Net Worth Update

On January 18, 2011 I decided to start a new way to track my net worth.  I created a private spreadsheet and zeroed out my net worth.  This way I can share my progress each month, going forward without revealing how much is in my savings account, 401(k), etc.

What assets am going to include:

What liabilities am I going to include:

What is missing?

  • Credit Card debt – Don’t have any except a revolving AMEX account so no reason to put it up
  • Checking Accounts – Always changing and moving kept low on purpose so no reason to track it
  • Cars – I have no idea why people count cars as an asset.  Its transportation not an asset.
  • Jewelry – I joke that The Wife’s hand is worth more than my car…but there is NO way anything is being pawned/sold so why list it as an asset?

From March 1, 2011 to April 1, 2011 my net worth increased 6.95%

From January 18, 2011 to April 1, 2011 my net worth has increased 13.24%!

Like last month approximately half of my increased net worth is based solely on decreasing my large liabilities.  I have a feeling that as I eventually pay off the debt everything will exponentially grow.

There is No Good Debt or Bad Debt

Like last month when I complained that most e-books suck, there has been a topic that has been bugging me for months but it isn’t enough for a complete post so I’ll throw it in with my net worth update.  A lot of people view any debt as evil then there are those that view debt as either good or bad depending on the type of debt.  I think those types of classifications are simply wrong.  Debt can’t be good or bad it doesn’t have the ability to be so, just like money can’t be evil.

I was shocked when I looked up the definition of debt

Definition of Debt

You can just feel the horrid connotations associated with debt. If debt is not evil nor is it either good or bad what can debt be?

Debt is Either Smart or Stupid

Debt is so old it is discussed in the bible!

It is better that you should not vow than that you should vow and not pay – Ecclesiastes 5:5

Maybe banking is the oldest profession, actually if you ask anyone that is underwater on their home they will probably say that banking and the oldest profession may be one in the same.  Seriously though, could you even being to imagine a world where there is no ability to borrow?

  • Most people wouldn’t be able to purchase a home,
  • Post High School education would be very different
  • The automotive landscape would be completely different
  • Commercial businesses would be a much riskier venture
  • How would capital intensive industries even begin?
  • The Federal and State governments would collapse

I digress.  Merriam-Webster obviously has a problem with debt, look at those examples!  Despite their best effort to drive people away from debt – debt can’t be good or bad.  Debt is a tool, just like money is a tool or a computer is a tool.  You could use the computer to hack and ruin people’s lives (bad) or you can use it to cure a disease (good).  Similarly, you can use debt to fund your drug habit or you could use it to start a business that will employ people.

What Makes Debt Smart or Stupid?

People say that using debt to fund an education is good debt, but what if that education is in underwater basket weaving where there is so little chance to recoup the investment?  Some say starting a business is good debt…but what if that business is a scammy MLM?

So what makes something smart or stupid?  Whether you can actually justify a monetary profit from that investment.