Personal Income Statement
Give your finances a X-ray
What does your income statement look like? Have you ever created one? In this article you will see what an income statement look like then you can create one from your finances. A financial statement is like an X-ray, MRI, and CT scan for your finances.
Business have to give their investors financial statements at least once per year. The best investors read them like a roadmap that reveals the health of that company. You are permanently invested in your financial situation. Do you know where you are going?
Your financial statements will reveal your financial health
| Revenue | |
| Earnings (from job or self-employ) | $__________ |
| Interest | $__________ |
| Rental | $__________ |
| Royalties | $__________ |
| Dividends | $__________ |
| Business profit | $__________ |
| Total Revenue | $___________ |
| Expenses | |
| Taxes | $__________ |
| Food | $__________ |
| Housing/Utilities | $__________ |
| Transportation | $__________ |
| Clothing/personal care | $__________ |
| Education | $__________ |
| Insurance | $__________ |
| Entertainment | $__________ |
| Vacation | $__________ |
| Other | $__________ |
| Total Expenses | $__________ |
| Surplus/Deficit | $_____________ |
The expense categories may be different for you.
Have you created a Personal Financial Statement?
What does your Financial Statement say about your finances?
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Greatest gift ever!
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I remember Christmas of 1988, my parents bought me the Garth Brooks “no Fences” cassette tape. (for younger readers cassettes tapes are the predecessor to CD’s which were the predecessor to digital music) I was so ecstatic, I could have peed myself and not cared. It felt as though I was literally walking on air. I remember jumping and seeming to never touch down. At that moment it seemed as though “it was the greatest gift ever.”
That cassette has long since disappeared and I rarely listen to the songs from that album (I could still quote many of them though). As I have grown older, my idea of the greatest gift has changed drastically from that cute little ten old rejoicing over a simple cassette tape.
My favorite gifts now have an intrinsic value far below that $10 cassette tape. They are:
- A collage my wife gave me for a birthday present
The Great Smoky Mountains
- It is my daughter saying “love you daddy”
- It is a shared meal with a good friend or even potential friend
- It is a word of advice from wise counsel
- They are the beauty of Tennessee Mountains
- It is the vastness of the stars
- It is friends around a warm campfire
- It is the quiet time talking with God
The greatest gifts aren’t things that rust or decay; they are relationships with people and quiet moments observing the beauty of the universe. The gift of eternal life, bought and paid for by the Son of God.
What is your greatest gift ever?
Are you taking the time to enjoy those gifts?
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How you can change the weather.
It is the first week of spring and this morning the snow was coming down. My daughter climbed up on a stool to look out window at the falling snow. “It is so pretty!” she exclaimed. “Can I wear my boots?”
While most adults seem to complain about winter’s persistence, my daughter is excited by the beauty and opportunity the snow provides. Think about the energy and emotion wasted by complaining about something that we have no control over. Can you change the weather?
“It is so pretty!”
Enjoying the snow.
“Can I wear my boots?”
Maybe we can’t change the weather. We can change our attitude about it.
My wife and I own several rental properties. Over the last 6 years, we have been the victim of break-ins, had tenants who purposely damaged our property, and stole from us. At one house we had the furnace stolen, hot water heater, even the kitchen sink. I had a tenant who punched holes in the walls, and called the building inspector on us. Then she stole our appliances when she moved out. How should I respond?
I could get mad at the injustice of it. I could curse the thieves. What good does either of those do? I am angry, blood pressure is through the roof, and I still have to deal with the problems. If I don’t forgive those people, every time I go about fixing the damage they caused I will just get mad all over again.
Expressing our Anger doesn’t solve the problem!
I focus on what I need to learn from the experience, such as exterior security doors, and a better tenant screening procedure. Then I go to work getting the home ready for the next person who needs it. Laughing about “they took everything including the kitchen sink.”
Why let snow ruin your week? Why let other people’s selfish actions ruin your day? As Steven Covey writes in “The 7 Habits of Highly Effective People”, focus on your circle of influence instead of your circle of concern. In other words… focus on things that you can change.
If you focus on things you can change, the weather won’t bother you and the past will be a history lesson. As Dan Miller says “I carry my sunshine on the inside.”
What impact will focusing on things you can change have in your life today?
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Should I keep a mortgage for the tax deduction?
How big is the Mortgage interest deduction?
We often hear, “you should keep a mortgage on your home for the tax deduction.” I am going to explore this statement, by using actual numbers from a tax return I prepared.
Ed and Daisy (names changed to protect innocent and guilty) are married with 3 children with an AGI of $99,318. They itemize deductions (pre 1986 referred to as long form) rather than take a standard deduction. Below is a list of their itemized deductions.
| Deductible medical expenses | $0 |
| State income tax paid | $4,542 |
| Real estate tax paid | $583 |
| Other personal property tax | $383 |
| Mortgage interest paid | $7,010 |
| Mortgage insurance premiums | $520 |
| Charitable contributions | $223 |
| Misc deductions | $0 |
| Total Itemized deductions | $13,261 |
Ed and Daisy deducted $13,261 from their taxable income. If they had not itemized, they would have only been able to take the standard deduction of $11,900. Oh wait, they would have still had $11,900 deducted if they had not itemized! So the real deduction gained from them itemizing was the difference between the standard deduction and their itemized deductions.
| Itemized deduction | $13,261 |
| Standard deduction | $11,900 |
| Increase in deduction from Itemizing | $1,361 |
So Ed and Daisy spent $7,010 on mortgage interest and only received a deduction of $1,361. They are in the 15% tax bracket. This means they saved $204 by itemizing. They gave the bank $7,010 and saved $204 on their tax return.
Anyone who tells you to have a mortgage for the tax deduction doesn’t understand math. I understand buying a home and using a mortgage to finance it. I have a small mortgage on my home. Don’t buy a home to save on taxes.
We buy a house to turn it into a home filled with love and laughter. Not to save on taxes.
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Are Big Houses and Fancy Cars a Sign of Wealth?
Just because you own expensive things, doesn’t mean you are wealthy. It is easy to confuse things with wealth. Houses and new cars are expensive, and to get them requires access to money. Just because someone has spent a lot of money doesn’t mean they are wealthy. Often times the opposite is true, those who are the wealthiest often don’t appear all that different from middle class folks.
What are signs of wealth?
Most of us miss the signs of wealth, because they are different for each of us. When we are wealthy we don’t have “a case of the Monday’s” or update our Facebook status to “TGIF” on Friday. Being wealthy encompasses more than just money. Wealth is the totality of our being fully alive.
Origin of Word:
1200–50; Middle English welth (see well1 , -th1 ); modeled on health (dictionary.com)
It is about having abundance in every area of your life. Abundance in your: relationships, finances, time, spirit, knowledge, character, and health. What abundance is, however, can be different for each of us.
If you spent your life making vast sums of money, yet didn’t take care of your body and died early is that wealth? If you chase your career, yet your marriage ends in divorce is that wealth?
If you spend all your time focused on your body; in the gym 3 hours a day, yet never feed your soul and spirit… is that wealth?
How I define my wealth:
- I have several deep friendships and I am more in love with my wife each year.
- When my assets are producing more than enough to meet my needs.
- When I am free to travel and spend lots of time with my children.
- I know my Savior more each day.
- I never stop learning.
- I am full of integrity, love, and act selflessly.
- I am around 235lbs, and able to dance all day.
So what does your Wealth look like?
What steps are you taking today to achieve your wealth?
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8 things I learned from Monty Python “Quest for the Holy Grail”
- African Swallows are non-migratory birds.
- However if they weren’t it is theoretically possible they could bring coconuts to England.
- If you build a Trojan rabbit don’t forget to be inside when you gift the rabbit.
- The second stage of the plan is extremely difficult if you aren’t inside.
- If you build your castle in a swamp and it sinks, don’t build in the same place.
- Sometime when you try and fail you should not try in the exact same manner.
- “Camelot is a rather silly place.”
- Why waste time there?
- Do more than say “I feel happy, I want to go for a walk!”
- Get up and walk if what you are saying is true.
- Strange women lying in ponds, distributing swords is no basis for a system of government.
- It does make for a great campfire story though.
- Let’s not bicker and argue about who killed who. This is supposed to be a happy occasion.
- Don’t let minor details get in the way of more important opportunities.
- A good religion has armaments that can defeat evil deities or rabbits.
- What is the point of a powerless religion?
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48 days book
