 |
| Sterling Silver Flatware May Be An Asset |
End of the Year Calculations Help You Understand Where Your Money Goes
Losing weight and taking control of
your finances are two common New Year's resolutions. You may want to see if
you've made any financial progress this year, and you can do this without a
financial counselor or planner.
If you're interested in handling your
money, you may watch Suze Orman, Clark Howard or Gail Vaz-Oxley. In addition to
finances, a recurring part of these programs is that the participants seldom
realize how much money they spend, and most spend more than they have coming in
each month.
Four basic calculations tell you all
you need to know -- income, expenses, assets and liabilities.
Income
Calculate your average income for the
month from employment and all other sources. Use your gross income so you can
see taxes, insurance, 401(k) and any other deductions. If you're not employed,
you pay your taxes and insurance from your savings or other income, so it's
important to remember that these are expenses whether you see the deduction or
not.
Expenses
Determine your average expenses for a
month. If you pay bills online, you may have to refer to the credit card you use
or the bank account attached to your bill-paying. Don't miss your automatic
withdrawals and quarterly payments. Divide yearly payments by 12 to get the
average monthly payment. Divide a quarterly payment by 3 for the monthly
payment. Free services online can help you keep track of your expenses. For
example, the Suze Orman Expense Tracker
helps you review your expenses without sharing your personal information with
the world population. http://www.suzeorman.com/suzetools/expensesheet/
Subtracting expenses from income
should give you money left over. If your expenses exceed your income, you need
to make adjustments in your lifestyle so that you don't spend more than you
bring in each month. The calculations are all you need to estimate where you are and where you want to be.
Liabilities
Calculate how much you owe by
itemizing all of your liabilities -- not for the month, but the total you owe.
Determine the amount you owe on your house, car, mobile device contracts, credit
cards and any other bills. Include student loans in deferral -- you still owe
these even if you aren't currently making payments on them.
Assets
Estimate your assets by checking the
value of items you own. If your house is valued at $100,000 and you owe $80,000
on the mortgage, you have about $20,000 in equity (unless you have a second
mortgage or reverse mortgage.) You can check kbb.com or edmunds.com to estimate
the current value of your automobile. Subtract any amount you owe from the value
to calculate your equity. List your savings and bank accounts as assets, along
with your retirement accounts. If you have a valuable collection -- coins
or sterling flatware, for example -- you may want to list that as an asset as
well.
Net Worth
Once you have base assets and
liabilities figures for the year, subtract liabilities from your assets to
arrive at your net worth. Use this figure at the end of every year to see if
you're making financial progress by increasing your assets and decreasing your
debts.
Do a few calculations now to put yourself on the right track for the new year. May your year be blessed with prosperity, and may you use what you have wisely.
Linda
cajunC
No comments:
Post a Comment