Monday, November 3, 2014

Step #3 – A Personal Inventory Assessment – Part 1 - Tangible Assets

This step is challenging. I’m breaking it into two parts. I like the elephant analogy in this case. How do you eat an elephant? One bite at a time. The entire 12-step program is about eating an elephant and eating the elephant in small steps. By utilizing this approach, what appears to be a daunting project becomes much more manageable.

Step #1 is an assessment of the dreams you had for your life when you were in your teens and early 20’s and the realization of where you’ve ended up currently. Step #2 is to discover who you actually are at the present time based on your early dreams from Step #1 and everything you’ve experienced during your lifetime to the present.

Step #3 is to examine all your personal assets and create a written inventory of them. Some of these assets are tangible and may include a home, one or more vehicles, clothes and so on. This is Part 1 of your inventory. You may have had to create an inventory of your tangible assets at some time in the past for your insurance company or for a financial statement when applying for a large loan, so this may not be entirely new to you. What you will notice is that I’ve expanded the information about each asset to make it more meaningful for making decisions and considerations in future steps.

Part 2 of the personal inventory is mostly your intangible assets and include things like your education, your professional/job experience, relationships, health, challenges and tribulations you’ve experienced, spiritual connections, belief systems, accomplishments, reputation, credibility and any other aspects of your life that can’t be directly seen, touched, weighed or takes up space other then in your mind, heart and soul.

Part 1 is to take an inventory of your tangible assets. Part 2, then, will be to take an inventory of your intangible assets.

I’m going to repeat this from time to time. I do not expect you to, nor should you, attempt to do all of this process in a single sitting, evening, weekend or delineated time period. Just as people in other 12 step programs go through the various steps in a program, they work at them daily, but don’t expect everything to be accomplished overnight. It has taken you however many years to reach your current age. Don’t expect to catalog all those years, months, weeks, days, hours and minutes in a few hours. This is a challenging process and the only way you can truly gain the ability to live free and be happy is to understand everything you can about yourself and why you are where you are today in your life journey. 

One other thing and this is important. This is YOUR personal asset inventory. It’s not your household asset inventory. If you’re married or in any kind of relationship with a significant other, you must each do your own personal asset inventory. If you jointly own any tangible assets, then you must determine how much of the value or equity in that asset is actually yours. Marriages and co-habitation relationships come and go. Some will last forever and, unfortunately, some won’t. I believe that “won’t” figure is still around 50%. I flunked Crystal Ball 101, so I’m not making any predictions for you. But, this must be a realistic listing and evaluation of your personal assets to be of value in achieving a lifestyle of freedom and happiness.

So, let’s get started on Step #3, Part 1 - Tangible Assets

Making A List, Useful And Nice

The tangible assets are the easiest to work with because you can see, touch, pick up or in some way move them, live in them, whatever. Take a sheet of paper or open a new document file on your computer in the “landscape” format (long side across the top) or, if you have some, use some wide accounting journal sheets and write across the top “Tangible Personal Asset Inventory of _________  (put your name in the blank space) as of ______” (fill in today’s date). If you’re handy with a spreadsheet program like Excel, you might find this process even easier.

Below the title create several columns across the page. Label them as follows:

Column #1  - “Asset.” This column needs to be wide enough to write in the names of the assets you’re going to be listing.

Column #2  - “Value @ Acq” This stands for the value when you acquired the asset. What did you actually pay for your house, vehicle, time share, diamond ring, table saw, stereo system, golf clubs, scuba gear, skis, boots and clothes, etc. Don’t guess! You probably have some records on these purchases.

Column #3  - “Equity” This means how much of the asset do you actually own. How much REAL money, not inflated by real estate brokers or insurance appraisers, Blue Books, etc. do you actually have in whatever the asset is. Be sure to account for market fluctuations based on the recent economic downturn in values. 

Column #4  - “Creditor Owned” This, obviously, means how much does a creditor own of the assets? Remember, even though the value may have fluctuated and changed your equity position, the creditor is still owed the same amount of money, which means the creditor may own a larger percentage then you thought they did and the only way that will decrease is by paying back what is owed to the creditor PLUS all interest due at the time of the pay off.

Column #5  - “Date Acq’d” This stands for the date you acquired the asset.

Column #6  - “Curr Real Value” This means what is the current real value of the asset? What is the asset actually worth in today’s dollars in today’s market? Vehicles are virtually always depreciating assets and even the NADA, Kelley and Edmund’s Blue Book values don’t seem to be very stable. Real estate is also somewhat unstable currently. For example, I recently heard about a studio condominium apartment in Florida that sold for $9,000. I’ll guarantee it was much, much more when the original buyer purchased it.

Column #7  - “Fire Sale” This is the value you hope (and you’re probably still being optimistic) you’d receive for your assets if some event occurred in your life and you needed money NOW and had to sell assets for whatever you might be able get for them. Consider what a pawnshop would give you. That’s basically fire sale value. This has been happening to a lot of people lately. Many of them were well-employed, middle class folks not long ago.

Column #8  - “Use” This means how often do you, actually, use the asset? When did you last use the asset? Do you ever use the asset at all? How many times have you moved the asset from house to house and storage place to storage place in your house.

Column #9  - “Where” This asks where the asset is kept or stored in your home or are you actually paying for a storage unit in a public mini-storage facility (ouch!)?

Column #10 - “Space” This means how much actual space in square or cubic feet does the asset require to keep or store wherever it is?

Column #11 - “Cost” How much is the ongoing cost in space, insurance, upkeep and so on for that asset to remain in your possession? If you have it in a paid public storage unit, that’s really burning money up. I know. I’ve done it.

Column #12 - “Need/Want” This means does the asset fill an absolute need in your life or is it simply something you want, but, when push comes to shove, isn’t really needed.

Column #13 - “Pers Values” This means how does the asset impact your current personal values? Does the asset make you happy? Does the asset make your life easier or more comfortable? Does the asset improve your life and lifestyle in any manner? Or, does it just . . . exist?

Column #14 - “Action.” This means, after evaluating the asset in your personal asset inventory, is there some action that should be potentially taken regarding the asset? Should it be sold for whatever it will bring? Should it be given away? Will the Salvation Army, Goodwill or the local Hospice be delighted to have it so they can help others with it? Or should it just make its way to the landfill some Saturday morning with so much other “Stuff” that has no real value?

The Realities

We could continue adding more columns and more labels, but these fourteen columns should give you a real world look at your current tangible asset load. This probably seems like a lot of information to fill in. There is no question it would be daunting if I told you to do it all right now, but that’s not the point. Like any 12 step program, this is a long-term process. Your assets, both tangible and intangible, are going to continue to change. So, this is another dynamic step that will continue evolving as time passes.

Additionally, no matter what your current age is, you have already accumulated so many tangible assets that you’re going to keep discovering things you forgot you even had and be adding them to your inventory. Most people end up in the “personal warehousing business” after a number of years. The worst reality is that you are storing assets that continue to depreciate or have no value. You’re never likely to use these items again and your offspring won’t want your “stuff” because they are well on their way to accumulating their own pile of depreciating assets.

There’s also going to be “stuff” I’ll call “dime store stuff,” if you’re old enough to remember 5 and 10 cent stores. Most of this has no value so it doesn’t need to be listed.

However, you may have some old junk (or so it would seem) that may actually have collectible value. You may have picked it up at a flea market or yard sale or it may have been in the attic, left behind by a previous owner or it’s a family heirloom that’s been handed down. All of these items need to be considered and evaluated. As an example, I have three original discount admission coupons for Palisades Amusement Park in New Jersey. Palisades Park has been closed since 1971 (four years after I left New Jersey), the land sold and developed into luxury high-rise apartments. Palisades Park was one of the great amusement and entertainment icons of it’s time just as the Disney parks have become today. Palisades Park was even immortalized in song, Palisades Park, recorded by Freddie Cannon, Gary Lewis and the Playboys and many other artists and bands. These discount coupons may have some collectible value even though they cost me nothing when I acquired them as a kid growing up near Palisades Park. You may have some assets like these, too.

Start Eating Your Elephant

I would suggest that you begin by listing the Assets in Column #1. You’ll start off with the obvious and most visible assets, your home, if you own one, your vehicle(s), your furniture, your cash in hand and liquid accounts, your IRA/401K and/or any other retirement or pension funds, other investments in stocks, bonds, real estate, precious metals, commodities, foreign currency, jewelry, tools, business (if you own your own or are a partner), tools, “toys,” time shares, one or more vacation properties, collectibles (and this is a very broad category), life insurance cash value, etc. You know what you have (or maybe you don’t). You start with the most visible and obvious and then as you go along, you’ll likely discover all kinds of things you forgot about years ago.

Once you have the Asset Column started you can begin filling in the other columns. You can fill in the other columns in any order. For example, once you have a list of assets you can go down the “Use” column and indicate the appropriate entry there. You can also work with the “Where” and “Space” columns in similar manner.

Overcoming The Overwhelming

Here is the toughest part of this process. SELF-DISCIPLINE! As the old saying goes, “The road to hell is paved with good intentions.” We all have to deal with inertia. Getting started is the first step. But, keeping the wheels turning requires continual effort. Set this as a project and allocate a reasonable amount of time to the process each week. If something pops into your mind, take action and list or modify whatever it is right then or you’ll likely forget. Set-up some way that you’ll see this in front of you all the time so it won’t get buried under a pile of papers.

Believe me! I know how hard self-discipline is and how easy it is to procrastinate. I could teach the master course on it. I’m going to start . . . next week. I’ve been fighting my own self-discipline problem with writing this 12-step program. I have attempted, on several occasions, to write a book and never followed through. This 12 Step Program is going to be my book. I’m eating this elephant one bite at a time and I’m working very hard to maintain the discipline of writing each of these steps so you can benefit from it. When it’s complete, I’ll have the foundation for the long awaited book.

Now it's time to get started on Part 1 of creating your Personal Asset Inventory. Part 2 is the next installment.


  1. Much easier for me than most people, I assume, as I own no property, have no retirement or other type of investment accounts, no boats, etc. Other than my vehicle, which is paid off in four months, and my personal items, my household goods will go to my sons' new place. So that will be downsizing all at once, which is fine with me. Love your blog.

    1. Thank you, Kathryn -- I appreciate your comment about my blog.

      You are in a better position than many people, certainly better than I was when I decided to make the major change in my lifestyle. It seems like you have this part of Step 3 pretty well under control.