Money Matters Weekly: Knowing Your Financial Stats To Get out of Debts
Think about this scenario: You get a chance to share a dinner meeting with Bill Gates and Warren Buffet. During the event, Bill proposes to pay your debt in full, only if you know how much you're currently in Debt. To make it interesting, Warren joins the conversation and propose to double your Net Worth if you know your value. You only need to be within +/- 10% of your actual numbers.
If you fail the scenario above, you are likely part of the majority who are currently living paycheck to paycheck. it does not mean you're poor, or struggling financially; it just means you don't have control of your money.
The following are numbers that you need to know at the very least in order to gain control of your finance. Keeping track of these number will help you take charge of your money and eventually have it work for you:
1. Your Financial Assets - Savings, Investments, Retirement accounts, personal belongings, cash. The way I see it, things of values that you own. Your property. If you had to sell everything you own, how much will you have on hands?
2. Your Debts (Liabilities) - Self explanatory. Things that you owe. For the majority of us: Credit cards and Loans. If you had to pay everybody you owe, how much will you spend?
3. Your Net Worth - The difference between your assets and your liabilities. What will you have remaining once you pay off everybody you owe with the money you've collected after selling out everything you own?
The goal is to have a positive Net Worth. Knowing these numbers will help you understand where you stand financially.
This is not an easy task; it requires time and energy to be able to gather all the information needed. You may have to hire someone to get your finance in place initially, or you can do it by yourself using software tools such as Quicken or Quickbooks.
Once you've figured out where you stand, you can then use your information to find out how to channel your money to work for you. check the following previously written related articles for more information: