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Organizing Your Finances:
- Show Me MY Money: What You're Worth or * net *
Worth
by: Janet L. Hall
Benjamin Franklin once said, * Time is money *.
I think he wanted one to
add up how much time they spent on a particular
task or job and how much
money they might have been wasting.
I do an exercise with my clients to help them
discover what their per minute
worth is to enable them to see how much money
they might be losing because
they are disorganized. Such as, if you are doing
a non-income producing
activity for 15 minutes, you can see how your
money is being spent!
It's a very simple calculation.
Your Per Minute Worth Calculation
Yearly income divided by 52 weeks = weekly
income
Weekly Income divided by 40 hours (or total
hours you work per week) =
hourly income
Hourly income divided by 60 = Your Per Minute
Worth
Before you begin to OverHall and Balance your
financial area, you need to
find out your net worth, and your spending
habits. This will help assist
you later with your budget, payoffs, or
long-term savings. It will also
help in guiding you with such things as your
protection, investment, income
tax, retirement, and estate planning.
Your total net worth is your total assets (what
you own or already have
saved) minus your total liabilities (what you
owe out). I'm not going to
tell you this is as easy as figuring out your
per minute worth because it's
not! It will take time and a commitment from you
to determine your net
worth.
TIP: I have found the best time to do this
exercise is when you are paying
your bills. At that time you usually have the
information needed to help you
calculate your net worth. So, if it usually
takes you an hour to pay your
bills, tack on at least an extra hour this month
for this exercise. For your
convenience, print out and use the net worth
form below. You will be
writing in your totals for each line. For
instance, if you have two savings
accounts, total your balances first and then
write in the total next to
Savings Account.
ASSETS
Cash Reserve Totals-
Certificates of Deposit:
Checking Account:
Credit Union Account:
Money Market Account:
Savings Account:
Investment Totals-
401(k):
Bonds:
Mutual Funds:
Stocks:
Personal Totals-
Art:
Boat:
Car(s):
Furnishings:
Jewelry:
Other:
Real Estate Totals-
Home:
Second Home/Vacation Home:
Other Real Estate:
TOTAL ASSETS: $
LIABILITIES
Short-term Debt Totals-
Credit Card Balances:
Current Bills Owed:
Loans w erms of six years or less:
Taxes:
Long-term Debt Totals-
Loans w erms of seven years or more:
Mortgage(s):
TOTAL LIBILITIES: $
Congratulations! You did it! * Drum roll *
Please!
TOTAL ASSETS: $
- (minus) TOTAL LIABILITIES: $
YOUR TOTAL NET WORTH = $
Now see if your net worth falls under A., B., or
C. below, and see how you
can begin to bring some balance back to this
area of your life.
A. If your total net worth is half or less of
your annual income or you have
a negative number you need to REALLY * OverHall
* and Balance your financial
area!
~~ Pay off some/all debt
~~ Cut back on spending
~~ Stop charging
~~ Start a savings plan
B. If your total net worth is more than half
your annual income but less
than a few years' income you need to * OverHall
* and Balance your financial
area.
~~ If you're 40 or under and own a home, you're
okay for now
~~ If you're 40 or over and you don't own a
home:
`` Cut back on spending
`` Stop charging
`` Reduce debt
`` Increase your savings
`` Buy a home before retiring
C. If your total net worth is more than a few
years' of your annual income,
CONGRATULATIONS! Keep doing what you've been
doing!
Listed below are some questions to ask yourself
now that you know and can
see what your net worth equals.
1. Do you have enough cash reserves to meet your
needs?
2. Do you have enough protection to provide
money for unforeseen emergencies
(we talked about this last issue)?
3. Do you have enough fixed assets (usually
long-term; bonds are an example)
to provide or produce additional income?
4. Do you have enough equity assets (short or
long-term; real estate and
stocks are examples) for growth and income?
To answer those questions, you need to know what
your family and your needs
and goals are and then plan how you are going to
meet them.
Quick Tips to INCREASE Your Assets:
1. Maximize your 401(k) contribution
2. Start investing
3. Get automatic deduction/deposit from paycheck
to savings each pay period.
Quick Tips to DECREASE Your Liabilities:
Credit Cards
1. If you have to use a credit card, use only
one major card
2. Pay more than the minimum payment on the
credit card with the highest
interest rate
3. Stop charging to the highest interest rate
credit card
4. Get rid of department store credit cards
5. Don't apply for anymore credit cards
Mortgage(s)
1. Pay a little extra each month towards the
PRINCIPAL of your mortgage
payment
2. Drop your PMI (Private Mortgage Insurance)
when your home equity exceeds
20% of your home's value (talk to your mortgage
lender)
3. Refinance mortgage at a lower interest
rate
4. Refinance mortgage at a lower interest rate
AND finance for 15 or 20
years instead of the usual 30 years.
5. Pay half your monthly mortgage payment every
two weeks (talk to your
lender)
Smiles, not Piles,
Janet L. Hall
The Organizing Wizard, Janet L. Hall, is a
Professional
Organizer, Speaker, and Author. She is the owner
of
OverHall Consulting, and Organizing By Phone.
Subscribe to
her FREE organizing newsletter at
http://www.overhall.com/newsletter.htm or
visit
her web site at http://www.overhall.com
Copyright 2000 by OverHall Consulting
P.O. Box 263, Port Republic, MD 20676
All Rights Reserved. Permission is granted to
reproduce, copy, or distribute so long as this
copyright notice and full information about
contacting the author is attached.
About the Author
The Organizing Wizard, Janet L. Hall, is a
Professional
Organizer, Speaker, and Author. She is the owner
of
OverHall Consulting, and Organizing By Phone.
Subscribe to
her FREE organizing newsletter at
http://www.overhall.com/newsletter.htm or
visit
her web site at http://www.overhall.com
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