Money Diet Challenge #2 – Figure Your Net Worth

Calculate your net worth | January Money Diet

Welcome, new dieters. Just jump right in wherever you are…we’re glad you’re here.

If you haven’t done so, I enthusiastically recommend that you check out the comments from yesterday’s post about saving energy. Some of our readers have shared excellent hacks for staying comfortable and making our living spaces snug and cozy. Thanks to all of you who have generously shared  your experiences and ideas this week.

Let’s delve in to our second challenge, shall we?

Getting Clear About Money

Our family’s finances didn’t really start moving in the right direction until I began calculating our Net Worth each month.

Before then, I could fool myself too easily. I could feel virtuous about putting $100 in our savings account, for instance, and conveniently overlook the fact that I also charged $150 on a credit card that month on impulse buys

The only honest way to measure where we really stand financially is by figuring our net worth.

Net worth, as I’m sure you know, is the difference between what we own and what we owe. On the first day of every month, I calculate ours. Now that it’s moving in the right direction, it’s an exercise I actually look forward to. My goal is to improve our net worth each and every month, even if it’s just a little bit.

If you do the same, you’ll discover that your finances can improve dramatically over time. Just focus consistently on moving that bottom line up, up, up.

Start with Assets

To do this calculation you can simply jot the figures on a piece of paper and use a calculator, or you can create a simple spreadsheet with a program like Excel (Money Under 30 has one posted here).

Start by adding up your assets. If you’re a homeowner, list the current value of your home. If you’re not sure, a site like Zillow can give you a rough estimate for now. Your professional neighborhood realtor would probably be happy to give you a more accurate market value, too.

Go out to your car and write down the mileage and condition, enter the info at Kelley Blue Book, and figure out the private party value. Check the current balances for your bank accounts, retirement funds, investments, etc., and add those to the list.

Don’t forget things like your grandpa’s coin collection, or any valuable jewelry, antiques, artwork, etc. you own. Just be realistic about the cash that the sale of such items would generate. If you’ve ever held an estate sale or tried to liquidate someone else’s assets, you’ve probably learned that what people are willing to pay for others’ treasures is often considerably less than the appraised value.

Add everything up, and you’ll have a pretty good idea of your total Assets.

Debt Next…

Next, make a list of every single one of your debts: mortgage balance, car loan, credit cards, lines of credit, student loans, etc. Add these up, and you’ll have your total debts, or Liabilities.

Now, simply subtract the Liabilities from the Assets to figure your Net Worth.

The result will be different for each of us. If yours is a negative number, don’t despair! When I was 21, I had zero assets, $5000 in credit card debt, a new car I couldn’t afford and an upside-down car loan with a 21% interest rate!

Regardless of what your financial situation is today, you can acknowledge that this is your starting place and resolve to get your net worth moving in a positive direction in the days ahead.

By figuring our net worth every month, we can see the effects of our financial decisions in a very real and immediate way.

If I charge a $25 sweater on my Visa card, our net worth goes down $25. If I instead contribute that $25 to my Roth IRA, our net worth goes up $25. So simple!

Now It’s Your Turn

Figure out your net worth, and leave a comment on this page when you’ve finished the task. (You don’t need need to share your net worth, just the fact that you figured it out.) If you did this exercise last year and your number has improved, we’d love to know.

As a special incentive, everyone who completes Challenge #2 and leaves a comment on this page before midnight MST next Thursday, January 12, 2017 will automatically be entered for a random drawing to win one of my favorite financial books, Your Money Or Your Life.

I encourage you to calculate your net worth each month during 2017, and challenge yourself to increase your bottom line every month. Are you already in the habit of regularly tracking your net worth? Perhaps you’d like to set a Net Worth Goal for the end of 2017.

And remember, no matter what the spreadsheet says – YOU are worth more than the finest gold or silver.

Here’s to a successful January Money Diet, and a financially strong 2017.

Hugs,

The signature for Eliza Cross

About Eliza Cross

Eliza Cross is a full-time writer and the author of a dozen books about food and home design. She has been blogging about simplicity and sustainable living since 2006.

24 comments to Money Diet Challenge #2 – Figure Your Net Worth

  • Paul Kanaga

    I always pay my credit card fully every month.I have been checking my net worth on a monthly basis.last year was much n better than the previous years. Still I have to do a lot to improve on my side.This year I have made some resolutions
    and I guess I will achieve my goal.

  • Catherine Godfrey

    Well this one was CRAZY for me. It wasn’t as bad as I thought, but we have to do much better. We are in the positive.

  • Nancy

    I analyzed my expenses from previous months to set a more reasonable budget so I could determine how much money to save each month and spend, especially on groceries and food.

  • Melissa

    I was happy to see we are moving in the right direction 🙂

  • Colette

    Well, we are way in the black! It’s a lot better this year than last since the VISA bill is nearly paid in full!

  • Lyn

    Always amazed – – Our net worth increases each year because we save more than we spend, but because that savings occurs before we ever see the money (direct deposit into my husband’s employee plans), we forget about it. When we met with our financial planner in the middle of the month, he honored us for that, but confronted us with how much we spend in other places (I’m addicted to plants and gardening and spend way too much at nurseries) – – money that we could use to pay off our mortgage. We are grateful for the discipline the January Money Diet provides. It’s now part of our New Year routine to pay attention and make changes where we can. Thank you Eliza!!

  • Annette

    This is my second year doing the money diet. I just love it as it helps me get back on track after Christmas. A couple of years ago I finally paid off a huge student loan and a ton of credit card debt and vowed never to have any consumer debt again. The only debt I have is my mortgage. I keep an eye on my net worth and usually figure it out every month. Because of the January money diet and the good habits I learned my savings and net worth has grown from last year. Thank you!!!

  • maggi

    im retired and living in an apartment with my cats. no car, no credit cards, just the basic bills plus the cats expenses. yet… i still cant save money. i will set up a spreadsheet and start tracking where the money is going. let you know later.

  • Judy

    I completed this calculation and do it several times a year. I have found it to be motivating and it reminds me that seemingly small changes make an impact over time.

  • Cindy

    I figured it out, and, well, it is starting spot! I didn’t include my partner’s income, or assets, since our finances are separate. Interesting exercise!

  • Steve

    Did mine for the second year in a row. Although I don’t own a home for two more days, it was still good to determine my assets and, right now, zero liabilities. It gives me some ideas for the progress I want to make this year.

  • Jessica

    We started this last year (our first year of the January money diet) and have continued to track net worth every month. It is such an impactful exercise and the “Your Money or Your Life” book is HIGHLY recommended.

  • Betty

    My husband does this regularly because he wants to make sure that our future is as secure as he can get it to plan for a stable retirement. So, I’m done with this challenge. You don’t have to put me in the drawing for the book. I already have it so let someone else have a better chance. Thanks again for this month of challenges – it’s very enjoyable for both me and my husband.

  • Deborah

    We had an improvement over last year, but still need to work on it. We hope to be debt free by the end of 2017. We are planning to do the money diet several times this year, to help achieve that goal.

  • Katy Emanuel

    We have definitely improved our net worth this past year and that had been our goal with making a move across the country. We moved to improve our quality life which included our financials. The up side of this is that I get to stay home with my children a little longer (until they go to school) before i need to return to work.

  • Cindy

    I did this exercise. Zillow said my home value has decreased by a few thousand dollars in the last 30 days. 🙁 I’m not sure I will do this monthly but maybe quarterly.

    I use electronic payments for bills and since it is early in the month, most (including the mortgage payment) have not sent out yet so my checking acoountvlooks much richer than it really is.

  • Sara

    This is a challenge I complete every month. Since I live in a rental apartment and I don’t have a car, I do a minimalistic version of it and sum up bank accounts, stocks, bonds, retirement savings and student loan. During this year from 20160101-20170101 I have had an increase in my net Worth by 46%. 🙂

  • Steph

    We are on the plus side, but only because of retirement accounts. I hope to get a better handle on debt/regular savings in the upcoming year.

  • Laura

    This is something I do semi-annually and we have managed to head in the right direction. We are both active duty military but I am transitioning to the civilian world in Feb so this will hugely impact our numbers. I will continue this practice because it has given me a clear idea of what my future income needs to stay or (hopefully) exceed!

  • Susan Trimble

    We are very fortunate that the only bills we have are utilities, insurance, food (2 people, 2 cats and a dog, gasoline, gifts, one credit card. We really don’t go out much so don’t have that expense. We are both retired. We get our retirement checks, SS, etc. I really don’t keep track of everything but will start now.

  • Just finished. I can’t say whether it’s better or worse though! I did this last year (which made it easier to do again, since I knew how to find all our balances), but I can’t find where I wrote it. Talk about looking in the mirror and forgetting what you see…

  • Susan Trimble

    This will take a while, but I’ll let you know. I know this is very important.

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