Episode #4 Supplement
"Calculating Your Net Worth"

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Episode #4 The First Step to Becoming a Millionaire in Your Automotive Business

Be sure to download the PDF supplement before listening to the episode.
(It will be easier to follow along with all the numbers I talk about)

When you start regularly tracking your net worth, you’ll start to think about how your everyday spending habits will affect your next quarterly calculation.

You may start to feel a little more guilty about your daily $10 coffee habit; or your trend of buying a brand new car every couple years.

Since you’ll want to see your net worth grow, you’ll WANT to make the small tweaks and changes in your daily spending.  It won’t feel like sacrifices.  You’ll actually enjoy the feeling you get from saving your money MORE than the feeling you get from buying that new car.

Believe it or not, it’s cathartic, and it becomes FUN!  It’s a game!

How do you do it?

Your net worth is simply your assets minus your liabilities.

Asset: anything you own that you can sell for money, 
Or anything that produces money for you,
Or actual money.  

Liability: anything you owe, line of credit, car loan, house, credit card, personal loan from friend, etc.


To track your net worth, you'll make a spreadsheet which you'll enter all your assets and all your liabilities so you arrive at a final number.  You'll also have a space to make notes each quarter to provide clarity on major expenditures.  See the examples below to get an idea of exactly which assets and liabilities we're going to keep track of.
Lastly, you'll have an equation that calculates your progress since the last quarter.

Asset examples:
Personal Cash in bank (not pocket money) DON'T GET CAUGHT UP IN THE MINUTIA!!!!!   Let this be easy.  No fancy math, just basic arithmetic.
Checking account, savings accounts (for emer, annual taxes, known large expenses like CPA, roof, paint house, car, etc.) Don’t have any savings??  We’re going to address that.

IRA balances.

Possible rental properties.  What could you sell them for today?

Balance sheet of your biz (will include biz cash, inventory assets, and debts)

No clothes, furniture, belongings, etc.  

No “toys” hobbies, kayaks, motorcycles, boats, homebrewing equipment, competition BBQ trailer, RV travel trailer, Author Robert Kiyosaki calls these “do-dads”

We don’t count your house or your cars as an asset because you’ll need these no matter what.

 

Liabilities examples:

Home mortgage

Car loans

Toy loans, personal loans

Credit card debt

The point here isn’t 100% pinpoint accuracy to compare people against each other… it’s to measure YOUR progress in all the meaningful areas of YOUR life.  When you do this over a couple years, you’ll see what’s important TO YOU and what’s not.

Once you've arrived at your final net worth number, think forward about how to improve by the next quarter.

After a few quarters, you'll see how your decisions affect your final net worth.  This is fantastic because you will naturally and easily transition your decision-making into the most profitable decisions you can make in any given situation.

Book suggestion: Rich Dad Poor Dad by Robert Kiyosaki.

Shout-out to Marcy and Alex Tran who own and operate Clean Car Custom Detail in Brenham, TX

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