The failure to create a personal financial plan is in fact a plan of its own. This week I attended an evening presentation here in Napa, put on by a local Financial Planning company. Although the target topic was 1031 tax deferred exchanges, the message I took away was that by our healthy living we are going to live longer and the longer we are going to live, the more money we will need.

It becomes apparent that having financial goals and a strategy to attain those goals is the cornerstone to preparing for future wants and needs. From the basics of a clean credit report to more complicated debt consolidation, looking at the way in which you borrow money from the big picture becomes essential.

A product of the depression and spending most of his life freeing himself from business debt, my father preached to each of us the need to pay cash for our purchases and the downfalls of borrowing. It is understandable that he would feel this way. Watching the emergence of the "debt set" with its advertising campaign mantra of "think of it as money," he was certainly not all wrong. We have become a society where if you can make the payment, buy it.

The balanced reality is that debt, the ability to borrow money, is an incredible tool that will accelerate your path in the creation of a quality life and provide you with the means to achieve financial independence. Used properly, borrowed money is the same as a borrowed car. You rent a car from Hertz, you drive it from place to place, return it and pay the fee for the time that you borrowed the car. The same with money. You borrow it for a stated time and purpose (e.g. owning a home), return it and pay "interest" as the cost of having had access to the money.

Learning to use debt to manage and leverage your life is a key ingredient for success.

A key person in creating a "personal mortgage plan" would be a professional loan representative that looks beyond providing you with a single loan package for the purchase of your home. What you would be looking for is a finance advisor for life, not just for a single purchase such as a home, car or other product. Such an advisor would look at your personal situation in detail and only then proceed with recommendations on how you can improve your situation by additional debt, debt reduction and the impact of interest expense.

In creating a path for your financial future it is important that your advisor knows all of your sources of income and expense. As well, it is important to know the present and future status of your employment (i.e., raises, relocation, retirement plan, health care). Additionally, your advisor needs to know whether you have children that will need help with a college education, a second home that is in your dreams or a retirement that needs to be funded. The baby boomers entering the retirement era of their lives are the least financially prepared to financially survive the remaining years of their lives, and to prepare for that retirement on only a taxable wage is next to impossible.

This is also where planned investment debt enters the picture. I define "investment debt" as debt where the cost or interest expense is paid by the income from the investment. An example would be the rental income on an investment home where the tenant is in fact making the monthly payment on the home for you. After 15 years, the loan has been paid off, the debt is gone, you still own the home and you now receive the rent as personal income for retirement or personal use. "Investment debt" is contrasted with "personal debt" where the purchase of a car or second home may enhance your life, but is not offset by an acquired source of income and only adds to the need to make more wage earned income.

After identifying needs and creating a personal finance plan, a strategy is needed to meet your goals. The strategy needs periodic monitoring and tweaking when there are changes that impact the income and expense of life. You may want to have different partners and obtain input from various points of interest and experience. Such participants beyond a professional lender might be a Certified Public Accountant, an insurance agent, a stock broker or advisor, your Realtor and a financial planner.

As we move into November, it is the perfect time to clean house and create your own personal finance plan for 2006. Take inventory on past and current borrowing practices.

Consult with a professional and create a monthly exit strategy from burdensome debt and commit to cleaning up your credit report for an improved FICO score. Determine your debt potential and comfort level regarding monthly payments and invest yourself to maximize that potential. If it means investment in a retirement account, a stock portfolio or a long term hold of real estate, commit to that goal.

Prepare to look back on 2006 as the 12 months where you took control of your financial life instead of letting it control you. Remember, no plan is a plan.