If you can’t answer this one question, you’re on dubious financial ground and you may not even realize it.

If you don’t know the answer but you’ve chosen to click this article title, I hope this will be the first of many quick and and easy steps overtime to put yourself in a better situation. But, probably not.

The reality is that if we don’t know the answer, it’s because we don’t want the answer compelling us to make better financial decisions. Self control and personal responsibility aren’t particularly fun. We are a society that focuses on the short term, which has material negative implications for the long term. It’s much easier to trick ourselves and keep doing as we wish if we just wallow in the bliss ignorance provides. Don’t get me wrong, you’ll most likely know the more granular information that contributes to the answer to the question, and it’s not rocket science. No one reading this isn’t smart enough or financially savvy enough or any other excuse people tell themselves to avoid allowing reality guide our financial decisions.
I’m going to let you in on a little secret. The only people that want you to make responsible financial decisions are you and some close family and friends. Damn near everyone else wants you to spend, spend, spend. Heck you have the government tell you to save using one side of it’s mouth, and with the other it’s telling you in much more powerful ways to spend, because it’s counting on that spending to make the economy flourish.

Not long ago a friend was excited about a great rate he got on a CD. The rate was below the current rate of inflation. I pointed that out and said, so, you can buy more with that money now than you will be able to with the larger sum at the end of the CD term if all things remain the same, and that sucks! That conversation stopped cold. And I wouldn’t be surprised if I was thought of with a choice word or two at that moment. But someone has to stay in touch with reality, and I’m comfortable being the dick to do it.
So, the one question… what’s your net disposable income? This isn’t fancy, this isn’t nuanced. I’m speaking practically, not worried about how a specific company makes credit decisions or anything like that. It just comes down to, how much money do you have left each month after all of your obligations are covered. I don’t mean down to the penny. Within $100 and adjusting regular expenses that vary in a way that’s out of your control, like heating costs if there’s an massive cold front for two weeks or a sudden spike in gas prices.

Without that understanding, you’re voluntarily flying blind. You wouldn’t drive a car if you couldn’t see. So, why would you drive your financial future while blindfolded?
If I’ve insulted anyone, you need to toughen up. Rub a little dirt on it and move on ;-)