First, track your net worth by adding up all your assets and all your debt and then subtracting the assets from the debt. This will give you your Net Worth and also give a picture of your financial health and it says a lot more than the numbers in your bank account.
For many years I was not tracking my debt, only what was in my bank account. I thought I was ‘rich,’ especially since I could afford to not worry about my next payday. This all changed when I decided to add everything up and calculate my Net Worth. I realized I WAS BROKE. I was broker than broke. It was a wake-up call because I now allocate my money with a purpose.
So calculating your own net worth will give you a whole picture of where you stand and how you can tackle it. This is also helpful to keep you accountable since seeing the net worth rise helps ensure that you will keep working towards the goal of being in the green!
A good reason to track your net worth while paying off debt is to see your own financial health. Having savings while paying off debt will do wonders when an emergency comes up or if you have a big purchase planned.
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