Creating Your Net Worth Statement -25

Net Worth Statement

Assets Liabilities

Current Liquid Assets Current Liabilities
Checking account 3,500.00 Capital Gains tax 1,500.00
Savings account 200.00 Salary Advance 2,300.00
Stocks/Bonds (E-trade) 4,000.00
Total Liquid Assets 7,700.00 Total Current Liabilities 3,800.00


Fixed Assets Short –Term Liabilities
Vehicles 4,500.00 Auto Loan 4,750.00
Home 84,000.00 Credit Cards 12,500.00
Personal Property 84,000.00 Business Loan 42,250.00
Total Fixed Assets 172,500.00 Total ST Liabilities 59,500.00


Deferred Assets Long-Term Liabilities
Promissory Notes 2,000.00 Student Loans 44,000.00
IRA 5,775.00 Mortgage 64,200.00
50% Interest Business 12,130.00
Total Deferred Assets 19,905.00 Total LT Liabilities 108,200.00


Total Assets 200,105.00 Total Liabilities 227,200.00


NET WORTH <$27,095.00>


Notice that the net worth was reported as a negative number. It is
estimated that one in every 10 American households has a zero or
negative net worth. These are primarily college students, recent college
graduates, or retirees on a fixed income.

The profile above is typical of a new investor. This person has gone to
college, as evidenced by the student loan liability. They have recently
purchased their home. Note the outstanding home mortgage is 77%
value of the home, indicating a recent home purchase, possibly in the
last two years. The person also signed personally for a business loan to start a
business in which they are a 50% partner. This is not uncommon.
Most of us will have to sign personally on business accounts for the first
couple of years as our business gets started.

You can improve your capital, and thus your net worth statement, in a
variety of ways. The first is simply to increase your savings and
decrease your spending. Each time you do this, more of what you earn
will appear in the assets column of your net worth statement, and tip
your net worth figure farther to the positive side.

Saving more goes hand in hand with reducing your debt. Debt
reduction lowers your liabilities and thus increases your net worth.
Learn more about strategically decreasing your debt and saving more in
Chapter 11 called “Dividing debt and conquering credit.”

The second way to have the most impact in improving your net worth
statement is to purchase undervalued assets. When you get a deal on
an asset and buy it for less than its value, you get an instant boost to
your asset column.