Increasing Your Net Worth: The Measurement of Real Wealth

The following is a guest post contributed by Tom Cleveland, who writes for Forex Traders.

Each year, Forbes magazine publishes a list of the wealthiest people in the world.  Of course, the names at the top of the list are household names—Warren Buffet and Bill Gates.  Forbes rates the wealthiest people in the world by their net worth.  Net worth is simply a person’s total assets minus their liabilities.  Although you may not be fighting to get your name on the Forbes’ list, chances are good that you have a definite interest in building your net worth.

Practical Step to Building Net Worth

Let’s return to the definition of net worth once more.  It is defined as a person’s assets minus their liabilities. Now, this is important to understand.  It doesn’t really matter how many assets a person has.  If they have too many liabilities, the inflated assets will not mean anything.  We see this play out in the business world all the time.  A company may have hundreds of millions of dollars in assets, but it attempts to expand too fast and takes on unsustainable debts, which are liabilities.  In corporate America, this eventually leads to bankruptcy.  A company that has hundreds of millions of dollars in assets, but also has $2 billion in outstanding liabilities, is headed for total collapse.  Thus, the way to build net worth is not to necessarily focus on building assets or a forex account, but to rather eliminate liabilities.

Eliminating Liabilities

The three primary liabilities that most middle-class Americans have are a mortgage, a car loan, and credit card debt.  The real way to build true, lasting wealth is to focus on eliminating the most destructive of these three types of liabilities—credit card debt.

Credit card debt is a major hindrance of wealth creation.  Ultimately, it is wise to buy assets in order to build net worth.  When hundreds of dollars are being spent each month paying credit cards off, this money could be going toward purchasing those assets.  Thus, one of the first steps that must be taken to build real wealth is to pay off all credit card debts in order to eliminate this liability.

Adjust the Budget

The most practical way to quickly pay off credit card debt is to honestly analyze your monthly spending habits and discover every area that could be cut back and eliminated.  Once you find out how much can be eliminated each month, then decide to shift this extra capital toward paying down your credit card debt.  This will not necessarily be fun and exciting, but it will help put you into a place of financial strength once the liability is eliminated and you can direct that extra capital into purchasing assets.

Further Reading:

How to Fight a Credit Card Interest Rate Change

Should You Spend Money on Budgeting Software?

Increasing Your Net Worth: The Measurement of Real Wealth

The following is a guest post contributed by Tom Cleveland, who writes for Forex Traders.

Each year, Forbes magazine publishes a list of the wealthiest people in the world.  Of course, the names at the top of the list are household names—Warren Buffet and Bill Gates.  Forbes rates the wealthiest people in the world by their net worth.  Net worth is simply a person’s total assets minus their liabilities.  Although you may not be fighting to get your name on the Forbes’ list, chances are good that you have a definite interest in building your net worth.

Practical Step to Building Net Worth

Let’s return to the definition of net worth once more.  It is defined as a person’s assets minus their liabilities. Now, this is important to understand.  It doesn’t really matter how many assets a person has.  If they have too many liabilities, the inflated assets will not mean anything.  We see this play out in the business world all the time.  A company may have hundreds of millions of dollars in assets, but it attempts to expand too fast and takes on unsustainable debts, which are liabilities.  In corporate America, this eventually leads to bankruptcy.  A company that has hundreds of millions of dollars in assets, but also has $2 billion in outstanding liabilities, is headed for total collapse.  Thus, the way to build net worth is not to necessarily focus on building assets or a forex account, but to rather eliminate liabilities.

Eliminating Liabilities

The three primary liabilities that most middle-class Americans have are a mortgage, a car loan, and credit card debt.  The real way to build true, lasting wealth is to focus on eliminating the most destructive of these three types of liabilities—credit card debt.

Credit card debt is a major hindrance of wealth creation.  Ultimately, it is wise to buy assets in order to build net worth.  When hundreds of dollars are being spent each month paying credit cards off, this money could be going toward purchasing those assets.  Thus, one of the first steps that must be taken to build real wealth is to pay off all credit card debts in order to eliminate this liability.

Adjust the Budget

The most practical way to quickly pay off credit card debt is to honestly analyze your monthly spending habits and discover every area that could be cut back and eliminated.  Once you find out how much can be eliminated each month, then decide to shift this extra capital toward paying down your credit card debt.  This will not necessarily be fun and exciting, but it will help put you into a place of financial strength once the liability is eliminated and you can direct that extra capital into purchasing assets.

Further Reading:

How to Fight a Credit Card Interest Rate Change

Should You Spend Money on Budgeting Software?

Make Money Selling Homemade Goods

There is a large indoor flea market in our area that always has homemade goods spread out on certain strategically placed tables. There are usually pies, brownies, cookies and bread and sometimes jars of salsa, honey, jams and jellies, all homemade. During a recent visit while looking over that day’s spread I got to wondering how much money one could make producing and selling such items. While my wife has baked various things for potlucks and fundraisers over the years we have not really thought seriously of selling homemade goods for profit. I suppose it’s always a possibility if we ever decide to pursue the idea.

I have also seen homemade goods for sale at craft shows, farmers markets and local fairs and festivals. Some other homemade items you could consider making and selling are soap, candles, jewelry, woodworking projects, extra vegetables from your garden, the list could go on and on.  

Make sure to check with your state’s health department for any applicable regulations and with local officials concerning any licenses or permits you might need.

If this is something you are interested in check out the following resources for some additional, more in depth reading on the subject.

Selling Your Home-Canned Salsa, Jams and Other Preserves

States Ease Restrictions on Selling Homemade Foods

Foodzie

Etsy

Related Reading:

Make Money by Selling Your Bones

Make Money Selling Plants

Make Money Selling Homemade Goods

There is a large indoor flea market in our area that always has homemade goods spread out on certain strategically placed tables. There are usually pies, brownies, cookies and bread and sometimes jars of salsa, honey, jams and jellies, all homemade. During a recent visit while looking over that day’s spread I got to wondering how much money one could make producing and selling such items. While my wife has baked various things for potlucks and fundraisers over the years we have not really thought seriously of selling homemade goods for profit. I suppose it’s always a possibility if we ever decide to pursue the idea.

I have also seen homemade goods for sale at craft shows, farmers markets and local fairs and festivals. Some other homemade items you could consider making and selling are soap, candles, jewelry, woodworking projects, extra vegetables from your garden, the list could go on and on.  

Make sure to check with your state’s health department for any applicable regulations and with local officials concerning any licenses or permits you might need.

If this is something you are interested in check out the following resources for some additional, more in depth reading on the subject.

Selling Your Home-Canned Salsa, Jams and Other Preserves

States Ease Restrictions on Selling Homemade Foods

Foodzie

Etsy

Related Reading:

Make Money by Selling Your Bones

Make Money Selling Plants

Can You Really Make Money Stuffing Envelopes?

To start off I have to say I have actually made money stuffing envelopes, but it was for a full time employer at an hourly wage and not as a private contractor or part of a work at home offer. While thinking about different ways to make money that I have not written about yet I was reminded of the old comic book and magazine ads that would promise a great work at home opportunity for good money by stuffing envelopes. Almost anybody that you talked to back then would warn they were scams, and I wondered if such offers still existed today, and if so, were they legitimate. After some research into the possibilities here is what I found out:

All Scams

They still exist, and they are all scams. The way they usually work is you are asked to send money for instructions and maybe a starter kit. What you will receive are instructions telling you to place ads and ask for money, just like what happened to you. They might also offer to sell you a mailing list, in which case you would be stuffing envelopes with a scam letter that asks the recipients to send you money for instructions on how to make money stuffing envelopes. It is all dishonest and illegal.      

An Alternative

Rather than respond to an ad consider contacting local print shops in your area and offering your services. This could involve working in their bindery department, maintaining mailing lists, collating marketing materials…maybe even operating their automatic envelope stuffing machine.

Further Reading:

My Worst Money Making Ideas

Can You Make Good Money Working As A Temp?

Can You Really Make Money Stuffing Envelopes?

To start off I have to say I have actually made money stuffing envelopes, but it was for a full time employer at an hourly wage and not as a private contractor or part of a work at home offer. While thinking about different ways to make money that I have not written about yet I was reminded of the old comic book and magazine ads that would promise a great work at home opportunity for good money by stuffing envelopes. Almost anybody that you talked to back then would warn they were scams, and I wondered if such offers still existed today, and if so, were they legitimate. After some research into the possibilities here is what I found out:

All Scams

They still exist, and they are all scams. The way they usually work is you are asked to send money for instructions and maybe a starter kit. What you will receive are instructions telling you to place ads and ask for money, just like what happened to you. They might also offer to sell you a mailing list, in which case you would be stuffing envelopes with a scam letter that asks the recipients to send you money for instructions on how to make money stuffing envelopes. It is all dishonest and illegal.      

An Alternative

Rather than respond to an ad consider contacting local print shops in your area and offering your services. This could involve working in their bindery department, maintaining mailing lists, collating marketing materials…maybe even operating their automatic envelope stuffing machine.

Further Reading:

My Worst Money Making Ideas

Can You Make Good Money Working As A Temp?