FIRE Financial Independence, Retire Early

Money Mindset Makeover-Day Three-Net Worth

Do you know your net worth?

It’s day three of the Money Mindset Makeover and today we’re going to focus on net worth and our assets and liabilities.

One of the questions on yesterday’s quiz was about this topic.

Not everyone can tell you the dollar amount in each of the above categories but it’s essential information.

You might think you have more assets than you actually do or you weren’t aware (when you added up all the credit card balances), just how much you really owed.

Today, sit down and either on pen and paper or a computer, make two columns.

One you’ll mark assets under which you’ll make a list of everything you owe that is already paid for such as a house, car, or even something that if need be you could sell and turn into cash. If could be domain names, bikes, power tools…

Also add all of the bank, saving, investments accounts and how much is in each.

Under the other column, liabilities, write down anything you owe money on. It could be a mortgage, car payment, student loan debt, credit card debt.

Total up each column and see if your asset number is higher than your liabilities. If you own a house and have a mortgage, try to figure out how much you’d get if you sold you house and then how much you still owe. Put the house price in the asset column and remaining mortgage balance in the liabilities column. Do the same for things like cars or boats etc.

Now you know your net worth.

Is it looking good or sort of scary? Sometimes waking up to the reality of how much we owe is a good thing and points us in the right direction to do something about adding more to the asset column.

Tomorrow we’ll look at monthly assets and liability before we begin to look at how to make a budget.

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