In the financial world net income does not determine your wealth. What determines one's wealth is one's net worth. Net worth is one's assets minus one's liabilities... and if you look over at my net worth chart you can see that my net worth is NEGATIVE!!!!
why is it negative??? well i have a very simple answer to that question. I have way more debt( liabilities) than i have assets(i.e cash, stocks, bonds, mutual funds, real estate, and businesses).
At this present time time my assets which includes cash ( that I am not putting towards the house), Kelly blue book value of my 2000 Passat ( in very good condition), personal belongings and retirement( 401K, 403B, Pension, and very underfunded Roth IRA) amounts to $22,474. My liabilities which is student loan debt and car loan equals $36,895. If you subtract my assets from my liabilities my net worth comes out to be -14,421.
I never took the time to calculate my net worth and to find out I have a below 0 net worth(maybe than I would have have started saving sooner or thought harder before i took on a car payment), but the more I started to look at it the more I thought of "opportunities" or ways to increase my net worth and realized it wasn't that bad.
The way it's looking I will have a positive net worth by this time next year. How will that happen? well with a lot of discipline, dedication and determination. My major concerns this year are reducing as much debt as possible and building a 3-6 month emergency fund. I hope to have my car loan and my three smaller student loans paid off before July 1, 2008. The car loan plus the student loans total 14822.09.
If I simply do all these things my net worth will be roughly $300.00. yes I know not much but hey its not negative and to make things even better this does not include any money I automatically throw into retirement funds, and manage to put towards the emergency fund.
I know I know you thinking What the fudge... did she forget she getting a mortgage? Hell to the nah... that number stays on mind... but i have a funny feeling about this real estate thing...( after all I have been following it for the past 6 years) I think the market will start going back up in 2009, and the house I buy will have a few thousand in equity in it sooner rather than later.
oh I also got a nice little bonus this year ( not a real bonus)but a couple of things I'm doing that will give a little more than $9000 extra income(gross) before the year is out. PRAISE THE LORD
until next time, think prosperous thoughts