I love money. I love talking about it, I love thinking about it, and I love looking at fictional budgets and scenarios. Thank goodness my husband is a patient man.

This love of money should come as no surprise to most people: I write about personal finance, run a site about negotiation, and spent the last year interviewing women about money. And oh yeah, I have my CPA, my MBA, and love a good spreadsheet (like really love a good spreadsheet).

But for a long time, there was one topic I really hated thinking about: my net worth.

I avoided crunching this number for years. It made me literally sick to my stomach.

Why? Because I was $120k in debt. Student loan debt. And even though I was told this was the “good debt”, it didn’t feel good. I knew my net worth was negative and I didn’t want to know how much.

Eventually, my husband and I decided to buy a house. That process makes you confront all of the financial skeletons in your closet. I decided to sit down, take a look at my net worth, and deal with whatever that number was. After all, net worth isn’t self-worth, right?

And you know what? It wasn’t as terrifying as I thought. I saw the (negative) number but also saw the potential to make that number positive. I decided to track my net worth every few months, to watch the progress I was making.

A year later I was out of debt and saw my net worth finally come out of the red. It’s a little bit fun to track it now and though I don’t check in on it as often as I probably should, I roughly know the number.

What is net worth?

In accounting speak, it’s your assets minus your liabilities. That means it’s everything you own (what’s in your bank accounts, retirement account, investments, your home, car, and anything else of value) minus your debt (credit card debt, your mortgage, loan on your car).

Why does it matter?

It’s a good indicator of your financial health at that moment. We usually have a lot of different financial things going on – a lot of accounts, with money and debt spread all over the place. Your net worth brings that all together so you can get a snapshot of what’s going on in your financial life.

How do you calculate net worth?

Simple arithmetic. If you use a budgeting program like Mint.com it can calculate your net worth for you. I like to do it myself because as we’ve already established, I’m a total money weirdo.

Add up all of your assets: bank account balances, retirement accounts, investment accounts, the value of your home, your car, and anything else you own that’s substantial.

Add up all of your debt: credit card, student loan, how much you owe on your house or your car.

Subtract your debt from your assets. If you have a positive number, you have a positive net worth. A negative number equals a negative net worth.

What do I do if it’s negative?

Welcome to the club, sister. As I said, I’ve been there before. What did I do? I focused on making that debt number go away. I started being as frugal as I possibly could (while still enjoying life) and threw all excess cash at that debt. I negotiated 2 different job offers, which helped me pay down 25% of that debt. You can see why I’m a fan of negotiation.

And I kept checking in with that number, frequently, because every time I saw that number get a little less negative, I was thrilled.

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