Location, Location, Location…
They may be the three most important words when considering purchasing a piece of property. Resale, value, appreciation, and leverage are all affected by the location.
You can buy the best looking home on the block but if it’s in the wrong location your value is likely to go down over time. But the opposite is true as well, swoop up a fixer upper in the right neighborhood and you can turn that property into a coveted gem.
Yes, real estate location is very important when attempting to create wealth but we can’t forget something equally as important …and that’s knowing where you stand financially!
HAVING A FINANCIAL FINISH LINE IS JUST THE START
You have a great financial goal – excellent! Maybe it’s having a million dollar net worth, becoming debt free in a year, growing your business or doubling your retirement savings in ten years.
While the end goal is excellent to have, it’s a futile experience without the knowledge of your starting point.
Having clarity on where you currently are financially is as important as having your end goal but unfortunately, too many people ignore this fact.
That’s exactly what happened in my case. When I decided to make the shift and take my family in a new financial direction I immediately discovered that I could not move forward until I identified my current location. So here’s my question. At this very moment…where are you?
LET’S START WITH YOUR NET WORTH
PRICELESS! I have no doubt that would be the response if someone asked your mother how much you were worth. But what if you walked into a bank and ask them for a business loan, could you get away with mom’s definition then?
Maybe you don’t define your net worth by how your mother values you but if you’re like most people I work with, you’re probably still very far from your truth.
This step is too important to ignore, it’s your genesis to creating your wealthshift. Once you determine your current location you can begin mapping out your financial road map with more clarity.
IT’S EVERYTHING ASSOCIATED WITH YOUR NAME
Let’s say that you decided to sell all of your assets and paid off your debts, what’s left would represents your current truth…or your net worth! But why consider this number since most people will probably never sell every material item and liquidate it into cash?
Great question…I believe it’s important for this key reason, it makes you take a hard look at every aspect of your financial situation and regardless if it’s good, bad or ugly, you will be able to establish better goals and make wiser decisions when you know what you’re working with.
DON’T GET LOST IN THE DETAILS
Your net worth is obtained by adding up the current value of all of your assets in one column (cash, checking accounts, retirement account balances, certificates of deposit, automobile values, stocks, real estate, etc…).
Then doing the same with your liabilities (debt from credit cards, mortgages, student loans, car loans, mortgages, home equity loans, 401(k) loans, etc…) in another column.
After that’s done, now you just apply simple math by subtracting your total liabilities from your total assets and just like that you’ve just created your personal net worth statement! (click here for a sample net worth statement)
Hopefully, your number will be positive but if not don’t get down on yourself because you should keep in mind that your net worth will constantly change over time.
The key here is to know where you stand because once you know your current location then you will have the coordinates to plug into your financial GPS and set your destination towards your wealth shift!
Shawn Dorrough – The WealthShift Strategist
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