海角大神

The first time I calculated our family鈥檚 combined net worth, it was negative. And it hurt.

At that time, we lived in an apartment. Our only significant assets were our two cars, which we had loans on. We also had student loans, plus ample credit card debt.

When you add up those assets and subtract those debts 鈥� you don鈥檛 get a happy result.

A lot of people freshly out of college face this same difficulty, though, and it鈥檚 disheartening. If you think about your situation in the world and realize that if you sold off every single possession you own and you鈥檇聽still聽be in debt, it feels hopeless.聽

When I was in that very situation, a few things helped make it tolerable.

贵颈谤蝉迟,听I focused almost entirely on my forward progress, not the overall total.聽Rather than thinking about the fact that my net worth was -$20,000, I focused instead on the fact that my net worth went up by $1,000 over the last month.

This required me to calculate my net worth on a regular basis and compare it to previous calculations,something I still do. I find that my previous situations provide the most powerful comparison for my current financial state.

With that change in the number I focused on came a change in approach to my finances.聽Since I was deeply concerned about maximizing the change from month to month,聽I began to heavily focus on frugality.

Making moves that directly reduced my spending produced a dramatic positive impact on my monthly improvement.

The money saved from frugal moves was largely tossed toward extra debt payments.聽As the balance of the debts went down, more and more of my monthly debt payment went toward the balance rather than toward interest, which meant that I was pretty consistently improving my 鈥渕onthly net worth change,鈥� which was the only number I was really focusing on.

After a while,聽鈥渂eating鈥� my previous record for change became a goal each month.聽If our net worth went up by $2,500 last month, then I wanted to beat that over the following month. If I managed to do that, then I had a new record 鈥� if I didn鈥檛, I wouldn鈥檛 beat myself up, but I鈥檇 look hard for reasons聽why.

What I found was that, once I locked onto this approach, I didn鈥檛 really have any motivation to do it differently, even when my net worth went into the positive category (which it did about six months later).

In fact,聽I still use the change in our financial situation as the primary measure of our success.聽I mostly compare things to how they were a quarter ago and a year ago and I鈥檝e started adjusting things a bit based on the fluctuations of the stock market (as the ups and downs of the S&P 500 now have more impact on the actual numbers than any real moves I make).

If your net worth is negative, don鈥檛 get disheartened. Instead, focus on the聽positive聽change you鈥檙e making to it each month. Make聽that聽number your focus and strive to increase聽that聽number each month. If you do that, your net worth will naturally follow.

The post聽聽appeared first on聽.