that

doesn't make sense, any missing
details, or something that you might

have forgotten about completely.

Then finally, see how all of the
different pieces fit together so you can

understand how you're doing right now.

Are you using your
income in the right ways?

Are you putting your
money in the right places?

Sometimes just seeing that not
enough money is going here or that

you've been holding too much of
your money there is all it takes to

start moving in the right direction.

Getting your financial house in order
is the essential first step to making

an effective plan because you can't
figure out where you're going if you

don't know where you are right now.

That's why this process is
at the beginning of every

financial plan that I do.

If you'd like to learn more about
what working with a financial

planner looks like or how you can
figure out those financial scores I

mentioned on your own, just reach out.

I'm always happy to talk.

You can shoot me an email at
[e-mail]

or send me a message through my
website at iselerfinancial.com/connect.

Next week, I'll be talking
with Chef Cheetie Kumar.

Cheetie is a two-time James Beard
Award nominee, but I first learned

about her when I saw her band Cherry
Valence play at The Empty Bottle in

Chicago probably 20-plus years ago.

Cheetie talks about how her path
through punk rock led to her opening

her first restaurant, the challenges
of learning to run a business while

also serving as head chef of that
business, and how cooking and cuisine

continues to evolve all over the world.

I really enjoyed talking with
Chef Cheetie Kumar, so I hope you

will join me back here next week.

The Thing We Never Talk
About is for educational and

entertainment purposes only.

It's not legal, investment, or tax advice.

But you already knew that, right?

People on the show, including myself,
may have interests for or against

any investments discussed, so do
yourself a favor and don't ever make

any investment decisions based on
what you hear on this or any podcast.

If you like what you hear, please
like and subscribe to this show

wherever you listen to podcasts.

If you have a money or finance
question you would like answered

in a future episode, please visit
iselerfinancial.com/podcast.

And you can get my insights on money and
more delivered directly to your inbox by

subscribing to my Keep It Easy newsletter
at iselerfinancial.com/newsletter.

Thank you so much for being here today.

I appreciate you.