How to Calculate Your Net Worth

by Ryan Yates

The easiest way to gauge your financial progress is to calculate your net worth, if you’ve got the guts.

The biggest hurdle to calculating your net worth isn’t the math, it’s the fear. A good sign that you need to find out how your financial life is going is to measure your fear of doing so. If you’re terrified to balance your budget, it’s probably time to do so.

Figuring Your Net Worth

You can use a blanks sheet of paper or fire up your Excel spreadsheet.

Items needed:

  • Balance of all checking and savings accounts
  • Balance of all retirement accounts (IRAs, Roth IRA, 401K, 403b, etc…)
  • Balance of your 1st, 2nd, 3rd mortgages (if you have any)
  • Balance of any vehicles (car, boat, motorcycle, atv, RV, snowmobile, etc…)
  • Balance of all other debts (student loan, credit cards, personal loans, 401K loans, etc…)

The Research:
Do you know the value of your possessions? To get an accurate net worth you need to first have an accurate value tied to each item.

Let’s start with the house. Zillow and HomeGain are two great places to get started estimating your home’s value. Now, these sites don’t take into account any upgrades you might have made to the home that could increase it’s value, but they do steer you in the right direction.

Next on the ‘value list’ should be your cars and your toys. Use the Kelly Blue Book to check the value of any vehicles in your possession. For your other recreational vehicles, check websites and classifieds to see what similar makes and models are selling for.

The Calculation:

  • Add up all the assets you have. Assets can be checking/savings accounts, retirement accounts, value of your possessions, and anything else that can be sold for money. The results are the total value of your assets.
  • Add up all of your liabilities. The liabilities are your mortgage(s), your vehicles (if you’re still making payments on them), and your debts.
  • Next, subtract your liabilities total from the total value of your assets.
  • The resulting number is YOUR NET WORTH
  • No, your calculation isn’t wrong. If the number was negative you are “in debt”.
  • If the number is negative you need to take a hard look at your situation. You can choose to remain in debt and hope that money will magically fall from the sky, or you can take action. The choice is up to you.

If you don’t like what you see, don’t get too depressed. This is what my net worth looked like at the end of 2009. I’m glad to say that we reversed this trend withing 18 months.

How To Get Your Net Worth Into the Black

There are many different ways to increase your net worth. The easiest way would be to win the lottery . . . fat chance, right? After reading J. Money’s article The $100 Scratch off Lottery Project I think I’ll leave the lottery to the “experts”.

Spend less than you make- Utilize a budget or some sort of budgeting software to help focus your efforts.

Increase your income- Get a second job, I recommend delivering pizzas. Sell items on Craigslist or Ebay. Start to do freelance work. Do anything that will bring more money into your household, just DO something.

Waiting for money to just appear at the door won’t work. If you need some ideas on ways to make more money, Phil from PTMoney has written a fabulous e-book called ’52 Ways to Make Extra Money’. If you sign up for his newsletter, you will get access to this free e-book.

Start a business- The internet is making it very easy to start a business online. I’m sure you can perform some Google searches and find all the resources you could ever imagine about the subject. Just this morning Erik over at MoneyCrashers wrote a post about how he started his own business How I Started A Side Business. There are countless stories around the blogging community that can act as a catalyst for you fire up your engine and get moving on making more money.

I’m sure you can think of other ways to help out your net worth, but the ones listed above will work quickly to put more money into your pocket. Yes, you could invest in the stock market and 401Ks; but if you are in debt, the single biggest action you can take is to get that number into the positive. Without debt, you are in control of your money and only then can you build real wealth.


Samurai January 26, 2010 at

Haha, funny. Left the Apple IIe back in Hawaii, but if interested, one can come out and pick it up! It’s in IMMACULATE condition with software too!

Good calculation on the official version of net worth, but my version is different. Essentially, “Your Net Worth Is An Illusion, Sorry To Spoil Your Delusion!” Only thing that matters is cash and of course all your debt.

How come u ain’t smiling in your pic Jeff?
.-= Samurai´s last blog ..Someone Always Farts In A Crowd =-.

Jeffrey Kosola January 26, 2010 at

HaHa don’t worry you are not spoiling any delusion I have. My reality is a mountain of debt to get rid off. Whether it’s measured in Net Worth (including the paper value) or Cash. The measurement is just an indicator of a problem that many of us have. Once you can understand the problem it becomes much easier to draft a plan to fix it. You can call it Cash worth minus debt, or I can call it net worth-as long as we are both trying to build wealth and have a better life the name and calculation just doesn’t matter.

About the pic, I don’t have any teeth so I don’t smile. I’m waiting on my gold grillz to come in the mail 🙂 Ok maybe not, I’ll be updating the pic soon, thanks for looking 🙂

Samurai January 27, 2010 at

Gold grillz will be MAD sweet!
.-= Samurai´s last blog ..Someone Always Farts In A Crowd =-.

Kyle C. January 26, 2010 at

I don’t include home value or my mortgage in my net worth calculation anymore. It is only cash, I don’t consider my home an investment, just a place to live. If my home were providing me with an actual income like an investment property then I would include it in my net worth.
.-= Kyle C.´s last blog ..How Long to Keep Tax Returns =-.

Jeffrey Kosola January 26, 2010 at

That’s a very good point Kyle. I don’t consider my home an investment either, I wait to get out of it-we’ve almost out grown it. I only show the house because I’m upside down on it an I want to have a real amount tied to my debts. Including them all in one place helps me to visualize how far I have to go. I guess seeing it every month just makes me want to go that much faster. Even putting the car on there might not be worth much to some people because of leases.

JoeTaxpayer January 26, 2010 at

I understand the different approaches on including the house. At the beginning, the house represents more than all your net worth. As time goes on, and your net worth is greater than the house, you can think of it as “if I sell everything else, I can pay off the house and still have $X more.”
Years ago I started backing out the house altogether, as that bottom line is my “number” the money that would support a retirement. That number needs to be between 10X and 20X one’s annual income to retire comfortably.
Nice article, Jeff.

Jeffrey Kosola January 26, 2010 at

Thanks for the advice Joe, I believe once my ship is righted I will be backing out the house as well. Cash value seems to be the theme among the Samurai, Kyle, and yourself. I will continue to focus on getting back to even so then I can really start investing in my families future. Fyi, Jane 2.0 is lucky to have you as a guide through her teen years.

J. Money January 28, 2010 at

Dude. that snowball graphic is hot! Good for you man, it’s all about putting it down on paper/computer? and holding yourself accountable 🙂 Although I must admit, I did win $2 in the lottery the other day….if i keep losing $5 to win that $2 I’ll be rich! haha…

Jeffrey Kosola January 28, 2010 at

Yeah, I love the graphic I just can’t remember where the idea came from. Oh yeah, I copied it from J. Money over at BudgetAreSexy I figure if you have a positive net worth that you track, I might as well track mine – even though I’m slightly behind yours. Only 200K to go 🙂 Look for another entry into the Millionaire’s Club coming next week…

Mark January 30, 2010 at

Growing your net quickly means different things for people in different financial situations. But I do agree with you, that paying down debt is the most surest way into a positive territory. I myself have a positive net worth but my debt is dragging it down a little. Mostly because I do include everything, including my car lease, which does have a balance, even if I don’t own the car.

Keep at it, a pizza at a time, you will get there.

Jeffrey Kosola January 30, 2010 at

Yeah, net worth falls into the “Personal” Finance category. We all view it differently and use I differently. Since I have a long way to go, I use it to fire my a$s up to go out make as much money as I can. Other people can sit back a relax because they have a positive number. Even when I get there I don’t believe I’ll be able to sit back. I’m a hungry person and getting into the positive area of the curve will really get me moving. At that point I’ll be able to save for the businesses I’d like to get into (gotta pay cash though).

Just imagine how much more you’d be in the positive if you blasted that debt away. I’m sure since you are already in the positive you could blow it up super quick. Just something to think about.

Have a great weekend Mark!!!

AG April 26, 2010 at

Great article Jeff. There are obviously different ways of calculating Net Worth value, but I like your approach.
As a Wordpress user, you might be interested in the Net Worth Plugin that we just released: It is free to download and would be great to get your feedback.


Jeffrey Kosola April 26, 2010 at

Hey AG, I came across you plug in the other day. I’m going to try it for my next net worth update and see how it looks.

how much is used car worth September 4, 2014 at

Wow, marvelous weblog structure! How long have
you been blogging for? you made running a blog look easy.
The overall glance of your web site is excellent, as well as the content material!

blue book used car September 4, 2014 at

Hello there! This is kind of off topic but I need some guidance
from an established blog. Is it tough to set up your own blog?

I’m not very techincal but I can figure things out pretty fast.
I’m thinking about creating my own but I’m not sure where to begin. Do you have any ideas or suggestions?
With thanks

{ 14 trackbacks }

Previous post:

Next post: