My finance mojo is back, so I’m back to writing about how to survive with just one income.
A few days back, I wrote about knowledge being a potential power. Unless knowledge is applied, it does not gainfully serve us much.
So let’s talk about what we know, or rather, what we need to know about our finances, so that we can do something about it.
To be able to plan and strategize well, we need some data. Let’s start with where you are at the moment.
What is your net worth?
But first, what is net worth?
Net worth is the total value of your liquid assets – cash, stocks, bonds, value of any personal property that can be sold relatively quickly, like your house, car, jewelries – minus the value of money you owe, like loans, mortgages, and credit card debt. A car, by the way, is a depreciating asset, so it should not go under liquid assets unless you are actually turning it into cash by selling it.
This exercise of computing your net worth may be depressing for some. I know I had nightmares in the weeks that we were working on our numbers for this, especially at the time that we were neck-deep in debt from my last delivery. Then another bout of sleepless nights when we had to decide to withdraw what we have paid for our children’s educational funds. This was during the troubled times of Prudential Life.
So again, this may give you a hard time accepting how bad you’ve managed your money, especially if you have been that person who pays the minimum amount due on your credit card. If you are that person, then it’s time to cut your credit card in half and throw away the pieces. I have to admit that my credit card has been my best friend for the past thirteen years, but it’s only because I always pay the full balance, on time. Plus, not once have I paid the annual fee. 🙂
A lesson I learned from my only brother, “If you cannot pay for an item in full, then you cannot afford it. If you cannot afford it, then you have no business buying it.” So my rule has been, if I need/want something, like a smartphone, I have to have the money to pay for it in full in the bank, even if I am availing it through my credit card at zero interest for twelve months. Why? If something untoward happens during the payment period, I know I won’t have to miss a payment, and I won’t be penalized.
So, going back to finding out where you are financially…
The exercise may be a long process. It may scare you a bit, depress you a bit. But facing your reality is the beginning of a successful money management in the future. Facing your present reality will help you realize the mistakes you’ve done, the bad money decisions you’ve made. Make a list of things (or people… ha ha!) that have contributed to losing potential savings, decreased your net worth and wasted your hard-earned money. Knowing your net worth shows you exactly where you stand financially. Know where you are at the moment, and you will know what steps to take in going the direction you want to go.
Do you have questions, comments or feedback about this post?
Please leave me a message, or post them, at my Facebook Page.
Marge, also known as The Happy WAHM, is a virtual assistant who turned her passion for entrepreneurship into a worthy endeavor of offering complete business solutions to CEOs and business owners around the world. She turned her back on a thriving corporate career to become a hands-on mom and created a lifestyle that allowed her to build a homebased career, homeschool her children, and still have time to pursue her passion for arts and crafting.
She only posts her content on her website, TheHappyWAHM.com. If you see this content on someone else’s site then it is NOT by any means authorized.
