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The free Personal Financial Planning course on Coursera has begun (there’s still time to join), and the first week’s topic is “Where are you? Where are you going”. One of the activities is calculating your personal net worth.
It may seem like a small thing, summing up your assets and subtracting your liabilities, but I am a living example that it does make a difference. I posted my first public net worth on December 9th, 2004:
Assets: *= pre-tax
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Cash Savings: $54,983
Brokerage (non-retirement) $ 7,808
Roth IRA: $ 2,001
Traditional IRA*: $ 5,383
401k*: $11,000
529: $ 1,097
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Total: $82,272Liabilities
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Credit Cards: $26,522Net Worth: $55,750
(I had a lot of money tied up in no fee 0% balance transfers at the time, with the money safely earning 3-5% interest in bank accounts.)
Now, I no longer share our raw numbers on the internet down to the dollar, but I still track my net worth privately and update my progress towards financial freedom regularly. I definitely think it made a difference, seeing the benefits of a pay raise or debt payoff. A little over 8 years later, our net worth is many times larger and we plan on paying off our mortgage completely this year. Knowing how you stand won’t solve all your problems, but it may give you a reality check especially if you were like me and exiting college well with a 5-figure negative net worth.
As I’m sure someone wise/rich/famous has said – “If you don’t know where you are, then how do you know how to get where you’re going?”
Or the other classic – “If you don’t know where you’re going, any road’ll take you there”
Find more in Goals | 1/16/13, 12:08am | Trackback
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