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We spoke briefly on yesterday’s post about some of the benefits of creating your own debt hit list. Using the knowledge gathered from generating your own debt hit list, we can calculate one of my favorite metrics, Net worth. Net worth is a measure what you are “worth” in terms of money.
In terms of “worth,” we will not judge whether men or women are morally bankrupt, at least not yet!
How is Net Worth defined?
In words:
Net worth is the amount by which assets exceed liabilities.
In math:
Net worth = Assets – Liabilities
Where an asset is the resources of a person or business, which can include:
- cash
- notes and accounts receivable
- securities
- inventories
- fixtures
- machinery
- real estate
A liability is money owed to a lender.
- mortgage
- student loans
- credit card
- personal loan
- car loan
This list is not a comprehensive list.
Now what?
My personal favorite way to keep track of my Net worth is using an application called Personal Capital. As far as applications go I have only tried Personal Capital, but it has meet all my needs. Personal Capital is a free to use application that can be used on PC, tablet, and smartphone to aggregate your assets and liabilities to give you a summary of your Net Worth.
If you are a home owner like me with a mortgage be sure to link the value of your home in the application by using Zillow within the tool. Your Net Worth will be subject to change because of Zillow’s algorithm for calculating the value of your home and accounting for market changes.
Do you know your Net worth? If not start tracking today in as quick as 15 minutes or less using Personal Capital.