Ramsey County

Making $ense of Dollars and Cents

June 8, 2009

MAKING THE MOST OF WHAT YOU HAVE

          When your family income drops suddenly or expenses unexpectedly increase, your first concern may be how to pay your bills and meet your day-today expenses. It is also important to look at your total financial picture and determine which assets you might use to meet family obligations.

          Determining Your Net Worth

          A net worth statement is a financial balance sheet. It is a calculation of your assets (what you own) minus your liabilities (what you owe). Preparing a net worth statement will help you get a clearer understanding of your financial resources and it will be useful in making decisions about how best to manage them.

          Liquid Assets - Cash or items owned that can be easily converted to cash. Keep in mind that cashing in certificates of deposit (CDs) before they mature may result in an interest penalty.

          Marketable Assets - Financial assets that can be cashed in or sold for their current market value. Prices will fluctuate with market conditions.

Other Personal Assets - Real estate and personal property that can be sold, but usually not as quickly as the assets above. Assets such as vehicles, furniture, and appliances usually depreciate in value; so they are worth less now than when you purchased them, even if they are still in good condition.

          Non-Marketable Assets - Assets that cannot be sold or are more difficult to turn into cash. Withdrawing money from your retirement plan, pension, or Individual Retirement Account (IRA) before age 59 1/2 usually involves a substantial penalty.

          Calculating Your Assets

          Write down the current amount of cash on hand. Use the most recent statements for checking, savings, money market account balances, and current certificate values.

          If you have government savings bonds, call a bank to find out the current value.

          Find out the cash surrender value of your whole life insurance policies by checking your policy or calling your agent.

          If you own stocks, bonds, or mutual funds, check a newspaper that publishes the stock market information daily. They are available in most libraries.

          Use the current value of your house or other real estate - not what you paid for it. Your local tax assessment official can tell you its full assessed value.

          Check a used vehicle guide (Blue Book) through your local library, insurance agent, or banker for the value of your car(s) and truck(s).

          To find out the value of your boat, camper, or any other recreational vehicle, talk to a dealer who sells used recreational vehicles.

          Make a conservative estimate of the value of household items and personal property, recording what you could get if you sold everything today.

          List the current value of your pension, IRAs, or other retirement plans, using the amount you would get if you were to cash them in today.

          Do not forget to add money others may owe you if you realistically expect to collect it.

          Calculating Your Liabilities

          The balance of the mortgage loan on your house may be on your monthly statement. If not, ask the lender for the outstanding balance.

          Record the balance due on all credit cards, charge accounts, installment accounts, and other loans. Be sure to list the total balance due, not just the monthly payment.

          List any current unpaid bills, including what you owe the dentist, this month’s utilities, telephone charges, etc.

          After you have totaled both your assets and your liabilities, you are ready to subtract total liabilities from total assets. The amount left is your net worth.

          Remember that your family has other important assets that do not show up on the net worth statement. Assets such as education, experience, skills, and knowledge are hard to put a dollar value on, but do not overlook them as a resource to help meet expenses.

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524 4th Ave NE #5, 2nd Floor Ramsey County Courthouse
Devils Lake  ND  58301
701-662-7027
email - NDSU.Ramsey.Extension@ndsu.edu