Continuing our financial series, let’s turn to a net worth statement.

You can find a form for outlining your net worth here:  http://www.washingtonpost.com/wp-srv/business/pdf/networth.pdf. To fill out these forms, you’ll need the most recent statements for all of your deposit accounts — checking and savings, 401k, IRA, Roth IRA, mutual funds, college funds, bonds, etc. Yes, it’s very scary to look at those accounts now. Just accept that they will have lost value – possibly a great deal of value. You also need to itemize all your debt: mortgage, student loans, car payments, credit card debt. medical debt, etc.

Once you have those columns complete, all up all your assets and all your liabilities.

Your net worth gives you a sense of your financial position. The ultimate goal is for your net worth to be a positive number, meaning that your assets are greater than your liabilities. Now, that won’t always be the case. If you are early in your career, your student debt will be higher and you won’t have had much time to save. Also, in a market downturn, your investments may fall drastically, with a commensurate impact on your net worth. A fall in housing prices may send your mortgage underwater (meaning that you owe more than the house is worth).

If you are employed, it’s a good time to look for ways to decrease your debt. You don’t know what your investments will do, but you know that getting rid of debt will save you the interest you are paying. It’s not unusual for credit card debt to charge interest rates of 18%. Very few legal investments offer that kind of guaranteed return.

Once your essential expenses and critical savings (see next week’s post) are covered, look at ways you can throw every additional cent at your debt. If you are working from home, use the money you would have spent on commuting and dry cleaning. Use the extra money your get from your side hustle. Give up one streaming service or pay channel. Throw everything you can at the lowest debt until it’s gone. Then move to the next highest debt. Keep going, even after the economy returns to normal. It won’t be fast, but when bad things happen (like now), it will be immensely comforting to know that debt isn’t hanging over your head.

If you lost your job due to the pandemic, ignore this advice! Go back and read my last post for more appropriate advice.