Category — Net Worth

After getting all of our financial statements in order, I made the first calculation of our total net worth (roughly calculated as assets – liabilities). What followed was not pretty. My Wife and I know how much debt we have, yet seeing the number totaled up and written down was a shock. I will not put numbers up here, at least not yet. I will, however, keep track of our progress on a monthly basis to see how we are coming along. It will be interesting to see how much of a change occurs month to month.

What do we plan on doing from here out?

The biggest drag is obviously our debt level. Since our wedding in June we have been using the debt-snowball method to pay off our debts. The first credit card debt was knocked out at the end of November, which felt great. Next up is the car, which we aim to have paid off in July, a full year earlier than the maturity date. When that’s out of the way it will really begin to feel like we’re making a dent in our debt levels.

On the other side of the net worth equation are our assets. Most of our money is in 401(k) retirement accounts, with a small additional amount in an emergency fund. We will both continue to take advantage of our 401(k) accounts, and will continue to fund the emergency account. I anticipate that by July, when we pay the car off, our assets should outweigh our debt and our net worth will turn positive (a great thing even if it is only a few dollars!)

This week I will get together the paperwork necessary to make a net worth calculation. The Simple Dollar has a wonderfully detailed post on creating a net worth calculator using a spreadsheet.

For preparation I will need to get the following documents together:

1. 401(k) account balances. Neither my wife or I have rolled over our 401(k) accounts from previous employers, so I may need to dig a bit to find all of them. After getting everything together would be the perfect opportunity to do that rollover.

2. IRA balances. I have one account with Vanguard, so this should be easy to get.

3. Savings balances. This will also be easy to find.

4. Credit Card Balances. Both of our cards are with a major bank, so this will be as easy as logging into our accounts.

5. Student loan balances. This might be tough to find, as both my Wife and I have set up automatic repayment. We’ll have to hunt down our statements and check balances.

6. Car loan balance. We get a monthly statement, so I will have to find that.

While I am at it, Five Cent Nickel has the excellent idea to create a Financial User Manual in his New Year’s goals post. I will add insurance documents to the list, as well as collecting account numbers and contact information for everything. By Saturday I should be able to get everything together. If you see a post on Sunday you’ll know I was successful!