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):
· Mortgage
· 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?
I have done the calculations. It wasn’t too helpful for me, because I have few loans and few assets, so the picture is pretty clearcut. It did help me to remember about my car as an asset, which I was totally forgetting about before. I think for people with multiple loans and many different asset types it is definitely helpful to figure out net worth.
MoneyAfterGrad recently posted..Guest Post: Why you can afford to stop wearing glasses
Yup. I think it can always be helpful to know where you stand..
I admit that I’ve never sat down and calculated this. I guess I just didn’t want to see the dismal total. I don’t owe money anymore, but I feel like I could’ve saved a lot more over the years. Doing this would be a good yardstick to track your overall progress and give you some goals to shoot for.
Modest Money recently posted..Guilt Induced Frugality
Yup. I like to keep track of my progress, but I don’t necessarily set firm goals. I tend to be hard on myself if I don’t make them.
I haven’t done the actual calculations but that’s because it would be a horribly negative number. However, I do enjoy plugging the new information into my excel spreadsheet and seeing the debt number go down!
bogofdebt recently posted..Spending Recap 9/2-9/9
Sounds good! The whole point is to keep track of your progress one way or the other – and that’s exactly what you’re doing!
We post our Net Worth update every month as it’s important for us to see what state our financial health is in. I actually have an easy free downloadable net worth calculator on the blog to figure it out. Some months it can be a bummer as the numbers don’t go up as much as we thought but at least we know what they are. We add in in our vehicles and house and adjust the price yearly. We don’t add in any of our personal assets besides the car and house though like appliances, tv’s, furniture… antiques, jewellery.. etc. Great post. Mr.CBB
Canadianbudgetbinder recently posted..Reader Question: RRSP’s-The Need To Know Basics
Thanks Mr. CBB. I’m a little shy, so I don’t like to get into posting numbers (plus I’m too lazy to calculate it every month). I know you post yours – I’m always amazed by your emergency fund!
I like to do this on a regular basis but my BF always leaves it for once or twice a year and spends a day going through a bunch of paperwork. I like doing it because if I’ve been doing better than where I was the previous year it can definitely turn a bad day into a good one!
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