Know Your Net Worth

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!

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