Assets and Debts=Net Worth. Homemakers Do You Know Your Net Worth?

Homemakers, do you know what you are worth? Do you know how much you owe? In other words, do you know your assets and your debts? These two equal your net worth. How do you go about knowing your financial status?

Choose a quiet time, or a time when both of you are in a good mood and pop the question. Very few couples talk about their present financial situation and their future financial goals. I did not ask my husband about money before we got married, nor did I ask 10 years later. However; due to an illness, the time had come for me to pop the question. He was reluctant to share, given this was his second marriage, but with gentle prying over time I became to understand our debts and assets, in other words, our net worth. You decide how to approach your spouse, because most people do not know their net worth (again the difference between all the things of value that you own, and all the debts you owe.) until there is a crisis. Crisis could mean death of a spouse, a debilitating illness or in most cases, divorce. I have met many older women, who do not have a clue or do not care to know about their finances. Suddenly, her husband dies and she is shocked to find out their house they have lived in for 40 years is not paid off and that he took out a second mortgage for reasons unknown to you. This is so common with young and old couples. It happens and no women, should be victimized twice, first the shock and grief of the break-up and then the shock of finding out there is no savings, but loads of debt. Homemakers, who choose to stay at home are especially vulnerable, given they are so busy with the daily living of raising a family. As mothers, we rely, to heavily on our spouses to be the financial wizards. I know of friends and relatives who are left in the financial dark after a death or divorce. Don't let this happen to you. Here are some general guidelines with web links to help motivate you to start talking to your spouse about your assets and debts.

1. Homemakers need to have their own bank account.

2. Whether you are planning to get married, have been married for 1 or 40 years, talk to your spouse about your assets and your debts. DO NOT think that because he loves you till death do you part, that he alone, should be the one, who keeps track of your assets and debts. You have to gain some financial control. This does not diminish your role as a mother or a wife; gaining control of your money will only make you stronger. You will feel better, knowing that you can take care of your family. Most articles I found on the web are about gaining financial freedom after a divorce or death. Do not wait, act now for your families future.

3. You may be surprised, your husband may like the idea you are taking some of the financial burden away from him. I invest in Roth's IRAs for myself and my husband. I look out for banks with good Certificate of Deposit rates. I have my own bank account and I have invested in companies that offer DRIPS or Dividend re-investment programs, like P@G. One can go online and invest a minimum of $250.00. It just takes a push to get your self-confidence up. Again, it is easy to start by opening your own account.

4. Check out investment companies, such as Vanguard. Their site is easy to follow and you can start learning about investing.

5. Best advise, is don't be afraid, don't wait for a crisis.

6. About.com with Deborah Fowls and Jean Chats from NBC news financial editor, who has appeared on Oprah many times talking to women about being aware of their financial situation are two places you can start.

7. I like Deborah Fowls lists of assets and debts that you can print out and take to your spouse as a way of getting the communication going. Another great site dedicated to the entire family is http://www.womens-finance.com/index.shtml. The web site has print-outs, quizzes to test your financial knowledge, advice to teach preschoolers to teenagers about money. It is easy to understand, a web site I refer to about the difference between traditional IRAs and Roth IRAs.

The list available at http://financialplan.about.com/library/n_blnetworth.html looks like this:

Assets/ Current Value

Cash in savings accounts

Cash in checking accounts

Certificates of Deposits

Cash on hand

Money Market Acct.

Money owed to me (rent etc.)

Cash value of life insurance

Savings Bonds

Stocks

Bonds

Mutual Funds

Vested value of stock options

other investments

Individual Retirement Acct (IRAs)

Keogh Accounts

401(K) or 403(b)

other retirement plans

Market value of your home

Market value of other real estate

Blue Book Value of Cars/Trucks

Boats, Planes, other vehicles

Jewelry

Collectibles

Furnishings and other personal property

other

TOTAL ASSETS=?

Now take a sheet or print one off of Deborah Fowls site and list total liabilities.

LIABILITIES include:

Mortgages

Car loans

Bank loans

Student loans

Home equity loans

other loans

Credit Card Balances

/Real Estate taxes owed

Income taxes owed

other taxes owed

premiums owed on life insurance

college tuitions/expenses

other debts
TOTAL YOUR LIABILITIES =?
Using these sheets may provide a bridge to get you and your partner engaged in a financial conversation. *Remember to choose an appropriate time to talk, not after an argument over not spending enough time with the kids.

Another tool that is available as a print out is called the Debt to Income Ratio Calculation. Don't be afraid of these math terms, it simply means, how much debt you have compared to how much money you and or your spouse earn. Mortgage lenders use this formula. To calculate you need the following information:

Monthly mortgage payment(including property taxes and insurance)or rent

Monthly home equity line of credit or loan payment

Monthly car payments

Monthly revolving credit payments(furniture,appliance loans etc.)

Monthly student loans

Monthly minimum credit card payments times two(making only minimum payments on your credit card will never get you out of debt)

other monthly loans

Monthly child support

Monthly medical/dental payments

Monthly utilities (cell phone, land line phone, heat, electricity, cable etc.

NOW TOTAL YOUR DEBT PAYMENTS

Jot down your monthly (take home) pay, annual bonuses and overtime, divided by 12 and other annual income, divided by 12, give you your monthly income. Take your total monthly debt payments divided by total monthly income which will equal Debt to Income Ratio.

Lenders will tell you that a 36% or lower debt to income ratio is good. But, you have to look at your personal situation, 36% does not fit all people. You may have more dependents, an elderly parent, a special needs child etc and you may spend more.

This whole exercise may be an eye-opener for both partners. You may realize you are living day to day without giving thought for your families future. Your husband may be grateful and realize that you both have work to do to get your financial house in order. Life is unpredictable and inevitably change will happen in your life. Be financially prepared for your sake and for the sake of your dependents.

The following is a list of documents that you need to organize and store in a safe, fire-proof box.

• your wills
• social security benefits (the government sends out a yearly breakdown of your social security benefits)
• stocks, bonds, securities
• important records(kids social security numbers, passports, birth certificates, health records, stock certificates etc.)
• Banking statements
• loans and other debts
• life insurance policies
• medical insurance
• pension plans from present and past employers
• real estate records(deeds)
• personal property
• safety deposit box information
• business/employment details(current boss, phone contact list etc.)
• tax records
  

Take the time to educate yourself about your financial situation, your family, including your husband or partner will appreciate your efforts, which will lead to a healthier financial future.

I recently ordered from Amazon.com for under $6.00, First Wives' Tool Kit(paperback) by Carol REIT. It is a kit geared to help divorce woman get their finances in order, but I thought it would be appropriate for all persons who are in any relationship that require making financial decisions.