Tue 10 Jan 2006
Negative Equity
Posted by coglethorpe under Net Worth
Heres a CNN Money article about a young couple’s journey to riches. Hopefully that’s the path I’m on now. But before I start, I need to find out where I’m at. I think I’m going to need a sedative, because this is going to hurt…
Assets
House: 320,000 (appraised less than 1 year ago)
SUV: 21,000 (yes, I own an 8-cylinder beast)
Car: 5,000 (don’t laugh, it’s paid for)
401(k): 10,000
Savings: 1,000
Total: 352,000
Liabilities
First Mortgage: 232,000
Second Mortgage: 89,000
Credit Cards: 17,000
SUV Loan: 21,000
Total: 359,000
Net Worth: (7,000)
I’ve learned that those parentheses are an accountant’s way of saying negative without using a minus sign. I assume an accountant a long time ago wanted to make the bottom line seem less pleasant (and not get fired) by making the switch to nice round symbols instead of a sharp line.
I doubt it worked, because it isn’t working for me right now. I’m nearly 40 and I’m in the hole! How did this happen? I’ve heard of people being upside down on their cars, but for crying out loud, I’m upside down on my life.
Enough of the minuses. I do have some positives, including a plan. I’ve stared devouring finance books lately and have come up with some ideas. I’ll share more of that later, but for now, let me count the things I have in my corner.
- A job. (six-figures, thank you very much)
- A paid-for car. It likely has 2-4 years left.
- A car I’m right-side-up in.
- A house that’s increasing in value.
- The determination to destroy my credit cards and their balances. Maybe some people can work the system with them, but I can’t.
- The knowledge of what assets and liabilities are, how to build one and limit (or eliminate when possible) the other.
The job will give me the leverage to eliminate the card and car debt, build my savings and start aquiring assets. Oh, yeah. Job. Best be getting on that!
