How Did It Go?
So, how are you feeling now?� Did you have a positive financial net worth...or a negative net worth?� We are not trying to make you feel bad or good necessarily...we are just trying to get you to take action about your financial fitness.� if you completed this exercise, then you have taken a very courageous step in this process.� All we are trying to do is to help you see the truth about where your spending habits have led...be it good or bad.

Now that you have done this, we want to explain a little bit about the concept of net worth.� Net worth is what we here at Plain Finances consider to be your most important financial indicator.� All of our counseling efforts and articles are focused on moving your net worth from negative to "0", then from "0" on towards whatever goal you have.� This is in contrast to other financial "gurus" who seem to focus on having a low cash flow or a low yearly expense.� The only trouble is, this often comes at the cost of your long term net worth.

For example, some financial experts will tell you that it is a good idea to buy a more expensive home, because this will lower your tax bill this year (due to deductibility of mortgage interest).� The only trouble is that it will also lower your net worth, because you will be paying more money in interest, not to mention paying the agent's fees who sold your home so that you could move into the more expensive home.

Your Objective - Focus on Net Worth
We suggest to you that you focus on increasing net worth as well.� This is the key to many of your future money decisions.� It will lead you out of debt (debt interest robs you of money...you never see it again).� It will lead you into a disciplined and fit financial lifestyle.

We don't focus necessarily on having the highest net worth...instead, we choose to focus on how much you can move towards a more positive net worth.� So, don't be discouraged if you have even a high negative net worth...we will give you vital keys to begin reversing this and moving towards the other direction.� Growth is the key...not overall net worth amount.

How will this "play out" in your particular situation?� Well, if you have any unsecured debt (any debt that does not have an asset that is increasing in value associated with it), you need to pay it off as quickly as possible.� This means any credit card debt, student loans, car loans...basically almost every debt except for your home mortgage.� Then, when you have paid all of those off, you can begin to tackle even the mortgage!

What it also means is that you will no longer focus on "getting a lower payment"...but instead, you will focus on the actual amount of debt accrued.� For example, if you go to shop for a car and you need a loan, the loan officer at the car dealership will try to "work with you" by asking you what payment you can afford.� Never mind that this lower payment will cause you to have your loan term extended and you will end up paying up a great deal more interest.

Wrap-Up
So, having completed your list, you should know exactly where you stand financially.� If you have any unsecured debt...or if your net worth is negative...then you should begin immediately focusing on how to pay off all of this debt.� And that will be covered in our next article in this series!

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