Management of your debt and building wealth begins by understanding your current situation. One quick and easy measure of your financial situation is your “net worth” or the amount remaining after subtracting your personal liabilities (debts) from your personal assets. If that sounds a little technical, don’t be concerned: Making a calculation of your net worth is actually quite simple.
- First, make a list of your assets. Assets are those things of value you own such as your home, car and savings accounts. Beside each item write down the estimated value.
- Next, create another list of your liabilities. Liabilities are debt or obligations you owe such as a mortgage, car loan, credit cards (or existing debt consolidation loan) and other obligations.
- Now subtract your obligations from your assets. If your obligations are greater than your assets then you have a negative net worth. Use a spreadsheet program to record everything. Periodically update the worksheet and track your progress!