How To Get Your $$ House In Order

Advice For Viewers From Harvard Professor

(CBS)  More than 60 million Americans worry about how to get out of debt. How do you stop the worry and achieve financial stability? Harvard professor Elizabeth Warren offers solutions in "All Your Worth: The Ultimate Lifetime Money Plan," which she co-wrote.

In the first of a two-part appearance, she tells The Early Show co-anchor Rene Syler you should begin with a foundation that divides your budget among "must-haves," savings and "wants," with the split being roughly 50 percent (must-haves), 20 percent (savings), 30 percent (wants).

"Everybody needs a money plan," Warren explains, "and at the heart of it, it's really pretty simple. It's about balance. ...It's really only about dividing your money into, sort of, three things that you spend it on, and getting in the heart of what this is about.

"It's a lot like balanced eating -- not too much of this and not too little of that. It's about getting a central idea that's powerful and strong and you can use it."

Warren describes the must-haves as "the things you pay every single month. It's the mortgage, the rent, the health insurance, the utilities. It's the car payment and student loans -- the things that may not be too cheerful to pay for, but you have to pay them month in, month out. That's sorta your basic, your nut. The part that gets paid, no matter what."

As for savings, it's "about believing in yourself. Savings is about what you want to put away for tomorrow. If you set up your budget right from the beginning so there's money there for savings, you get the real point of owning your home, the real point of sending your kids to college and not loading them with debt. It's whatever it is that you want to dream."

And what if you can't stick to that formula? "Here's the thing: You have a lifetime plan. There are times when you have to vary from that. …Paint the center of the bullseye. And then if you do variations, at least you understand where you are and how much you've varied it."

Wants, Warren adds, is just that: whatever it is that you want: "Wants can be about a fabulous turquoise sweater, about getting the car waxed or getting a bikini wax. Wants can be anything. The key is to make them fun and the way to make them fun is, you've got the cash, you've set it aside, and you know you can spend it and have fun with it."

Warren adds it's best to pay cash for wants, so the bills don't come back to haunt you later.

Warren is scheduled to dish out even more suggestions on The Early Show Wednesday.

"All Your Worth" is published by the Free Press, which is owned by Viacom, the same company that owns CBSNews.com.

To read an excerpt of "All Your Worth: The Ultimate Lifetime Money Plan," click here.