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:
Examples of assets are:
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
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
- Mortgage loan
- Credit card balances
- Outstanding bills
- Automobile loans
- Taxes
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