What is your net worth?
Remember when I said that in order to know where you want to be, you need to know where you are? Let's start with the basics and over the next few posts, we'll make a plan for eliminating debt and building your wealth.
Your own personal State of the Nation
Don't worry, we're not going to make a speech or an announcement! We're going to assess where you're starting your wealth journey.
We need the facts before we can go any further. You need to know your net worth. Super easy to figure out.
First of all, let's figure out your net worth. It is the number when you subtract debt from assets.
- Put together a list of cash in the bank, value of investments, value of pension plan, value of any property you own, value of your car (and anything else you own that is worth money).
- Put together a list of all debt: student loans, mortgages, car loans, lines of credit, etc.
Take your assets, minus your debt = your net worth. Yay!
Where ever you are right now is the best place to be. It is what it is.
Let's accept the number as fact and remember, your net worth does not define your personal worth.
These are numbers on a screen that are going to make life a lot easier once we get them in the black (and add some zeros!).
I calculate my net worth a few times a year to assess where I am and calculate how long it will take to hit my goals. The raw, undeniable numbers motivate me to make better choices. It's a good indicator of whether or not I'm on track for financial independence in the near future!
In my next Debt Free Living post, we'll look at how much debt we need to eliminate. My favourite part of the process :)
I'm curious: were you surprised by your net worth? Is it more or less than you expected?