Category: Net Worth

Spent $0 in a week

How:

Hey don’t judge me, I had all the food I needed and all the drinks were already chilled in my ice box, didn’t need to buy gas or anything else. It was a regular week and I finally reached a milestone. I always thought that this would be difficult to accomplish when I started blogging, but I can now say that I have done it at least 3 or 4 times in the last 4 months. It all started by tracking every penny I spent in my handy dandy notebook. The days of the week that I didn’t spend any money vary, sometimes the spend fast week started from Friday to Friday or most recently from Sunday to Sunday. As you would be shocked that I didn’t make a purchase during the weekend, I will let you know that it could be done. So if you want to accomplish a similar feat for all mankind or maybe just for your wallet, start tracking every purchase and then make drastic cuts by planning ahead of time. Groceries should be purchased to last you through the week, your gas tank should be filled prior to as well, and for crying out loud avoid any major retailers.

Why:

As you might be asking yourself why did I put myself in such a predicament of being a terrible consumer and not adding to our nation’s GDP. Well if you may ask I did it to add to my Net Worth which is my very own GDP. Another word for this extreme sport as per shopaholics everywhere, is basically called a spending fast. I had a goal in mind as a way to test myself to think differently and I was going to achieve it no matter what. Every step taken financially will hopefully lead me in the right direction towards achieving my goals. Not a single online purchase, not a single candy bar, and not a single article of clothing purchased in that week.

Conclusion:

The end result if I do this more often than not, I will reduce my annual expenses and systematically increase my savings. I have so many goals in life and I want to achieve them as badly as we all need air. Well maybe not that bad, but you get my point. Sometimes to achieve something you have to make drastic changes and this is my major change as of right now. I can not say that I will keep the spending fast going for long or that I might not spend money on something as dumb as a $150 dollar pair of Jordan’s. I can clearly state that I am more focused and determined than ever to do what I have to do, which is to be in a more stable personal finance foundation while growing my net worth.

RichUncle EL

Net Worth = Freedom

Net Worth = Freedom. No really it does. Keep reading.

Where are you with your Net Worth calculations? Do you know what the average figure is for somebody your age? Well don’t delay in finding out your information so that you can gauge where you are in the spectrum of above or below average for you age range. How else would you be able to know if you are on track with your retirement goals? The reason I titled this post as net worth = freedom is because that net worth figure we all are shooting for in life will eventually be your income after you retire from a traditional job. Obviously a well-funded nest egg will provide a sizeable annual income and the freedom to do what you want. Will social security be around to assist us in our golden years? Maybe, but let’s pretend that it will not be around thus fueling a greater fire within us to save those pennies. A thousand years later if Social Security is still around you will then have extra gravy and steak every night for dinner.

Assets – Liabilities = Net Worth

Assets:                                                                                     Liabilities:

Checking/Savings Accounts                                                     Credit Card Debt

IRA/ 401k Accounts                                                               Mortgage/Student/Car Loans

Stocks/Investments                                                                 Family Loans

Homes/Cars/Jewelry/ Anything that is sellable

My Quote-What we do now with what we have now will definitely impact us later with what we have later.

Don’t be like certain people who could care less to find out their current net worth figure, because they do not want to be let down for falling short on the figure they are supposed to have. If you notice at the bottom of this blog you will see calculators and if you click on the Net worth link you will be enlightened and reborn. No I’m kidding about being reborn, but if you value your future life like I do, you will take notice that you need to ante up your treasure chest. I will give you a quick run-down of the average Net worth figures for 25-54 year age ranges. Now this by no means eliminates you from running your own numbers, stop being lazy. This is just example to give us a visual effect and comparison of the different age groups.

Net Worth by Age as per CNN Money:

25 under: -1,250

26-34 Year Old: -8,525

35-44 Year Old: -51,525

45-54 Year Old: -98,350

To be completely honest I do not agree with these numbers as they are a bit skewed. Somebody who is 41 years old should have a lot more than 51K net worth and somebody who is 32 should have a lot more than 8 thousand as well. Another way to work out your net worth figure is to divide your annual salary by .04 and then divide that by ten and that figure should give you an amount you should aim for which is really aggressive. In this example age has no factor as it is all based on income. So it helps those people who are not content with the figures provided by CNN Money as I am.

Income Based Net Worth Examples:

Income-25,000/ .04= 625,000 / 10= $ 62,500

Income–30,000/ .04= 750,000/ 10= $75,000

Income–40,000/ .04= 1 million/ 10= $100,000

Income-50,000/ .04= 1.25 million/10= $125,000

As these figures are very difficult to attain it is still a possibility with dedication and living a life where you do not have to impress others around you by flaunting items that set you back in life. If you are in between the income figure and age based figure for your specific situation then you are on the right path. But if your Net Worth is less than the age based example then it is pertinent to begin thinking of your future. The closer you are to the income based Net Worth the easier it will be for you to live off of your investments later.

Comment on this post and give us your opinion on what your feelings are about the Net Worth examples and its importance to your future. Do you know what your Net Worth is (Keep yours private) or is it a magical number you have never cared to calculate?

Watch your Money!

NetWorth

If I can stress one very important fact, and the foundation that this blog is based on, it is that everybody should track their Net Worth. Make a spreadsheet, journal, or even on a post it. Track it consistently so that you can improve on the bottom line. I started tracking mine about 4 years ago and I can now see an improvement in how I view money and the direction I want to take to reach my next financial goal. Granted all this tracking has me on edge more often than not, but it has always been my desire to eventually be financially stable, so that I won’t ever need to track my net worth and just let it grow, grow, and grow. Also this tracking will let you see how much of your income comes from Earned, Passive, and Portfolio Income sources. I think the ideal situation for most is to have a good stream of passive and portfolio income while sipping your fave drink on the beach somewhere or while sleeping in a villa in Tuscany. I am still far away from this reality but without the tracking of my Net Worth I would not be one step closer than I am after I started tracking my finances. Do yourself the pleasure of Watching Your Money!