Are You Guilty of Treating Your Debt Too Emotionally

Now take everything you own. This includes the contents of any bank or investment accounts you have, your retirement account, stock portfolios, and so on. If you own a house (even if it's mortgaged), add the fair market value of the house. If you have vehicles (cars, boats) add them in. It is fair to add in the value of your furniture, electronics, and clothing, but be very conservative. It may have cost you thousands to build the wardrobe hanging in your closet, but it's doubtful you could convert it to very much cash. Don't count what you spent, count what you could get if you had to sell it today. Add everything together to get what accountants call your "assets."

Now subtract liabilities (what you owe) from your assets (what you own), and you have your net worth.

I hate to disillusion you, but the number should be positive. And it should be thousands.

There are some reasons for a low net worth. For those who are just starting out or those just starting over, your net worth may be low because you have not had chance to amass any assets. You may have just gone through a major medical disaster or other catastrophe. The other reason your net worth may be low is a lot of debt.

Now look at your income and your monthly bills. Don't worry about total debt here, just look at what you spend each month versus what you bring in. Take some pencil and paper time here. Does your out-go exceed your income? That's a debt-making machine. Until you turn this around, you're going to keep your debt growing which, in turn, will keep your net worth negative.

If you can't make minimum payments, if you are adding to your debt each month, or if you are really unsure of your financial states, you are probably in need of some financial help.

Certified credit counselors can help and there are lots of excellent books and programs on the market aimed at getting you debt-free. There are even free resources. For instance, your local banker can probably help you come up with a financial plan to manage your debt, including things like debt consolidation.

If you're wondering if you have too much debt, you probably do. One of the great financial secrets of the truly wealthy is this: no debt. It's possible for even ordinary people to live debt free.

The bill collector or the repo-man are not the first signs of debt problems; they are really symptoms of a prolonged period of too much debt. When the warning signals come, even if we are not rattled by them, we should take firm steps to dig ourselves out of debt. The difference between too much debt and being destroyed by debt are just a few missteps.