Recently, a listener asked how we balance our assets and liabilities. In our family, we track our net worth consistently. Doing so allows us to understand how our wealth is growing.
On this episode of Investing in Real Estate, Natali and I are discussing how we calculate and track our net worth. We’ll explain how you can add up your own assets and liabilities in order to tell a story of your personal finances. Please join us for episode 643!
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Calculating your net worth is quite simple. You’ll begin by making a list of everything you own that is of value. Include your real estate investments, cash accounts, stocks, and 401k. Other assets could be college savings accounts, vehicles you own, and art. Include anything that is cash, or could be sold for cash.
You should also assess all of your liabilities. This includes all of your debts. Include the remaining balance on your mortgage and car loans, any credit card debt, a HELOC, etc.
Then you subtract your liabilities from your assets to determine your total net worth. Another way to think of this is if you were to sell everything you own and pay off all of your debts, your net worth is what you would have left.
On today’s show, we’ll discuss further the idea of calculating your net worth. We’ll share the spreadsheet we use, acceptable debt, and more.
On this episode you’ll learn:
- How often you should calculate your net worth.
- The best way to calculate your debt to equity ratio.
- How to you make financial decisions based on your net worth.
- Why net worth is important.
- And much more!
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How to Calculate Your Net Worth and Make It Fun!
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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