Being debt-free is possible for everyone, regardless of income. Learning to manage our debt and spending habits and then focus on saving can be life-changing and positively affect your net worth. Net worth calculates by subtracting your liabilities (debt owed) from your assets (not financed). Net worth is calculated for both individuals and companies and is an accurate determination of how much someone, or something, is worth. In this article, we discuss how you can create a debt reduction plan for 2020.
Consistent growth in net worth is an indicator of good financial health. If liabilities grow faster than assets, or the value of assets drop, it indicates poor financial health and likely a negative net worth.
The most common methods of reducing debt are:
Debt snowball: Pay off your smallest debts first. Focus all the additional money you put toward debt reduction on your lowest debt balance while paying minimums on the rest.
Debt consolidation: Paying down high-interest debts by consolidating them into one or more lower interest debt.
Manage your debt and increase your net worth in 2020 with these simple ideas:
Whether you’re trying to become a millionaire or pay off your debt, determining your worth helps to measure your debt-reduction progress. Discussing your net worth at our annual meeting will help you keep on track with your financial goals. When debt is excessive and unmanaged, saving is hard, create a debt reduction plan today.
Northland Financial LLC assists families and individuals with retirement income planning. As well as Medicare, Social Security, life insurance, IRAs, college planning, and asset management. Contact us today to schedule an appointment.