Sunday, May 07, 2006

net worth

I'm going to share a little secret with you - I have been broke all of my life.

Okay, not so secret. If you know me this is not new knowledge. I have never traveled outside of the USA or Canada, and the majority of my continental travel was aided by me being a flight attendant for a year. I never owned a new car, and the car I did had often had all kinds of fun "quirks" like having to roll down the window to open the door or a layer of glass missing from the windshield or having to spray lighter fluid on the air filter cold mornings to start the car praying that it didn't back up and start a fire as it was oft to do. (Nothing like beating down an engine fire on a cold Michigan morning to get that blood pumping!!) My furniture still consists of hand me downs and college level quality. My clothes are Old Navy and Gap.

This is no one's fault but my own. Granted, according to that book "Rich Dad, Poor Dad" some of this is learned behavior. But my choosing to move away from home at twenty, change my career every year or so, and put myself through college and pay tuition for NINE YEARS might have something to do with it. The fact that when moving to new York I refused to live in a borough and kept myself in poverty by paying exorbitant rent just perpetuates my continued self-effacement.

I have to admit, I wear my destitution like a badge of honor. When I made my first real career change, leaving General Motors and a potential life of comfort being an engineer, I consciously chose an adventurous life over a well moneyed one. About four years ago when my debt reached a level that put me in panic mode because I had started to get all kinds of collection calls and had put my credit in the toilet. I had just let it get out of control, burying my head in the sand. At that time I got smart.

My time was then spent joining a credit improvement agency, creating a budget, tracking my spending, and really learning where my money had been going in order to figure out what I had to do in order to stop my downward spiral. It was a rough couple of years, but although still in debt at least now I am smart with my money. I pay attention to where it goes, and that is half the battle. For a couple months I didn't go out drinking. I stopped buying breakfast and lunch every day and brown bagged it. I did not clothes shop for a year. Oh, and the big one, I lived and entire two years without ANY credit cards. Only the debt of the closed ones.

After two years I was back in control, and for the most part my credit became good enough once again to be able to rent an apartment on my own in NYC. Which means something.

One side effect of my journey was that I have learned how to pay attention to my investments. Mysteriously at one point I realized I had accumulated some money in my 401k. So I started to monitor it, and actually MANAGE my money. Yes, it helped that I couldn't get my greedy little paws on it to spend a cent.

Today I went online to check the progress of my funds and had a revelation. Due to my careful grooming my little nest egg has accumulated to be more than my current debt.

Yes, that is correct, today my net worth is not in the red. I am no longer worth negative money!! Okay, turns out it has been that way for a couple months, but I didn't realize it until today. Heck, I am proud of myself.

Not to get carried away here - after all my goal is to eradicate my debt so that I can completely change my career and take a huge pay cut. But the smart way this time, by living within my means and even continuing to increase my savings. I don't have to be poor; it just took me a while to figure that out.

1 comment:

MortgageTop said...

Hello,

I recently published an article on mortgage loans, tips on how to make them work for you and other forms of mortgage financials – here is an excerpt from it, in case you are interested:

Smell a Good Deal for a Real Estate – Try to discover a property that has already got some equity in it, when you purchase it. Equity represents the value of a real estate, a property after you have paid any mortgage or other charges relating to it.

Try to Get a Second Mortgage on the Real Estate – You could try to be more creative and ask the seller whether he would be willing to have a second mortgage on that home. Thus you could set up an agreement with the seller through which you will have to pay monthly an approximate sum of $200, for instance, on $15,000 of the price of the real estate (plus or including the interest rate), for the second mortgage.

Save Some Money to Pay in Advance – Some lenders might give you a full credit if you come with at least a small percentage of the sum. This would grant you supplementary points for getting the credit and would also lower the interest rate – e key point of any mortgage refinance program.

Don’t Give up, Go Further – don’t trust the first broker who tells you that there is no hope for you. You will finally find someone who could offer a viable solution, just keep asking and searching. An alternative is to apply online to mortgage services. Thus your application would be seen by more lenders and you might get more offers to analyze your solvency.

Improve Your Present Credit Score – by not applying to credit cards, auto loans or other loans, if possible. Too many inquiries would also affect credit scores. Another important thing you should do to improve your credit scores is to acquit your current duties and payments on time.

If you feel this helps, please drop by my website for additional information, such as how to refinance a second mortgage or additional resources on mortgage rates.

Regards,

Michael