First things First

Now The best place to start is at the beginning.

Before we can dream about staying home with our kids and supporting them as they develop into amazing human beings. Or dreaming about telling our bosses they can shove it because we have a steady stream of passive income. Or even before we plan that 3 day weekend to Las Vegas we really need to understand where is our money going.


How long have you been working? What do you have to show for all that time? What are you worth? You know financially.

Have you thought of it before? If not its a good time to start. I personally have been reading financial blogs and articles for a while now. I devour the information hungrily and even though there are benefits to reading about methods for getting out of debt, how to create a budget and smart shopping techniques the biggest eye opener was when I finally sat down to figure out my net worth.

This is where I think you should start. So I CHALLENGE you to figure out your net worth!

How do you figure that out? Now I’ll be honest I am about to over simplify things here. The correct and most accurate way to figure out your net worth is by apparently adding up all the things of value you own (and could potentially sell, for example that big screen t.v., the xbox, the 5 pairs of manolo blahnik in your closet, even the car) but I think that’s a bit too much work to start off so here is my more general formula.

Figure out the Positive value : Add up all the money you have saved up.


Lets also include an example we have 2 people one named Jane and the other Joe.  Jane and Joe both use the following formula

401k Balance + Bank account Balances+ Secret personal stash(cash)+ Safety net savings+ home equity = (positive)$$$(YAY!)

Figure out the negative: Add up all the money that you owe (your debt).

Car loan balances+ Student loans+ credit card debt+ (anything else bought on credit for example furniture your still making payments on)+ mortgage = (negative)$$$( ugh! boo!)

Now add them together (positive)$$$+ (negative ) $$$= ???

Joe: 401K (10,000)+Bank(5,000)+ Cash(2,000)+Equity(26,000)= $43,000

Car loan(11,300)+ Student loan(46,000)+Credit card(3,000)+Mortgage(214,000)= $274,300

Total= $43,000 + (-$274,300)=$231,300 That is a negative net worth

Jane hasn’t bought a house : 401k( 7,500)+ Bank(7,200)+ Cash(3,000)= $17,700

Car loan( 18,300)+Student Loan(13,000)+Credit card(5,800)= $37,100


What did you get? Are you in the green! or in the red!

When you look at only what you have in your account you might be pretty happy with what you see Joe and Jane both have around 17 K in the bank but it’s not as pretty a picture after you consider your debts.

Now when I did this calculation I was pretty disappointed. I had been aggressively paying down my student debt and saving for retirement and I made good money, how was I still in the red?  The good news, now that my number was right there in my face I could clearly see it and I made a plan.  The amazing part was that once I had made the plan the finish line kept getting closer and closer. If you had the same thing happen to you, well now you know and can also make a plan.

If you find that you are in the green Congratulations! that’s great!

– The Roamer

Did this help? feel free to leave some comments and share your wisdom and tips.

*** I don’t own a house so I don’t include equity or mortgage balance if you think this is causing confusion see what your number is without including these 2 items.

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