5 ways to know if you are financially illiterate

Do you know how money works? Ben Steverman at BusinessWeek claims that Americans are functionally illiterate. Are you one of those Americans? 1) Do you have personal credit-card debt greater than one month's salary?

2) Is your house payment (or your rent) more than 30% of your monthly income?

3) Do you have a savings account? Does it have a 6-month cushion?

4) Do you understand the concept of compound interest?

5) Do you know what your predicted lifespan is?

Three years ago, my answers to those questions would have put me in financial kindergarten. It was a sad way to live, with lots of middle-of-the-night hyperventilating. But thanks to a lot of hard work, some smart decisions, and the help of the Biz Diva, I got financially literate.

And can I just say how really really grateful I was when the economy tanked right after I quit my job and my husband was laid off? Because I wasn't all that worried. Financial literacy gave me time.

My problem wasn't so much that I didn't know what I should have been doing. It was that I didn't want to look at what I really had been doing. I wanted to keep my head in the sand. It's the way I'd always dealt with money; it wasn't so bad. There was a lot of anxiety and that sick feeling I'd get if I saw a quiz like the one above (6 months cushion in my savings account? How could that ever happen? Especially when I had 6 months worth of credit card debt?). Oh, and the worst? "Have you saved enough for retirement?"

Let me tell you what a great feeling it is to look at those quizzes now!

If you find yourself in that same bind, I recommend you call the Biz Diva at her new number right away: (707) 665-5410.

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This post was submitted anonymously.