It is in the courageous rising-time moments that you see who you really are. But, you must also see where you really are.

      It doesn’t matter if you are a seasoned financial expert or you just opened your first checking account, you always, always, always need to know where you really are financially.

      Sounds simple enough. What’s so difficult about determining where you are financially?

       The (Brutal, Honest) Truth Shall Set You Free!

      Imagine this (which for most of us women is probably not much of a stretch). You want a new dress for a special charity gala you are attending. You try on several dresses in your size. Most of them are a little snug. “They must be sizing them smaller nowadays,” you say to yourself. Then you slip on a dress that you don’t really love but, lo and behold, it fits perfectly. Do you really like the dress? Not so much. But you buy it anyway. Why? Because it tricks you into believing that maybe, just maybe, you really haven’t gained any weight and you really are still the same size. You can proudly state that yes, indeed, you still are “a size X.” Has your weight increased? Not according to that dress size. Has your body shape changed? Apparently not. You are still a size X.

      What has this scenario got to do with your financial situation? People do the same thing when it comes to facing up to how much money comes in and goes out every month. People pretend they just woke up one morning and, clear out of the blue, half of their annual salary is racked up in credit-card debt for clothes, vacations, and household items. “How did that happen?” we innocently ask. It happened because you did it. I have no problem with credit cards. I love my American Express, Visa, and MasterCard. The problem is spending a lot of money on things that do nothing to improve your financial situation.

      The first key to financial success is taking a good hard, truthful look at where you are now. Once you know your starting point (“You Are Here”), you can plan a strategy on how to move forward.

       Lie to Me, Please

      The subprime disaster that began in 2007 is a good example of people lying to themselves about their finances. This happened in many countries, but it was rampant in the United States. Subprime means “less than great.” Lenders want “prime” borrowers, people with track records of paying their loans back. Borrowers are labeled “subprime” when they have a poor history of repayments. What happened in the financial world was that government policies made it easier for lenders to lower their standards and allow people with poor credit to borrow money to buy a home. This created a real estate bubble which benefited lenders in the short term. What kind of benefit? They could collect more in fees and commissions. They offered mortgage loans which required little-to-no money as a down payment and very low interest rates… initially. The financial institutions made a lot of money for themselves.

      And what did our subprime borrowers exclaim? “Yippee! I can finally afford to buy a house!” Although it sounded too good to be true, thousands of people climbed on board. They didn’t seem to question the fact that, even though their financial situation remained the same and they had been unable to qualify for a home loan before, now they were miraculously qualified. They didn’t question it because they were happier with the lie than the truth. They simply closed their eyes to the fact that somewhere down the road, they would eventually have to pay. And pay they did. Had they asked the questions, they would have discovered that, in the fine print of their loan documents, it said that, at some point down the road, the low interest rate would disappear and be replaced by a much higher interest rate. Because so many of these borrowers did nothing to improve their financial situation, they were later faced with higher mortgage payments they could not afford. Many paid the piper and lost their homes to foreclosure, bankruptcy, and financial ruin. As my stockbroker friend tells his clients and me, “If it’s too good to be true, then it is. Walk away.”

      Even today, in the midst of this global financial fiasco, people simply want to believe that everything will be all right. The government will fix it. Somebody will come to their rescue. They live in hope and do nothing differently related to their own financial situation.

      When it comes to money, many people are lazy. It’s not that they are not working hard. Many people today are working two or three jobs. It’s that they are too lazy to learn something new. (Obviously you are not one of them because you are taking action and learning what you need to do for you.)

       To Stay Balanced, Keep Moving

      In October 2010, Robert and I and four friends sailed a new 58-foot Beneteau sailboat from Los Angeles, California, to Honolulu, Hawaii. The opportunity appeared and, even though I had almost zero sailing experience, I figured this was a once-in-a-lifetime opportunity. Count me in.

      The boat was delivered to Los Angeles from France and all the necessary work to get the boat voyage-ready was done in Marina del Rey, California. Robert and I arrived in Los Angeles five days before we set sail, buying provisions, working with the team, and supporting the final preparations. I was anxious to set sail for Honolulu.

      You have to understand, I have never been so far out on a boat that I could not see land. I wasn’t sure how I would respond or what to expect. One thing was glaringly apparent once we were out of port and under full sail—you were not, even for one second, standing still… ever! Depending on the winds and the waves, the boat was either on a slant to the left (port) or a slant to the right (starboard), and sometimes it was a back-and-forth motion. I was always grabbing onto something to keep my balance. Making coffee in the morning was a monumental feat. We lost the French press to a swell the first day. Thank God I brought my stainless steel coffee pot and filters along. No one would want to be with me for 14 days in confined quarters without coffee.

      Everything I take for granted on land was now a task to be mastered at sea—washing my face, clearing dishes off the table, carrying a glass of wine up five steps—all took extreme concentration and balance. There was one night where the weather had turned, and the rain was coming down pretty hard, so we were all eating dinner below in the main cabin. Four of us were seated around the table. JM was sitting on the steps with his plate in his lap, and Chad was carrying his dinner to the table. Just then a large swell hit the boat and Chad, looking as if the scene were choreographed, lightly stepped, stepped, stepped carefully not to lose his balance and fell into the couch on the opposite side of the cabin, holding his plate full of food balanced over his head. He didn’t spill a drop. We all applauded his dexterity. In the middle of the applause as I was standing up, a much larger swell hit the boat, sending me and JM flying across the cabin. No applause here. Only spilled food and several bruises.

      I was always on guard because the boat, the foundation I was standing on and my only physical safety, could shift at any time. I could never be complacent or assume that things would remain calm. I was never standing still, always moving to keep my balance.

       Nothing Happens Until Something Moves

      Women seem to be constantly looking for balance in their lives. While many think balance is a stillness, a calmness, I think balance takes constant movement. If you’re standing still, then there is no movement. When an unexpected event occurs, you’re thrown off your feet. You’re thrown off balance. So one of the keys to dealing with whatever comes at you is to always keep moving. As Albert Einstein said, “Nothing happens until something moves.”

      Your financial statements are never standing still. They are constantly changing.

      To know where you are today is a snapshot in time. But you have to take that initial picture. It is the foundation for your voyage, for where you want to go. To have a strong foundation requires: