It took us a long time to get here, but we’re here, the last installment of “banking actions“. This post’s purpose is to bring banking terms, such as assets, debts, and net-worth, to simple terms. Pamela and I are strong believers that when people give you words and share how they are used, you have to decide how those words are used and applied to your life. For example, net-worth doesn’t have to be a term you hear in company financial settings or when you apply for a mortgage or some other large purchase. These terms have simple meanings that we’ve allowed others to make complex.
Let’s start with getting to know your financial value. What are you worth according to the numbers?
Your Value (Assets-debts=Net Worth)
Can we first agree that value can be assessed in a number of ways? Here are two: 1) the value you believe something is worth and 2) the value that others believe something is worth. My goal here is to give you a way to assess your own value by the numbers, that is. Why is this important? You’ll need this for the conclusion I’d like to make at the end of this post.
Assets are all the things of value that you possess-can put your hands own. The majority of us are less familiar with this term as we don’t have many assets.
This fact is what led to this post and my desire to change this for my readers. Assets include, but are not limited to, such things as:
When you add your possessions up, it provides you with the amount of your assets. Do you know what you have in your possession? These are the things that have value and can be used as leverage to make your life, your business better. The more assets you have the better your life, your business will be. If you’ve been following me for any time, you’ll want to add “increasing your assets” to your family plan.
We are all too familiar with debts; this is a huge problem. If I were to ask you to name, your assets you’d struggle, but when asked to name your debts, you can go on and on. We know debts very well; they’re anything that we owe to someone else. Debts include, but are not limited to, the following:
Bills (i.e. Utility services)
Loans (auto, bank, mortgage, etc.)
The fewer of these we have, the better. If you have debts, they will require our greatest attention if you desire to make your life, your business the best it can be.
Net Worth: Assets – Debt
Now that you have the terms and their simple meanings, you can do the math. Your assets minus your debts will give you your worth. Let’s say your’s looks like this:
1000 (assets) –
= – 4000 (Net Worth)
When your debts are greater than your assets, you’re normal. In corporate America, they refer to this as being in “The Red”. You’ve heard that phrase before; haven’t you? Normal people live life in “The Red”. Normal people owe more money than they have in their possession.
“The Red” versus “The Black”
I said all that to get to this part. For the majority of our lives , Pamela and I spent it living in “The Red” because that was normal. It wasn’t until we decided to be uncommon that we realized that there was another way to do life, our business. After we began applying the principles that we share here at kerryaclark.com, we began to see our “Net Worth” shift. I remember the day that Pamela, showed me that we were finally in “the black” with our power bill. I had to ask her what did that mean? In “the black”? We learned about that in college, but I hadn’t heard those words in a decade or better. We had finally moved from owing the power company to having the power company owe us. (BTW – I can’t wait to share with you how we did that, but I’m going to need you to invite your friends to join us for that journey.) What we learned was that there’s a way of doing life, running your business that’s been hidden and at kerryaclark.com we’re going to expose as much of those hidden practices as we possibly can.
Today is Friday!
Your life is your business. What if you’ve been living in “the red” only because you didn’t know any other way to live? That was our story, but we have learned a few secrets. Begin with measuring your assets against your debts.
Question: Do your debts outweigh your assets? If so and you’re ready to do something about it, leave a comment below or click here to email me.