PollBeggar

POLL: Is Your Net Worth Greater Than a Beggar’s?

Posted by on April 27, 2011 in Personal Finance

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Ever wondered how bad your debt really is? Sure you have. Well, you could compare your debt to the average American’s debt, but that will only help you understand how you measure up to other people. If you want to get a general idea of the severity of your personal debt, try calculating your net worth. Here’s how, plus a poll to participate in:

Net worth is actually really easy to calculate.

First, add up all your debts, also known as liabilities. You can do this quickly by checking in with all your loans and credit cards and asking “How much do I owe?” This stuff is generally all available online, so you might not even need to make the calls. If you’re a good budgeter, you should already have a pretty solid idea of what this is, anyway.

Next, add up all your assets. This gets a little trickier. You’ll have to estimate the value of things you own. Include your house, your vehicles, jewelry, art, and other valuables. If it’s worth more than $500, include it. This can be a taxing process, because you may discover that a lot of the things you spent a bunch of money on are not worth much now. (Seeya dental and medical bills, not to mention insurance!) Be fair and honest in your calculation to get a reasonable number.

Now, simply subtract your total liabilities from your total assets. If you find yourself looking at a negative number, you’ll surely find some relief in this cartoon:

I must admit, I got a chuckle out of it, but it really isn’t funny. The number of people out there with a worse net worth than your average busker is depressing to say the least. If you’re calculation yielded an even zero or a positive number, you should definitely celebrate. If your net worth is really bad, it might be time to start fighting your debt a little more fervently.

Take the survey below to reveal the results and see how you compare to other PerkStreet Blog readers:


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  • http://www.creditdonkey.com CreditDonkey

    This is satirical but it makes sense. Beggars barely have liabilities. They live on begging that’s why they are beggars but of course we can’t say that they are better than those who look for real jobs. I say take this fact and turn around your financial freedom. If you have a really huge debt, your debt to equity ratio will plunge. If you borrow money to pay old debts, your debt to equity ratio will also dip. The best thing to do is to maintain the equity and prioritizing payment old liabilities instead of saving. This does not mean not saving altogether. It just means you have to set aside a bigger amount for payment of debt.

  • http://Twitter.com/KylePs80 Kyle Psaty

    Well said!

    -Kyle

    Kyle Psaty
    PerkStreet Financial

  • Mfmccarthy

    You gotta take into account earning potential, though. Being in 60k of student loan debt means you have a chance for a career, plus you probably have a home, a shower, and a lower chance of being a mentally unstable addict.

  • http://blog.perkstreet.com PerkStreet Jen

    This post came up again on Twitter recently and reminded me of a time I was in college and someone asked me for change. Not only did I not have change, my checking account was overdrawn and I’d just been laid off from my part-time job. I had less cash available to me than the woman asking for change had in her cup. But I was on my way to a cozy dorm room with a closet full of clothes and a dining hall full of food. I thought then, “There but for the grace of student loans, financial aid, and my parents go I.” It definitely opened my eyes.