Day 3 of the January Money Diet – Compute Your Net Worth


Figure your net worth at Happy Simple Living blog

Photo: Images of Money

Our family’s finances didn’t really start moving in the right direction until I began doing an exercise each month that forced me to confront reality: figuring our net worth.

Before then, I could fool myself too easily. I could feel virtuous about putting $100 in our savings account, and conveniently ignore the fact that our credit card debt had increased by $200 that month.

Net worth, as I’m sure you know, is the difference between what we own and what we owe. On the last 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.

I’ve never felt comfortable talking about my personal finances, but I’m going to step outside my comfort zone and share this fact with you: although I’m a self-employed single mom, our net worth improved by $28,900 last year. Part of our success was due to the fact that I paid down $7,500 of debt in 2012. It’s no surprise that with less debt, we paid less in interest and had more to invest in assets that pay us interest – what a concept! 🙂 You’ll discover that your finances can improve dramatically, too, if you focus on consistently moving that bottom line in the right direction over time.

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 an estimated 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, which is sometimes considerably less than the appraised value. Add everything up, and you’ll have a pretty good idea of your total Assets.

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. You can create a simple spreadsheet with a program like Excel (Money Under 30 has one posted here) or you can simply figure it with piece of paper and a calculator.

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! No matter 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.

By figuring our net worth every month, I can see the effect of my 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 $25 to my IRA, our net worth goes up $25. So simple!

You may prefer to use a site like Mint to automatically track your net worth, but I find that personally doing the calculation each month keeps me in touch with the unvarnished truth about our finances.

Homework Assignment #3: Figure out your net worth, and leave a comment below when you’ve finished the task. Resolve to do this calculation monthly during 2013, and challenge yourself to increase your net worth every month. Are you already in the habit of regularly tracking your net worth? You get to coast today, or you may wish to set a Net Worth Goal for the end of 2013.

Finally, my friends, no matter what the spreadsheet says – YOU are worth more than the finest gold or silver.



Win a Deluxe Happy Simple Living Gift Basket

I’ll be giving away a gift basket chock-full of home and garden goodies plus several other prizes on January 31, 2013. Every time you post your homework assignment or comment during January, you’re automatically entered for the drawing. I hope you’ll stop by often this month and share your own ideas, thoughts and experiences.


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.

Day 3 of the January Money Diet – Compute Your Net Worth

  • lindsey doolin

    I am totally doing this monthly!

  • Sara

    What was surprising was that although I am a pretty new graduate, my pension savings account, where my employer contributes a certain percentage + my normal savings account soon equals my student loan, that is my net worth is soon 0.

  • Leah

    This was great! I had no idea we were worth so much.
    Even with a mortgage and a credit card, we are doing well.
    Thanks! A great new years boost.

  • april

    did it. i’m worth more than i thought! yea! and increasing my net value is a doable goal. it’s a “make-me-feel-good-about-finances” that i can get excited about every month!

  • Great starting point, Eliza! I started doing asset/liabilities worksheets a few years back. So helpful for seeing exactly where a household stands. Thanks again for this annual project. Financially, the January Money Diet is such a great way to start a new year. Onward!

  • I have just discovered your web site and I love it.

    Actually, my husband and I (retired now) did an asset and liabilities spreadsheet about 15 years ago. It was a life saver. It indirectly encouraged us to pay down our mortgage early so when we were both laid off at the same time about 10 years ago, our mortgage was gone! It also improved our spreadsheet big time. I am so glad to see others take the time see look realistically at their net worth. The more people who do that the more likely we will as a nation, pull out of the debt hole we are in as a country. I know folks like to look at the Federal Government as the problem (and they do contribute), but the problem is that we as individuals have mismanaged our assets as well … so exercises like this are important.

    Thank you for a great web site … it helps inspire others to act accountability.

  • Another reason for me to take the money diet so seriously. My net worth isn’t much. I have zero debt, but I also own very little, of which I am happy with. My savings is what I want to improve this year as I tend to share my extra income with those who are less fortunate than myself or to help family rather than putting it away for me for some later date.

  • Martha

    Oh the horror–I bet if I did this monthly I would be able to get faster. House value can change so much in that time though? I might just keep track of savings for a while as that is what we’re trying to increase the most.

  • Handed this one off to my dh. There was a day when I knew all these numbers. But that was about 3 children ago. 😀 Really loving this challenge. It’s such a great idea. Today’s my son’s 16th birthday. We’d normally have taken him out for GF pizza but we decided to make it here. Everyone has really enjoyed it and we didn’t have to mess with the baby at a restaurant…which is good since he’s been asleep for most of it. 😀

  • Belinda

    I am very blessed to be able handle my finances and have been totally debt free since I paid off my mortgage 2 years ago. These last few months, I feel like I have spent recklessly and need to evaluate again. I get much encouragement from these daily tips and look forward to them! Thank you!!

  • Alverdine

    At least mine’s in positive territory this year! In 2012 I managed to sell a house I should never have bought in the first place – I bought it for emotional rather than financial reasons, back when the market was nuts and they were giving loans to every jackass, and then couldn’t sell it when work took me out of town. I sold it for less than I paid for it, but it cleared the mortgage. So now, even though I don’t really own anything of note but a tiny secondhand car and the laptop I’m typing on, at least I’m out of debt. 🙂

  • Bobbie

    I can see the value in doing this monthly although I had not thought of doing it that way before. Owing more on my home than it is currently worth is discouraging. Otherwise, not bad overall but it could be better.

  • Deborah Gore

    Whoa! What an eye opener for me! Lots of things to work on this year. I am a single parent (divorced 7 years ago) and I have worked to keep my home and put my two boys through college. Youngest son will graduate in May of this year. I do have some credit card debit, but my car is paid for. I have retirement savings through my job, so that is good, but I have used savings to pay for college needs. I need to work to start replacing my savings. I do have equity in my home and want to work to pay more on the principal each month. This is something that I will continue to do on a monthly basis. Thank you for this exercise.

  • Janet McGinniss

    Because I’m a low income senior with a disability I finally went to the Food Bank. And, tomorrow the community cetner distributes food also which Iwill attend.

    Although the food is not 100% wholesome. I really would like fresh veggies and no canned food, still there were some foods that I will eat, Rice Crispies, canned green beans and sweet potatoes, rice, grape juice, peanut butter and cheese. The cheese maybe for an emergency as it is processed. But, it will help me save money if I eat out of my comfort zone a little.

  • Victoria S Andrews

    Luckily for me we paid off the mortgage last year and do not own a car with a payment, and always pay off the credit card every month, but this was a great exercise as we really don’t have a lot of savings or assets that give us money. We sort of live for today as who knows what the future holds, which could lead to a very sad future! Thanks for the exercise!

  • Ray

    I took your challenge. It was a somewhat painful exercise since the final number was less than I expected to see, but what an eye opener. My mortgage is what really drags me down as I have lost nearly 1/2 the purchase value of my condo which I purchased right in the height of the market. This is a good exercise though. I will be doing this monthly for the year. I suspect I’ll learn from it and get more motivation to improve my finances.

    • Many are in the same boat with the decline of the real estate market, but hopefully the market will continue to improve and the value of your condo will increase. Congratulations on doing the exercise, and here’s to your continued success in working toward your financial goals!

  • Anja

    I never considered calculating my net-worth monthly but i think I might start doing this. So far I only ever calculated incoming money and outgoing cost and what I have in the savings account.

    As far as liabilities are concerned, I don’t have a mortgage and am credit card debt free. I used to have a credit card which I used way too often, so I chucked the credit card out 3 years ago and then it took me a year, to pay of the debt by cutting down on any and all spendings, which was difficult but I managed.

    I have a 3 different saving accounts with different conditions, that have some money in. A retirement account and some other investments.
    much room for improvement but the savings account keeps growing each month

  • ElainieMay

    We passionately already track our finances. You are correct, tracking it monthly inspires us to save rather than spend. We have learned how to save over $1000 a month this way. It is amazing how our lifestyle is still very comfortable without all of the extras,that really, complicate life. Simple living is so much more gratifying.

    We don’t feel we miss a thing and are proud to be careful consumers and avid savers.

    • Love it, love it, love it. You’ve created a lifestyle that works for you, by living within your means. And it’s impressive that you’re also able to save so much! Thanks for sharing your thoughts, ElainieMay.

  • I hadn’t considered tracking net worth on a monthly basis, but I think it’s a good idea and might be just the kick start we need to start accelerating our mortgage payments.

    Without getting into specifics, we owe slightly more on our home than it’s current market value (we’ve been here 6 years, so have had little time to build equity even in a good economy, let alone the current one.) We have a fairly small loan on our RV, which books out at far more than we owe. We have no credit card debt. Our vehicles are paid off and still in good condition. My husband has a retirement account via work, and we have a small amount of savings.

    There is plenty of room for improvement, but things could be so much worse.

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