How Much Are You Worth?

Ray’s Take: What do a class=learn" style="color: #7d0200; text-decoration: underline;" href="http://www.memphisdailynews.com/Search/Search.aspx?redir=1&fn=Mike&ln=Tyson" rel='

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Name SearchWatch Service'>Mike Tyson, Curt Schilling, Marvin Gaye, Francis Ford Coppola and Meat Loaf all have in common?

 

They were all worth millions at one point in time yet all found themselves bankrupt and broke. According to the New York Times, when Francis Ford Coppola filed bankruptcy his assets came out to be a whopping $52 million and his liabilities totaled $98 million. Wow. Talk about major overspending.

 

While most of us will never be as wealthy as these celebrities, calculating your net worth is an essential tool in measuring your overall financial progress from year to year.

 

To figure out your net worth, start by calculating your assets. For most people, this is your home, other real estate properties and vehicles. If you own a business, list the current market value. Next, you’ll need to gather statements for all your liquid assets. This includes checking and savings accounts, CDs, and other investment accounts like retirement and brokerage accounts. Last, list personal items of value such as jewelry, coin collections or any other items worth over $500.

 

Now calculate your liabilities. Add up your mortgage, car loans, student loans, balances on credit cards and other debt that you owe. Subtract your total assets from your total liabilities. Hopefully, your net worth is in the green but there are times in life when it could be in the negative.

 

Because of easy access to credit, many people with zero or negative net worth have lots of “things” like cars, TVs and even houses. It’s possible to have zero net worth yet appear prosperous by many standards. There are only a few good financial planning rules of thumb, and one is “spend less than you earn.”

 

Finding out how much you are worth is a good exercise to do each year to see how you are progressing or regressing on your financial journey. And to make sure you don’t end up in bankruptcy court with people – even celebrities – living above their means.

 

Dana’s Take: a clas="learn" style="color: #7d0200; text-decoration: underline;" href="http://www.memphisdailynews.com/Search/Search.aspx?redir=1&fn=Elizabeth&ln=Thames" rel='

Learn more about Elizabeth Willard Thames

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Name SearchWatch Service'>Elizabeth Willard Thames wrote a book called “Meet the Frugalwoods.” It was about a young couple who achieved financial independence and early retirement (they called it FIRE) by saving more than 70 percent of their income in order to achieve their dream of living in the Vermont woods.

 

This was a truly inspiring story about a couple challenging their peer group’s values and putting their finances exactly where they found joy. They saved and nipped spending until they were able to live their dream of raising their two babies in the Vermont woods. The couple also shared case studies of others around the globe who have aligned their finances with their dreams.

 

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