Financial metrics — check for ‘leaks’


By Jim Smith

SUN Columnist

The automatic cuts by the federal government went into effect March 1 and $85 billion sounds overwhelming, but it is actually only 2.4 percent of our total federal budget.

Where and how one chooses to make those cuts, of course, is critical to now and the future, just as it is with our personal budgets.

Are you tired of living paycheck to paycheck? If so, this is a good time to take action. Stop ignoring and commit to a serious critique.

Start with needs versus wants. Where are those little “leaks.” Do you know specifically where each dollar goes? Paycheck to paycheck doesn’t have to be your standard.

Human nature being what it is, we like to measure personal progress — be it weight, school test scores, health or finances, so here are a few metrics to start with.

Where do you stand? Goals surface as progress is evaluated. Some of the following guidelines will appear vastly different from your results, but the closer you get, the more fiscally comfortable you become.

Fitness quiz: Start with a 20-question quiz at

Overall expenses. It starts with knowing exactly what comes in and goes out. is a free, secure Internet tool that allows you to enter your specific debts and monthly expense detail. It helps guide you through real costs as well as guidelines for each household expense (benchmark examples — 33-35 percent housing and utilities, 18-25 percent for food).

Debt to income ratio. Excluding mortgage, your monthly debt (credit cards, car loan and student loans) should be less than 15 percent of takehome pay. If greater than 20 percent, it is looked at as a red flag and financial concern. This ratio affects interest rates and insurance rates.

Emergency fund. Do you have quick access to cash equal to at least three months (preferably six months) of expected household expenses? That unexpected emergency could come from job change, moving deposit and expenses, medical emergency or vehicle problems to stress our finances. This fund can be any combination of various liquid assets (money Market funds, lines of credit, home equity line, etc.). According to AmericaSaves, 51 percent of families reported not having funds available if they had unexpected expense greater than $1,000 (not including lines of credit).

Net worth. It is recommended one calculate this at least every couple of years. There are numerous templates on line or just a basic spread sheet. Net worth is simply household debt subtracted from household assets, i.e., if you sold everything you own and paid off all money you owe what would you have left?

One commonly referenced metric indicating financial wealth is gross income (excluding inheritance) x age/10. Example ($60,000 x 50)/10 = net worth $300,000. You might be below the recommendation as you recuperate from the recent financial slump though this calculation is a guideline. The overall intent is that net worth increases with age. I don’t recommend this calculation for those at minimum wage or just starting careers.

What do I need to retire? This is a calculation to help you determine what your retirement nest egg needs to be. When can you afford to retire? One million dollars is often thrown around, but try to be specific for your needs. For at least the first five years post retirement, figure 75-80 percent of current income. Based on anticipated expenses, a nest egg of $300,000 is needed for every $1,000 of monthly draw intended to supplement pension or Social Security. For example, if your calculations indicate you will need $2,000 monthly draw (beyond your social security check), then a $600,000 nest egg is an estimated goal (4 percent annual draw from $600,000 nest egg equals $24,000 per year).

This article was provided by Wendy Rice, CSU Extension Agent, La Plata County.

Property Management Workshop

The Archuleta County Weed and Pest, along with the CSU Extension Office, is excited to offer the community a Property Management Workshop on March 27.

The workshop will be held at the CSU Extension office at 344 U.S. 84.

Call the CSU Extension office at 264-5931 for information.

Presentations will include Chemical Modes of Action, Forest Health/Insects and Disease, Poisonous Plant ID and Animal Symptoms, Applicator and Public Safety, and Property Improvement Methods. Lunch will be served for a fee of $5. Please pre-register.


March 21 — Colorado Master Gardener Program, 9 a.m.

March 21 — 4-H Shooting Sports, 4 p.m.

March 22 — 4-H Cake Decorating project meeting, 2 p.m.

March 22 — 4-H Cloverbuds program meeting, 2 p.m.

March 25 — Back to Basic Food Preservation Class, 1 p.m.

March 25 — Back to Basic Food Preservation Class. 6 p.m.

March 27 — Property Management Workshop, 8 a.m.

March 27 — 4-H Sports fishing program, 4 p.m.

March 28 — Colorado Master Gardener Program, 9 a.m.

March 28 — 4-H Lamb Project meeting, 4 p.m.

March 28 — 4-H Goat Project meeting, 5 p.m.

March 28 — 4-H Swine Project meeting, 6 p.m.

March 29 — Extension Office closed.

March 29 — Pathfinders, 6 p.m.

Check out our webpage at for calendar events and information.