What are assets and liabilities? Assets are stuff you have. The value of an asset is whatever you can sell it for. Liabilities are what you owe. Assets put money in your pocket while liabilities take money away from your pocket. If you don’t want all your hard-earned money to follow the scheme above, it is important to pay down your debts as soon as possible (See how here: How to become debt-free fast) so that your money stays in your pocket! When you don’t have as many liabilities, you can build your assets at a rapid rate instead of splitting your money into too many areas.
- Savings account
- Checking account
- Retirement accounts
- Investment accounts
- Things you own such as:
- Jewelry, Accessories
- Student loans
- Car loans/leases
- Personal loans
- Credit card bills
- Health bills
- Home mortgage
- Anything you have financed
It’s important for you to know your assets and liabilities so you can be aware of where your money is going, and then make changes if needed. Here’s how to calculate what you are currently worth:
- Write down all your assets and add them together.
- Write down all your liabilities and add them together.
- Subtract your liabilities from your assets.
Due to Kenny’s and my massive student loans, we are still in the negative right now, but we are very close to being in the positive and should be by the end of the year! To see our Debt-Free journey, go here: Debt-Free.
Our Assets and Liabilities
Assets: $25,000 (cash, savings account, Roth IRA, things we own)
Liabilities: $54,300 (3 student loans)
How are your assets and liabilities looking? Do you need to make some changes?