Tuesday, February 19, 2008

What is Your Worth

I think everyone dreams and wonders what it would be like to be a millionaire. In our dreams we are debt free and we get what we want when we want it without concern because we can afford it.

There are two types of millionaires, those who have it on paper and those who have it as liquid assets. Most paper millionaires I know are nervous. Their fortunes depend on a certain economy. A fall in the stock market can reduce or wipe out their wealth. A rise in oil prices hurts them as well. Real estate values have tanked and tanked some of them with it. There are several people here on the coast that lost millions when the December storm turned their timber into pulp. Their once every seventy year investments are gone. There are a lot of pit falls to maintaining a million dollars on paper.

I am not any where near to being a millionaire. I am a content thousandaire. Though the overall economy does bump into me, I have less distance to fall than those with more. I feel fortunate that my assets and liabilities lean slightly towards the positive asset side.

Many people have the wrong idea of what assets and liabilities are. They think that everything they own is an asset and that’s not true at all. Simply put, and asset is something that makes you money and a liability is something that does not. A table saw is an asset for some people and a liability for others.

The sad news about this concept is that many Americans do not even qualify as thousandaires. They may be hundredaires at best. If you have a bunch of stuff that doesn’t make you any money and if your mortgage is for more than half of the value of your home you may be in some financial dire straits.

Some people are perfectly content with this status because they feel you can’t take it with you. That’s OK, but I think it is important to know exactly what your financial foundation is without embellishment. Changing your economic status doesn't usually happen on it's own unless you are Jed Clampett. If you are financially happy right now, ask yourself if you will still be happy ten years from now. Do you ever plan to retire? Which "Aire" do you want to live in?


Blogger Mike S said...

When we had loads of money(on paper & in the bank/assets) we were far less contented than after we gave most of it away to family & those less fortunate. We did it in ways that would give the recipients the means to pass even more on someday, if they so choose. We have enough for our needs plus a bit for 'wants', the rest was excess we worried too much about when we had it.

11:04 AM  
Blogger Beth said...

I'm a little cautious. (Big surprise, huh?) I know I can't take it with me but I'm a bit leery of outliving it. I only need enough to be comfortable (and I know I'm lucky to be able to be comfortable).
I also like sharing what I do have - although I must be a bit more careful now.

11:17 AM  
Blogger Hahn at Home said...

You really don't need to much to be rich in other ways, I'm thinking. At least that's what I tell myself when I look at my checkbook balance.

12:44 PM  
Blogger The Guy Who Writes This said...

You are in good shape, Mike. Probably because you were raised by depression era parents.

Beth,You are too level headed not to be in good financial shape, but if all else fails, marry well ; )

Lori, I'm surprised, being you are a bean counter I thought you knock me around for playing with economics on this blog.

5:29 AM  
Blogger Beth said...

Marry well??
You have got to be kidding.
Been there, done that...

6:57 AM  
Blogger matt_stansberry said...

Hundred-aire! Nothing I own is making me any money. Damn it.

12:01 PM  
Blogger The Guy Who Writes This said...

No even your fly rod and laptop?

12:58 PM  

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