Give yourself credit: Net worth update

For several months, I’ve been tracking my net worth as part of my effort to pay off debt and build up assets.

We’re not horribly in debt by American standards — which means we have a lot of debt. When I realized how much freer we would be without all those monthly payments, I determined to get rid of some.

We started a big debt payoff push at the beginning of 2007 with “only” a mortgage, a second mortgage, a car loan, some student loans, and credit card debt less than half the U.S. household average of $9,200 (that’s according to CardWeb.com per this article, and it’s among households that have at least one credit card).

The good news for us: Most of our credit card debt was accumulated when we charged Mr. Cheap’s grad school tuition last summer. The bad news: We were dumb not to get a tax-deductible student loan for that $3,000 hit, which we thought we’d just pay off, but we’re still working on it.

Nevertheless, what’s done is done.

So how’s the net worth? It’s up 5.89 percent since last month. (This is per my list of accounts in Quicken, noted on the 10th of each month.)

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2 thoughts on “Give yourself credit: Net worth update

  1. keith says:

    this is great. any tips on how to keep track of your net work, especially as a freelancer? i do work but don’t get paid until two months down the road. and about how much do you take out for taxes for contract projects?

    wheeeeee!

  2. cheaplikeme says:

    Well, what you have is still what you have! There was an interesting debate recently on The Simple Dollar about how to calculate net worth, but essentially, it’s what you have minus what you owe.

    As far as taxes for contract projects, the key element is to be sure you’ll have enough to pay the taxes when you figure them out the April after you did all the work. This year, because of fewer deductions (like less child care expense) and making a bit more money, we were about $4,000 short — hardly fun to come up with in the course of a few months. (Though I did it!)

    The first year I worked for myself, I had a relatively low-cost lifestyle (with a big load of student debt and moving expenses), and I saved 50% of every client check. This was very smart. If I had a short month, I always had extra set aside. And after I paid taxes, I had thousands of dollars left that I used to pay off my student loans. Now, with mortgage and car payments and tuition (oh my!), I have reverted to that system, but I set aside 20% of every check, which I believe will cover taxes with some extra at the end. So, pick the percent that works for you, but I think applying it to every check is a good failsafe.

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