Figuring Your Net Worth Dear Student, Yesterday, you took stock of who you are. By now you should have completed your "Know Yourself Questionnaire." (If you haven't yet… take time to do it now. This is an all-important first step.) Once completed, you can set your "Know Yourself Questionnaire" aside. We're going to return to it in Step #3. Right now, though, today, now that we've taken stock of who you are, we're going to take stock of what you own. First, some context. At this getting-started stage of your go-overseas adventure, you may be wondering: How much money do I need to move to a new country? But that's not the question you should be asking yourself. The question you should be asking yourself is: How much money do I have to to move overseas? What you need to figure, before you can begin shopping for the overseas haven that's right for you, is how much haven you can afford. Specifically, the easiest way to approach this is to calculate what your nest-egg amounts to on a monthly basis. The minimum amount you're going to need to be able to move overseas and live a reasonable, comfortable life is about US$700 per month. If this is your budget, your choices are limited, but you have some good ones. And you can build out from there. If your Social Security income is less than US$700 a month, however, or if you're not of the age yet to collect it, and you have no other pension to count on, what option do you have? That's what we're going to figure out today. And here's what I recommend: Calculate how much you'd have if you sold everything. Don't be shocked. Stick with me. This is only an exercise. But I think that, once you've walked through it, you'll see the beauty of this straightforward approach. Think about it this way. If you were to liquidate every asset you own, where would that leave you? What lump sum of capital would you net? Then, next step, invested, what level of yields and dividends might that capital throw off on a monthly basis? That's how much money you have to go overseas. Longtime friends Vicki and Paul Terhorst retired in 1984 with only US$500,000. That was their total net worth, as Paul explains it, including house, cars, investments, pension funds, and so on. Considering inflation, Paul and Vicki's US$500,000 in 1984 would be about US$2 million today No, you don't need US$2 million to go overseas. But, if you don't have Social Security or pension income to support you, you need to be prepared to adjust your expectations according to the nest-egg you have. So let's start there. Tomorrow, we're going to try to predict and project what you could do with your lump-sum nest-egg capital… and then we'll work from there to think through what kind of nest-egg capital could buy you… and where. Today, though, we're going to figure what you've got to work with. I've prepared a simple spreadsheet to help you document your assets and your liabilities, so you can figure your nest-egg (otherwise known as your net worth). The spreadsheet is available here for your reference. When you look at the spreadsheet, you'll see two value columns for each line item. The first is for current values, the second for projected values. Begin by detailing the value of every asset you hold, starting with cash deposits and working your way through savings, retirement, and investment accounts and on to hard assets, such as real estate, vehicles, collectibles, coins, precious metals, antiques, jewelry, insurance policies, etc. Next, itemize your liabilities. Then balance the two to figure your current bottom line (which will show in the Current Total Net Worth cell in the spreadsheet). This is your starting point. The name of the game from here is twofold. First, you want to eliminate all debt (if possible). Then you want to move as many of your fixed and other assets up to the Current Assets cells. You do this by selling them off. Say you own a house right now that's worth US$300,000. You hold a mortgage on that house for US$150,000. For the Current calculations, you'll enter US$300,000 in the Real Estate/Primary Residence cell under Fixed Assets. Then you'll enter US$150,000 in the Current Mortgages cell under Long-Term Debt. For the Projected column, you'll remove both those entries and, instead, enter US$150,000 in the Projected Cash in Bank cell under Current Assets. In other words, for everything that you liquidate (and therefore move from the Current Fixed or Other Assets categories to the Current Assets category), you're going to reflect the proceeds as Projected Cash in Bank. This does not mean that all proceeds from all asset sales and liquidations will sit forever in a bank account. However, for our purposes at this point, we want to see what you've got to work with. We'll talk a little tomorrow about what you might do with your lump-sum nest-egg capital. Today, though, again, we just want to find out what that lump-sum nest-egg capital amounts to. Make your best estimations, asset by asset, using current market valuations (for gold or other precious metals, for your car, for jewelry that you'd be willing to sell, etc.) as best as you're aware of them. In other words, while the column is titled Projected, this does not mean projected values at some date in the future. It means projected current values if you were to sell today. Step #2, Day 2 Assignment: Your Live-Overseas Nest-Egg Net-Worth Calculator This is your assignment for today, Day 2 of our program. Take the time now to itemize your current assets and holdings, along with your current liabilities and debts. Then imagine that you convert all (or nearly all) of your non-liquid assets to cash. Tomorrow, we'll begin thinking through how that nut might buy you the life overseas you're dreaming about. Until then, 
Kathleen Peddicord
Your New Life Overseas Coach
P.S. Remember, we're standing by, as we will be throughout all 52 days of this program, to answer any questions and to help any way we can. Reach us anytime at 52Days@LiveandInvestOverseas.com.
| 
No comments:
Post a Comment