This isn’t an amusing euphemism about your worth as a Human/LEO/Medic/Firefighter.
I’m literally talking about how much you are worth monetarily.
It’s a topic many of us don’t want to talk about, let alone give some thought to, but it’s one that needs consideration.
It’s a simple exercise that has long gone ignored by more people than not for a few reasons. Possibly, they are simply afraid of the answer and don’t want to face their particular reality. Another possibility is they simply don’t know how.
I’m going to teach you in less than five minutes.
I won’t bore you with accounting spread sheets or any of that nonsense. All you’re going to need is a pad of paper, a pen, and maybe a calculator.
Draw a line down the middle of your sheet of paper. On the left side, write “Assets”. On the right side, write “Liabilities”.
Too account-y? Go for “My Stuff” on the left and “I Owe” on the right.
Time to fill in the “Stuff” column. Examples are as follows:
- Car (and/or other vehicles)
- Household items
- Cash on hand
- Cash value life insurance
Don’t worry about money owed on these things. You only need to be concerned with what the fair market value (what you could potentially sell the item for) is.
Time to fill in the “I Owe” column. This should match the opposing column with the amount owed on each item. For example, your home may sell for $250,000, but you may owe $225,000 on it.
In this step, you also need to include consumer debt. Things like student loans, credit cards, and any other personal loans. These most assuredly represent liabilities.
Time for first grade math. Subtract the second from the first and voilà! That is the equity in that item.
Let’s use the example of the house above. It is worth $250K, but $225K is owed on it. Thus, the equity is $25K.
Once you have tallied up the equity in each item, add all of those together and that will equal your net worth.
A word of caution about net worth:
When the reality of your net worth hits, don’t freak out. Many of us have either a low net worth or even a negative net worth. This can be for any number of reasons, but some of them include a large debt load.
Now that you know what you are monetarily worth (don’t get wrapped up in determining your self-worth based on your monetary worth, friends), it’s time to create a plan to increase that number.
That’s where I come in.
Over a 28-month period, the Wife and I increased our net worth by eliminating nearly $78,000 in liabilities (read: debt). We’ve also steadily increased our savings.
We did all of that by creating a budget and living below our means.
I can walk you through how we accomplished that rather daunting task as well as explain how I can help you achieve your financial goals.
All you need do is connect with me by clicking the button below!
Don’t let the stress of finances negatively impact you for one more day. The time to start getting control of your finances is now.