08/20/06: Building Wealth Step 1: Assess
Before embarking on a comprehensive plan to build wealth, assess where you are and plan for the trip. It's hard to get somewhere without first knowing where you are. Answer the following questions to get a full picture of your financial location:
1. Are you solvent? Solvency is the ability to meet current obligations with current income. Can you pay your bills on time? Write down all of your sources of income including salary from your job, investment income, gifts (if given on a regular basis), government assistance, a second job or business income. Do this on a monthly basis. Now list all of your monthly expenses, including rent, grocery, car payments, student loan payments, taxes (especially for homeowners), dining out, automobile fuel and repairs, and any other loan payments or expenses. Total these two lists. If the amounts are the same, or your income total is larger than the expense total, you are solvent. If the expense total is larger than the income total, you are insolvent.
2. What is your net worth? Net worth is the difference between how much you have and how much you owe. Do you have a positive or negative net worth? First, list all of your assets, including bank account balances, savings (including retirement funds), the current value of your house, the current value of your car (not what you paid for it, what it's worth today), brokerage account balances, stocks, bonds, commodities, valuable jewelry (again, using the amount for which you could sell the item, not what you paid for it). Total these amounts -- these are your total assets. Now add up everything you owe: The balances on any mortgages, car loans, or credit cards, lines of credit, student loans, or any other loans. Total these amounts -- these are your total liabilities. Subtract total liabilities from total assets to get your Net Worth. If total assets is a bigger number than total liabilities, you have a positive Net Worth. If liabilities exceed assets, you have a negative Net Worth. If they are equal, you have no Net worth.
Now that you know where you are, it will be possible to decide where to go, and how to get there.
05/05/06
Everything Bonds: What is a bond? How is interest paid? What are the different types of bonds? How are bonds bought and sold? How is the market value of bond determined? Download and get these answers and more!
04/27/06
Everything Credit: Why do I care? What's my score? How can I get a good rating? / GOLD! Should I sell? Should I buy? Why's it so high? You can't afford to miss this show!
04/18/06
Everything Debt: How to get out! What if I can't make enough to pay my bills? How can I tell if I have a problem? What should I pay off first? Answers to these questions and more in the latest Everything Money podcast, available now!
04/11/06
How to get free money! What does 401(k) stand for? All about 401(k)'s. Should I buy life insurance for my children? What about saving for their education? Answers to listener questions. Improved sound quality, bumper music, and 32k quality. All this and much, much more in the latest edition of the Everything Money Show. Get it now!
04/06/06
The Everything Money Forum is now available. While you can only hear the show for 20 minutes a week, you can communicate with the host and other listeners 24/7 with the new forum. Sign up today and start the interaction.
04/04/06
Is there such a thing as Easy Money? Find out in the latest show, which also deals with building an emergency fund as well as building and maintaining a balanced portfolio. Want to know the first thing you should do today to be assured of financial health? Download the mp3 or get the podcast to find out.
03/29/06
Download the inaugural show and add the podcast feed to your list of favorites. In this episode you'll find an introduction to the show, a sample of what we'll talk about in each show, and a little bit about balancing your investments. What will the next show be about? You can be part of that by sending your question or topic request to question@everythingmoney.org
03/23/06
The first show is coming soon! You can be a part of it. Got a question about money? Ask anything about money and get your answer on Everything Money. Send an email to question@everythingmoney.org. Be sure to include your first name and home town.