Step 1 To Pay off Debt: Know Your Net Worth

The first step toward financial freedom is assessing your current wealth. In order to have a complete assessment and continue on to creating a budget and debt pay-off plan, you need to start with what you have now.

Net worth is based on your current wealth, meaning the only time it is accurate is the day you calculate it. Using a balance sheet, follow these steps:

• List your assets
• List your liabilities
• Subtract liabilities from assets
• Answer is your net worth

I hope that answer is on the positive side!
Examples of assets are:

• Cash
• Bank account balances (including checking, savings, and certificates of deposit)
• Savings bonds
• Investments (at current market value)
• IRA/PENSION/401k (at current value)
• Investment property
• Automobiles
• Furniture/appliances
• Jewelery/collectibles

Examples of liabliities are:

• Mortgage loan
• Credit card balances
• Outstanding bills
• Automobile loans
• Taxes

Be honest in your answers, you'll only be cheating yourself out of valuable data. By calculating your net worth monthly/quarterly/annually, you can see if you are heading in the right direction and increasing your worth.