How we increased our net worth by more than 170% in less than a year
The M-Network along with many other bloggers are doing a year end net worth wrap-up. You can find links to all of the participating blogger’s articles at the end of this article.
I didn’t actually start tracking my net worth until February of 2007. I decided to start tracking it based on the suggestion from a number of personal finance books I’ve read, primarily The Millionaire Next Door.
What is Net Worth and how to calculate it?
Calculating your net worth is pretty simple, assuming you have all of the data. Mathematically your net worth is your assets minus your liabilities. In reality it’s what would be left over if you sold everything you owned and paid off all of your debts. What to include in your assets and liabilities is a bit more controversial as I learned when I wrote about Net Worth: How To Include Your Retirement Account. Net worth is a tool that provides an overall picture of your financial situation. I wrote an article on How To Determine And Track Your Net Worth that will provide you with more detail.
Our Net Worth Wrap-up
I am probably going to disappoint you, but for a number of reasons I am not going to disclose the specific numbers in my net worth. I have too many friends and family that read my blog and could also get into some issues with my employer for sharing the detailed numbers. As a result, I don’t feel comfortable disclosing the specifics.
What I will share is the percent increase from February to December of 2007. During that time we increased our net worth by more than 171%. We are in the black as well. Here’s the 4 main things we did:
1 – We saved
In February, we received both our tax refund and a bonus from my employer. Both of these were put directly into ING savings accounts to fund our emergency fund and to assist with paying off our debt. We also started saving money into our Christmas and property tax funds. I additionally had stock options that matured. I don’t believe in keeping individual company stocks, and therefore sold them, placing the funds into our ING savings accounts furthering increasing our assets.
2 – We sold stuff
We were big into RV camping and had both a full-size heavy duty Dodge truck and a 34 foot Jayco trailer camper. We owed money on both. We decided we loved financial peace more than camping and sold both the truck and our camper. We also had a two yard sales where we sold a bunch of extra stuff that we no longer used or needed.
3 – We paid on our debts
We used the windfall cash we received from our taxes, bonus, and stocks to pay on our debts. Namely four credit cards. We continued to aggressively pay on our debt throughout the year, paying anywhere from $500 – $1200 a month against our credit card debt. We did this by running a tight budget and being frugal with our money. It’s amazing how much “spare” money you can find in your budget when you actually begin looking for it.
4 – We had a fair market analysis done on our house
Until July, I was under estimating the value of our home. We had a Realtor perform a fair market analysis on our home and as a result we received a pleasant surprise, I was undervaluing our home to the tune of $35,000. That gave us a pretty big jump in our net worth.
Overall we had an excellent year from a net worth perspective. While we don’t have the nice truck, the nice camper nor were we spending money and buying all of the stuff we had the previous year, it was far more gratifying to see our debt dropping and our net worth rising. I mean a 171% increase…hard to complain about that!
Do you track your net worth? If so, how did you do during 2007? If you didn’t track it during 2007, do you plan to during 2008?
Read about other bloggers Net Worth Wrap-ups:
- Being Frugal – I’m in the black
- Cash Money Life – Net Worth Goals for 2008
- I’ve Paid For This Twice Already – It’s Hard to Get Back to Zero
- Moolanomy – December 2007 Site and Net Worth Review (+0.72%)
- My Two Dollars – The M-Network Shares Their Net Worth – You Know You Want To Peek!
- Plonkee Money – net worth 2008?
- Single Guy Money – The Big Net Worth Roundup
- Brip Blap – net worth or net worthless?
- DebtFREE-Revolution – Trying to Figure Our Net Worth
- My Dollar Plan – 2007 Net Worth Update: +19.7%
- Rocket Finance – Net worth for the new year
- Mrs. Micah – New years net worth – paid down debt in 20087 and bolstered savings
- How To Determine And Track Your Net Worth
- Net Worth: How To Include Your Retirement Account
- 6 Ways to kick off your personal finance new year the right way
- 1 Year Ago Today – 10 things we've done to regain financial control
- How to make paying your year end property taxes painless