net worth

January 2009 Net Worth

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Many PF bloggers share their net worth and I’ve decided to do the same.  This is my net worth as of the end of January 2009.

Assets: $29,866.68

  • Cash Savings – $20,383.05
  • Stocks – $5119.35
  • Roth IRA – $4031.67
  • P2P Loans – $332.61

Liabilities: $4109.60

  • Credit Card – $4109.60

Total Net Worth: $25,757.08

It had been a very long time since I had last computed my net worth.  I was a little surprised by how much I have in cash savings.  I’ve been putting off investing more in stocks because I didn’t feel like I had enough liquid assets.  I can probably safely put some more in stocks.

My credit card debt is part of a student loan debt that I paid off with the credit card using a balance transfer offer of 3.99% for life.  I’ve seen several reports of credit card companies changing the rates or charging a $10 monthly on deals like this but so far that hasn’t happened to me.  I’m going to be sure I have enough to pay the card off in case that happens. I might pay it off in a few months anyway just to have one less thing to worry about.

I’m not including my student loans in my net worth statement.  There are a couple of reasons for this.  One is that doesn’t appear that I will have to pay on them in the near future and they may eventually be forgiven.  The other reason is that I think I will get a clearer picture of my net worth without including the student loans.  They will continue to capitalize and make my net worth appear to diminish even if I increase my assets.  I’m sure some people might not agree with leaving my student loans out of my net worth computation but I think it is better to leave them out.

How Much Have You Earned and What Do You Have to Show for It?

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The first chapter of “Your Money or Your Life” is about making peace with your past involving money. The two exercises they suggest you do to help accomplish this is to figure how much money you have made in your life and how much you have to show for it.

The easiest way to figure out how much money you have made in your life is to look at your statement of earnings from the Social Security Administration. They should mail you a statement each year. If not you can contact them to get a statement. This statement will show your earnings by year since you started working. It won’t show any earnings that weren’t subject to social security tax but it should reflect the vast majority of earnings. Once you add up all the years of earnings from the statement plus any earnings not reflected on the statement you will have a fairly accurate total of what you have earned in your life. This total might surprise you. I have made a little less than a quarter million dollars in my life. That is actually very little considering I am 41 years old. Doing this step makes it clear that I need to earn more money.

To figure out what you have to show for all these earnings you figure your net worth. You take all your assets(bank accounts, stocks, real estate, personal property, etc.) and add them together and then you subtract your liabilities(mortgage, student loans, credit card debt,etc.) to arrive at your net worth. Hopefully this will be a positive number. My net worth is negative due to my student loans but disregarding them I would have a positive number.

Now that you have both figures you can compare them. There is a good chance that your net worth seems awfully small compared to what you have earned. You can’t change the past but you can improve from here on out. If your net worth didn’t seem very small compared to your earnings than you are ahead of the game and following the steps in the book should be a snap. Next week I will post a summary of the second chapter.