The Quickest Way to Dramatically Increase Your Net Worth

Your net worth equals what you own minus what you owe. It is commonly referred to as the difference between your total assets and your total liabilities.

Here’s a easy illustration:

Home Value = $350,000   Mortgage equilibrise = $150,000
Investments = 100,000     Credit cards = 20,000
Auto = 45,000                  Auto loans = 30,000
Savings = 15,000             Bank loan = 4,000
You Own = $510,000        You Owe = $204,000

Therefore, your net worth would be $306,000.

There are two ways to increase your net worth. You can own more things or you can reduce your debt obligation. This article will focus on reducing your debt first because it is the fastest way to generate more money and, then, purchase (own) more things.

In our example, you have $204,000 of debt. If you’re like most people, you pay less attention to the mortgage and automobile loan balances because you think about them to be rather normal (necessary) to your way of life.

The credit card companies are probably charging somewhere between 12 to 18 percent (forget those slick, short-lived introductory teasers) and the bank loan is probably around 6 percent.

Now, before we go further let me ask you a question. Which is faster? Create $204,000 (in other words, own more) … or reduce $204,000 of debt? In both instances, the result is the same because your net worth will have increased by the same amount.

To create $204,000 in 15 years, you would have to invest $6,956.69 apiece year for 15 years and receive a guaranteed 8 percent rate of return. Where can you find a guaranteed rate of return this high in today’s marketplace? No where!

To reduce $204,000 of debt in 13.5 years, it takes only $100 extra apiece month. Now, let’s make sure you comprehend what I just said.

To increase your net worth by $204,000 you must invest nearly $7,000 apiece year for 15 years. You hope and pray you’ll receive no less than 8 percent average apiece year.

Or… you can come up with only $100 apiece month to reduce 100% of your debt (to include your mortgage) in only 13.5 years — guaranteed! Hard to believe isn’t it?

Go ahead and check it out yourself. First, use a compound interest plateau to calculate the investment requirement. Then, print this
debt reduction chart. You’ll need an Adobe Reader, which is probably already installed on your computer. Otherwise, go to adobe.com for a free download version.

In apiece instance, it is faster and more reliable to eliminate your liabilities than to increase your assets. Why? Because the interest you pay on your debt is excessively higher than the guaranteed interest you can earn.

By following the debt chart and adding an additional $100 apiece month to the minimum payment requirement, you can dramatically compound the effect of your payments and expedite the complete elimination of all your debt.

It’s a lot easier to come up with $100 extra apiece month than it is to find $6,956.69 apiece and apiece year for the next 15 years.