I have been thinking for a long time about starting a blog. I have done extensive research on constructing one and what it should look like. Since this is a personal finance blog we might as well come up with some measure to gauge our success. Let me be the first to tell you that prior to starting a blog I never really kept track of our finances. It was more it is what it is, this is what goes out and this is what comes in. The rest we spent or paid other bills.
I think an adequate measure of overall success would be to track net worth. Since we are in this together I want to demonstrate that through active involvement and knowing where the money is going we can see our overall financial picture and plan for the future. The future might be anything it could be a new car, retirement, or anything that fits your fancy. Seeing how the Mrs. and I do not really know our financial picture at the moment, we want to focus long term ie. Retirement. Let’s be realistic we don’t know what will be around when we are ready to retire, who knows about social security. The topic of Social Security will be another discussion someday!
Net Worth – big concept but let’s get down to what it really means. For those savvy in finance it is your total assets less your total liabilities.
What is an asset? Assets are things like cash, savings accounts, vehicles, investments, 401k, and any other retirement accounts, jewelry. You don’t want to track everything here; we will only be looking at the major contributors to our net worth.
What are liabilities? Liabilities are in layman’s terms debt (something we owe money on). We listed the house above in the assets, but if we have a mortgage the remaining balance that we owe is a liability. Some others are car loans, student loans, credit cards, taxes, medical bills, and any other private loans.
If you are wondering where you should include it in your net worth calculation drop me a line or post a comment and I will be happy to help.
I have attached a few samples for you to use or feel free to create your own; it doesn’t have to be anything fancy. I would love to see what you have created, so drop me a line.
Let’s hear it how are you doing?