We have over 400k in debt and I love it
I talked about it in this post here “Our Networth Increased by 125k in one year”
From 2011 to 2012 we gained over 100% in net worth gains or 125k!!!
I was really happy and tried to figure out how we could outdo our 2012 start.
Well in 2013 our net worth is now….
Before we get to what we are actually worth, let’s break everything down…
What are our assets?
For the first time readers, I will define each critical term. So, what is an asset you ask? Good question Jane (Your name will be Jane for this exercise).
An asset is:
Property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.
Our assets are:
- Cash which equals to $53,152.62
- Investments (Stocks/Bonds) which equal $164,727.22
- Other Assets (Cars) which equal $31,000.00
- Real Estate which equals to $646,000.00
Total Assets: $ 894,879.84
As you can see, a majority of our net worth comes from our real estate adventures. That’s the power of 1 primary residence, purchased at a significant discount and 3 kick ass rental properties.
What are our liabilities?
What is a liability you ask? Good question Jane!
A liability is:
Legal debts or obligations that arise during the course of business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or services. Also know as… shit you have to pay for…
Our liabilities are:
- Credit Cards which equal $7,189.69 (We pay this is full every month, 0 interest)
- Loans which equal $115,313.36
- Mortgages which equal $353,882.95
Total Liabilities: $ 476,386.00
What is our net worth?
What is net worth you ask? Good question Jane!
Net worth is:
In business, net worth (sometimes called net liabilities) is the total assets minus total outside liabilities of an individual.
So, all we have to do now is some simple math. We will simply take Total Assets and subtract Total Liabilities to achieve net worth.
Total Assets – Total Liabilities = Net Worth
$ 894,879.84 – $ 476,386.00 = $ 418,493.84
That means our net worth has increased by over $171,737.30 in one year. That crushes our $125k gain from 2011-2012.
What could you have done better?
A review of our monthly expenses uncovered a few things that we could have done to improve our net worth.
We spent $15,600.00 on food/house items
We spent about $5,000 on going out/having fun (not including vacations)
We spent spent $12,000 in personal spending money (our allowance for personal fun)
We spent $30,000+ in real estate repairs / covering 3 vacant properties (This sucked!!!)
We spent over $5000 on holidays/Bdays
We spent $2400 on our dog
We spent $15,000 on home renovations
As you can see we definitely have room for improvement, but the good thing about this, even with all those expenses above, we still live on less than 50% of our net income.
Moral of the story?
It doesn’t matter how much debt you have, it doesn’t matter how much income you bring in, net worth is the measuring stick of financial success. I know a lot of people bringing in 200k per year and nothing to show for it. I also know tons of people with 0 debt and little to no net worth. Focus on the big picture.
Oh… and if you live on 50% of your net income, your wallet can take a big beating before you need to worry 🙂
Before you go.. I would love to work with you 1 on 1. Click the picture below to get started on building wealth