Debt freedom is overrated so says Tiffany Aliche, founder ofThe Budgetnista.
Debt freedom isagoal, debt freedom is notthegoal, said the financial educator.
Thegoal should be wealth.
Rather than tracking only how much you owe, Aliche noted it’s also important to know how much you own when making financial decisions. Photo courtesy of Tiffany Aliche
If the phrase net worth sounds intimidating and banker-y, it doesnt have to be.
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What Is Net Worth?
When it comes to numbers in personal finance, its easy to become hyper focused on a single aspect.
But your net worth includes a more complete, current picture of what you owe vs. what you own.
Its almost like taking your financial temperature, Aliche said.
How Do You Calculate Your Net Worth?
Lets start by digging into liabilities, since you probably have a better idea of what they might be.
Why Is Net Worth Important?
Net worth is more than a static number on a ledger since assets and liabilities can change in value.
If you only focus on debt, for instance, consider what youre missing from the big picture.
For example:
You reduced your debt by $32,000.
Thats good, right?
Which brings us to how it’s possible for you to increase your net worth.
How Can You Increase Your Net Worth?
I thought I was a good saver, but I was just a good delayed spender, she said.
I used to save, save, save, go on a vacation.
Save, save, save, buy a car.
Once you start investing in long-term strategies, those investments can start to earn you money passively.
I no longer have to work as preschool teacher TIffany because my business does the work, Aliche said.
Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder.
Readher bio and other work here, then catch her on Twitter @TiffanyWendeln.
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