Your Net Worth

CALCULATING YOUR NET WORTH

To measure how well you are doing with your finances, you should calculate your net worth at least once every year. This will show you how much progress you are making toward achieving your goal of financial independence.
Add up your total assets and deduct the amount of your total debts to arrive at your net worth.
For example, if you have $220,000 in total assets, including equity in your home, car, furniture, investments, and other assets, and you owe $120,000 on your mortgage, auto loan, credit cards, and other debts, then you have a net worth of $100,000[EQUITY IS DEFINED AS VALUE MINUS CLAIMS AGAINST. SO I’DSAY FO THE ASSETS YOU SHOULD SAY THE “HOUSE VALUE”, OTHERWISE YOU ARE SUBTRACTING THE MORTGAGE BALANCE TWICE. RIGHT? OR SAY EQUITY IN THE ASSETS AND DO NOT SUBTRACT THE MORTGAGE FROM THE NEXT CATEGORY]. It is very motivational to note your progress year after year as you begin to improve your net worth by increasing your assets, reducing your debts, and implementing your financial goals and plans. The annual review process will motivate you to continue the financial discipline necessary to achieve financial independence.