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November 5, 2015

True life: 3 years ago I had a negative net worth

November 5, 2015

True life: 3 years ago I had a negative net worth

Download your free net worth tracker here to track your own net worth each month!

It was a Wednesday morning. I remember because trash day is on Tuesdays and there were still a few empty barrels sitting on the sidewalk. I had settled in at work, was checking emails and sipping my coffee. My phone vibrates it’s a text from my older cousin, who’s always talking about money and investments.

Cousin: What’s your net worth?

Me: My net worth? I don’t know what my net worth is, I know I have lots of student loan debt : /

Cousin: Well if you’re 23, you should have at least $23,000 in assets.

Me: : 0 Welp I have no where near $23,000 in assets. How is this even possible when I graduated with $38,000 in student loan debt.

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Three years ago I had a negative net worth.

I didn’t want to check my net worth because I knew it would be in the negatives. I was afraid. I had just started Young Yet Wise a few months before. Honestly creating Young Yet Wise has helped me stay on track and learn more about my own money. When I started Young Yet Wise I only had my 401k from my company. I had no Roth Ira, no individual stocks, no money plan, very little savings, credit card debt, and student loan debt. Once I added up everything I owned (assets) and subtracted it from everything that I owed (debt and other liabilities) I was in the negatives. I knew I had to do something to change this. I had to create a plan and stop only paying the minimum balance on my credit cards and student loan debt.

Screen Shot 2015-06-15 at 6.52.04 PMHow can you change your net worth to positive if it’s in the negatives?

Debt is what stops people from building wealth. If you can eliminate your debt and manage to have more assets, your net worth will be positive.

Knowing my net worth really helped me get focused with my finances.

I always knew how much student loan debt I had, how much credit card debt I had, and how much I had in my savings and investing accounts I just didn’t have it all written down in one place. Since I knew where I stood, it was time to start tackling my debt and increasing my savings and investments. I didn’t want to put every penny I had towards my debt, because I still wanted to be able to save, and take advantage of compound interest when it came to investing. (more on investing here)

 

I believe knowing your net worth is the first step to moving in the direction of financial freedom

The problem is it’s easy to just sweep our debt or liabilities under the rug because most people can’t see them. It’s easy to convince ourselves that we’re fine financially. You may not even want to write out all your debt down on paper or in an excel document, it’s kind of like being extremely over weight and not wanting to face the scale. How will you make progress if you don’t even know exactly where you are? I know it can be scary, but you owe it to yourself to figure out what your net worth is.

Detours will keep you from your goal of one day becoming financially free.
When I held my organize your finances contest many of the people wanted to be financially free by a certain age, but they kept running into detours. Detours such as credit card debt, or student loan debt, and the wrong definition of luxury, one contestant summed it up perfectly “my primary goal is financial freedom. Debt accumulated through “empty” purchases have resulted in an embarrassing level of consumer debt.” It’s like they could see the goal ahead of them, but their needs for today become more important than their needs for tomorrow. If you plan to be financially free one day, you must figure out your networth. Don’t think about the huge amount of debt that you have. Just take it one day at a time.

 

“You don’t set out to build a wall. You don’t say ‘I’m going to build the biggest, baddest, greatest wall that’s ever been built.’ You don’t start there. You say, ‘I’m going to lay this brick as perfectly as a brick can be laid. You do that every single day. And soon you have a wall.” — Will Smith

It can be scary seeing that number, but the only way to progress is to see exactly where you are. Now at the end of each month I’ve been updating my progress. It’s helpful to see where you are, not to discourage you, but to help you see how far you have to go. I kept my net worth chart really simple. assets

Financial bloggers publicly share their net worth:

One of my financial blogging friends J. Money tracks his net worth publicly each month. He’s been posting his net worth to his blog for over 7 years. In 2008 he started with $58,769.95 today he has $487,648.94) It’s pretty cool and inspiring to see how much money he’s been able to accumulate. You can find his net-worth posts here: www.budgetsaresexy.com/net-worth/

He even created a website where he shares 185 financial bloggers net worth: http://rockstarfinance.com/blogger-net-worths/ (no you won’t find my net worth listed here) I love how it shows variety. Some people have a negative net worth of -122,000 while others have a net worth of $2, 136,031, it’s super inspiring to read these numbers and they even go into details.

Tracking your net worth doesn’t have to be difficult
I always knew how much student loan debt I had, how much credit card debt I had, and how much I had in my savings and investing accounts I just didn’t have it all written down in one place. I finally sat down and figured out my net worth. It can be scary seeing that number, but the only way to progress is to see exactly where you are. Now at the end of each month I’ve been updating my progress. It’s helpful to see where you are, not to discourage you, but to help you see how far you have to go. I kept my net worth chart really simple.Screen Shot 2015-11-09 at 6.40.01 PM


Keeping track of your net worth holds you accountable and keeps you inline with your money goals.

I’m not saying that you have to broadcast your net worth to the world like you do your selfies, but keeping track of it for yourself can be really beneficial. It doesn’t have to be anything fancy either. Don’t let your brain convince you that it’s too much work.

Do something TODAY that your future self will thank you for.

Figure out your net worth. Download your free net worth tracker here to track your own net worth each month!

 

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