Net Worth
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Net worth would be your assets minus your liabilities. Assets would be things like bank accounts, investments, cars, homes, and significant personal items. Make a list of these assets along with your best estimates of what those items are worth today (what a willing buyer likely pay for it). Liabilities would be things like car loans, mortgage loans, student loans, credit card debts and unpaid bills. Make a list of these liabilities along with the amounts due. If your assets exceed your liabilities you have equity or a positive net worth. If your liabilities exceed your assets you have negative equity or a negative net worth. Regardless, you need to know where you are at so you have a baseline. You’ll then be able to compare this baseline to future results to see if you are improving your financial position or not.
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How do you improve your net worth? Save more (increase your income or decrease your spending) and use this excess to pay down your liabilities or increase your assets or a combination of both!
Click here to download my net worth calculator template!