Last week, I had a post about living paycheck to paycheck. I said I’d start to do a series on how to help you break out of that cycle, and I’m planning to cover everything from cutting costs, to negotiating with credit card companies to looking into declaring bankruptcy. I think that a lot of this information will be useful, no matter what your financial situation!
The first thing you need to do to figure out exactly what you have and what you owe. This can be referred to as calculating your net wealth. I try to do this at least once a year to see how hubby and I are doing – are we doing better? Are we down? Can I finally make good on my threat to sell his CD collection? (yes, he still buys CDs).
So, in order to do this, I figure out the following:
· What do we have in our savings and chequing accounts?
· What do we have in our RRSPs?
· What do we have in non-registered savings (that’s anything that isn’t a saving or chequing account or a retirement account)
· How much is the stock I’ve bought worth (yes, I own individual stock – but only for companies I work for or have worked for)?
· What do I estimate the house and car are worth (not everyone likes to include these, as they aren’t ready cash)
You should be able to find most of this information online, or have paperwork for it. I don’t get into pension plan values at all.
And then there’s the not so fun part – what do I owe. This can include any of the following (I put the total amount owed, but you should also have a separate column for monthly payments – you’ll need this later on):
· Car payments
· Credit Card Bills
· Any other outstanding bills – best to list those individually
· Any money I owe other people (e.g. parents)
As with what you have, you should be able to find this information online or have the paperwork for it. If you’re in the habit of stuffing unpaid bills into a drawer – now’s the time to pull them out!
Good luck! This may seem like a lot of work, but it’s a one off and well worth the time and effort. It’ll get you on track to start figuring out where your pain points are. Next week, I’ll cover how to start tackling credit card debt and unpaid bills.
Have you ever sat down and calculated what you’re worth? Do you find it’s helpful or not?