This is the first step in our analysis - I need to know how much I have to figure out how much I'll need. Please remember that this is a step-by-step process. Just because I only have a few hundred dollars put a way right now doesn't mean I won't be able to retire on the sunny beaches of Florida.
What I have:
Let's first taking into account all the assets we have in our various accounts and our liquid assets:
- Cash
- Checking Account
- Savings Account
- Retirement Account
- Investment Account
- Emergency Fund ( more on this later )
- Life Insurance (most people forget to include this!)
Now lets add in our fixed assets:
- Home Value
- Vehicles
- Jewelry
- Furniture
- Remember to list the current value of these assets. You don't need to itemize every item in your house. If I tried to do that, my list would go on for days (I like to save all my junk!) Just list anything that is over $500.
What I Owe:
Let's look at our liabilities. This includes items like:
- Mortgage
- Loans - car loans, student loans
- Credit Card Debts
- The $500 that you owe to your friends for all those bets you made
- Again, you don't have to calculate every little item (though we know you still owe your mom $20 for gas), just anything over $500.
The Big Question - How Much Am I Worth?
Take what you have and subtract that from what you owe. This is how much you're worth. The minute I tell people this, the next comment I get is: I'm never going to retire! That number is NEGATIVE!!!
Don't panic. We'll evaluate why this number is negative and how you can fix it. At least now you know where to start.
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