June 16th – Net Worth
This was an upload of an early SSSC episode that wasn't on the podcast feed.
Do you know what your net worth is? Its an important number to know because its the most accurate measure of your wealth. Its also a great way to track your financial progress. Knowing your net worth helps you understand how assets other than cash contribute to your wealth.
So how to calculate your net worth – Total up the value of all your assets – cash, investments, real estate, land, and other assets of high value. On the real estate, use the best estimate of current market value. The Zillow Z-estimate is a good place to start.
Now total the value of all liabilities, including credit card debt, installment loans, mortgages, any other liabilities, and bills currently due. Subtract the value of your liabilities from the value of your assets to determine your net worth.
If your liabilities are more than your assets, you have a negative net worth.
If you aren't happy with you net worth number, you can improve it by doing one of two things: One – increase your assets, or two, decrease your liabilities. A combination of both would be ideal.
To increase your assets, spend less than you make – stop overspending.
To decrease your liabilities, lower your debt by paying it off. Start with high interest debt like credit cards.
June 17th – Revolving CC Debt
Do you have revolving credit card debt? Many Americans do, and they don't realize the cost of carrying balances on their cards.
This week I wrote a blog post called The Cost in Wealth of Revolving Credit Card Debt. In the post, I present a case study of Jillian the Spender versus Judy the Saver.
Jillian has $10,000 in credit card debt, and although she pays more than the minimum each month, she uses her card again and runs the balance back up. Each month she pays about $170 in interest expense. Over 5 years, she will pay over ten thousand dollars in interest expense.
Meanwhile, Judy is saving and investing $170 each month and earning 8% on her investments. In 5 years, she will earn nearly $2,300 in dividend income and stock price appreciation.
When you factor in the cost of interest expense, plus the opportunity cost of not investing what she's paying on her credit cards, Jillian's revolving credit card debt is costing her more than twelve thousand dollars in five years, and over $100k in twenty years.
You can access all my exclusive worksheets and templates here for FREE.
If you have revolving credit card debt, and you want to pay it off as soon as possible, follow these steps:
- Write down all debts with balances, interest rates, and monthly payment.
- Write down all other monthly expenses.
- Identify all services you're paying for that you can eliminate: cable, satellite, gym, other subscriptions.
- Identify all goods you're paying for that you can reduce: groceries, alcohol, eating out, clothes, makeup, shoes, hobby stuff, and other incidentals and unmentionables.
- Total up how much you can lower your spending every month, and look at how many months you can pay your balances off in.
- Decide whether you want to target your lower balance debts or highest interest rate debts first.
- And then start paying on them immediately.
I would recommend paying off any debts that can be handled in a month or two first, and then switching to highest interest rate for the bigger balances.
Keep at it until your revolving credit card balances are paid off.
Then start investing each month what you would have spent on credit card balances, and watch how fast your wealth increases!
June 19th – Fun & Free Weekend
- Organize a neighborhood street-luck, or potluck. Have everyone bring a dish, and chow down while jamming out to some music.
- Organize a walking or bike tour at a nature trail or park near your neighborhood.
- Backyard sports. This one is simple -play a game of football or soccer in your backyard. No one to play with? Then try an outdoor yoga or meditation session instead.
- Stream of consciousness writing session. This is a proven way to unlock your creative mind. All you do is sit down and write anything, everything that pops into your mind for ten minutes. Just let your thoughts flow. The only rule is you can't stop writing. Try it and see if it works for you!
- Invite some friends over for crafts & wine. Use stuff you already have around the house, and ask your friends to bring theirs too. You could paint, make bead necklaces, or have a mini quilting bee. Everyone shows up with a bottle and a basket of crafty goodness.
- Find and take pics of ten things in your house you can sell on the Facebook Marketplace, Craigslist, or Ebay.
- Learn a new skill online. There's so many things you can learn for free just on Youtube.
- Use your camera phone to have a photo session. Learn how to use pro features on your phone, and then test it out by taking some close-up shots of unusual plants, trees, or maybe a cool angled shot of a building downtown. Be creative, have fun! And then edit and share your masterpiece on Instagram. (If you try this one, tag me on your photo (@BeyondPennies)! I'd love to see it.)
- Volunteer your time. Get some friends together to be involved with a community project, or just do it yourself. Either way, it costs nothing more than your time and you can actually make a difference in your community and the world at large.
- If you live in Bend, Oregon like I do, then Floating the River is always a great option.