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In 2019 I was able to increase my net worth by $32,000 but only took home roughly $40k from my paychecks... How is this possible? It's actually a lot simpler than you think. There are a few basic steps that we can all take in the new year to grow that net worth number. It's really the only number that I am constantly paying attention to as a metric for my personal wealth. 

Step 1 - Tracking your net worth. I like the app Personal Capital to track my accounts and every day expenses. My favorite feature of the app is the home screen that tracks your net worth for you! Looking at it everyday makes you aware of how much you have and plays a part in gamifying the process for you. Currently, I am down to just recording it annually. I started by recording every month in order to make sure I continued growth. Being aware of what this number is and the impact transactions have on it, has to be your first step in financial independence. Very few people out there will innately acquire wealth. We must be aware of where we stand in order to grow. 


Step 2 - Owning a house. This one should have a big asterisk beside it. Owning versus renting is not a one size fits all decision. There are a lot of things to consider about your own situation but for me it looks to be a profitable experience. My mortgage payment is half of what the average rent is in my city. I bought an affordable fixer-upper in a popular part of town. As I slowly renovate rooms to modernize the place the property's value is holding steady and my monthly payments are slowly going converting into equity. Whenever it is time to sell, I'll likely make some money off of that. Whereas with renting, I can guarantee that I won't make any money. One thing that is nice about Personal Capital is it automatically pulls your houses estimate from Zillow to keep tracking this for you. I'm able to follow the ebbs and flows of the market, and it gives me a very rough idea of what my property should be worth.


Step 3 - No New Debt. Of course I say this after saying it can be profitable to buy a house! Housing is one of those expenses that you can expect from life. You'll always have to pay for a place to live. When I talk about no new debt I talk about avoiding loans and payment plans for items you can live with out. Jewelry, electronics, furniture, renovations, all of these things can have payment plans that turn into debt that hangs over your head and pull that net worth down. Always try to make decisions that limit new debt. Pay outright for small things. These little debts add up much faster than you realize. Try to avoid them and seek alternatives if you can. 


Step 4 - Pay down your existing debt. We all have debt in some way shape or form. Make sure you are taking active steps to pay yours down. Don't miss a payment ever and prioritize what debt you have. 

1st - Pay down any of those credit card debts that are wracking up. 18% interest can suffocate you for years if you are just making the minimal payment

2nd - Car loans - depending on your interest rate take care of any vehicle or personal loans.

3rd  - Student Loans - While these interest rates are high, federal student loans do not transfer should anything happen to you. In the event of death student loans are wiped out... Unlike your other debt

4th - Mortgage - If you have recently purchased a house or refinanced you are probably sitting at a nice interest rate (something below 4%). At that rate I don't feel that it is essential to throw down loads of money to pay that debt down. Yes it would be nice to own your house outright but at 3% interest you are better off putting that money to work in index funds that are returning at a 6-7% rate!


Step 5 - Invest. Some of us out there are fantastic at saving money. They are frugal and always save more than they earn. But they never take that next step of putting that money to work for them. It sits stagnantly in a savings accounts at their local bank earning fractions of a percent in interest. This was a viable strategy for your grandparents due to the high savings accounts rates of the past but that time is no more. According to the FDIC, the national average interest rates on savings accounts is at... Wait for it... .09%!!! What a waste! In modern times the purpose of a savings account, if you even have one, should be a rainy day fund. A quick source of money that you can access immediately to cover repair costs on large items on your house or vehicle. A savings account is no longer a great tool to build net worth. Instead you should be putting those dollars to work for you in LOW COST INDEX FUNDS. Check out our resources on them. Challenge yourself to invest incrementally more each year or each quarter or maybe even each month. It is crazy how fast that net worth can snowball!

Make these steps happen as soon as you can. We are all bad about putting things off thinking there will be a more convenient time later. Make these steps today so that your net worth can start its exponential growing process!

KEEP STACKIN!

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