What's your PF level?

I've slowly become aware of the fact that I am just not at the same level of sophistication as others when it comes to personal finance. I'm strictly a newbie at this point. I've just recently gotten an Excel spreadsheet budgeting system that I like and use regularly. I only started my Roth IRA retirement account at the beginning of this year. I still have debts outstanding, and so does my wife. I have a car that I haven't paid off yet, but I should have that done by year's end.

That's where I am with my personal finances. Where are you? Here's a list of the characteristics and activities of people at different levels of PF ability:

Level 0: No PF ability whatsoever

• I'm in debt up to my ears.
• I use credit cards to pay for things I don't have the money to buy.
• I'm taking out a HELOC (home equity line of credit) to pay off credit card debt, which…
• …will just go up again because I have…
• …no self control when it comes to spending.
• I don't know what my income and outgo are because I have no budgeting system.
• I don't save any of my income. (Savings?? Why would I do that??)

Level 1: Beginning PF'er

• I know what my income is, and what my outgo is.
• I budget my income in one way or another.
• I track my spending, and balance my checkbook regularly.
• My spouse or significant other works with me to make the system work.
• I may have debts, but they are going down, not up, because I'm dedicated to being free of debt.
• I put aside part of my money for savings, buying a house, and/or retirement, before I spend anything.
• I know enough about investing to put my money into index funds, but not much else.
• I have a plan for funding my retirement, and I'm following the plan.
• I try to find ways to save money and/or make more money, on a small scale.

Level 2: Intermediate PF'er

• I have a working knowledge of financial instruments, and I probably manage my own portfolio and retirement investments.
• I actively work to increase my income by increasing my value, either to my employer or as an entrepreneur.
• I actively work to increase my net worth, because I know that net worth is the true indicator of wealth.
• I have strong organizing skills–I know where all of my documents are, and I track my investments in an organized manner.

Level 3: Strong PF'er

• I'm nearing the point where I can afford to retire, even if I'm not yet at retirement age.
• I make informed, intelligent decisions with my investments.
• My net worth just keeps going up.

You may have noticed that as I got to describing the higher levels of personal finance proficiency my descriptions had significantly less detail. That's because I know very little about what it's like to be at that level of PF competence. It's like being at the base of Mount Everest and not being able to see the peak through the clouds. It's only as you climb the mountain that you can see a little higher than you could before. That's also a very good reason to associate with those who are at a higher level than myself. They're like your personal finance Sherpas, your guides up the mountain of personal finance ability. Find them, befriend them, and let them help you climb your PF Everest.