Combating the Bag Lady Syndrome - Part 1

Many women, myself included if I’m being honest, have a fear of losing everything. Even if this fear is not a constant in our lives, it’s there and it bubbles to the surface from time to time. Perhaps it stems from childhood experiences, maybe you experienced a time when you had to start over in life, or perhaps it’s just instinctive for women. This fear, known as Bag Lady Syndrome, leads us to worry about finances and causes anxiety about the future. We lose sleep thinking about our finances. We make decisions, sometimes giving in to indecision, based on fear.  Sometimes we simply stick our head in the sand.

Studies show Bag Lady Syndrome affects women regardless of age, marital status and socioeconomic class.  Therefore, in honor of Women’s History Month, we are looking at ways women can combat Bag Lady Syndrome in a series of blogs. As you know, we believe, “With knowledge comes confidence.” If you know where you stand and can feel confident in your finances, you can send the bag lady on her way.

One of the first steps in this battle is to know what you have and what you owe.

If you are a paper-and-pencil kind of girl, get out your supplies. If spreadsheets are more your thing, grab your laptop. Whichever route you take, the goal is to get all your assets and debts recorded.

Start by making a list of all your bank accounts and their balances. Do the same for all your investment and retirement accounts. Don’t forget to include savings bonds and health savings account balances as well. Finally, add your home, vehicle and any other major tangible personal property you own with its value. When you have all your assets listed, calculate the value of everything you own.

Next, it’s time to start writing down your debts – not as much fun, but this is important to get them all. Start with your mortgage, car loan and student loans, then record all other debts: credit cards, personal loans, etc. As you did with the assets, add up all your debts.

Subtract your debts from your assets to get your net worth.

Update this information every year. It is a powerful feeling to see progress over the years – the value of your assets going up and your debt balances going down. Then, when that Bag Lady fear starts tapping you on your shoulder, you can put her in her place!

- Juli Erhart-Graves, CFP®, Worley Erhart-Graves Financial Advisors