4 Steps to Amassing Positive Net Worth

I have written numerous articles this month about how bad debt, high interest rates, inflation and foreclosures are bringing our economy and the American middle class to its knees.  This is happening to a degree that will take decades for many people to recover.Here is some advice that if put into action properly is almost guaranteed to yield positive results or at least save you from a long road of financial hardship.  I call it my 4 steps to amassing positive net worth.

1. Develop a skill or acquire an education with something that you enjoy that will set you apart from the masses then go out and put that knowledge to use.  Remember that no matter how smart or skilled you are there is probably someone out there who is just as good or better.  Combining your marketable skills with the ability to establish and leverage an effective network around you will help to ensure that your special abilities do not languish untapped it will also provide a necessary competitive advantage.

   This is an interesting and important step because it doesn’t necessarily apply to a formal education.  I like to contrast myself (I hold an MS from Boston University) with the example of my best friends, who started a painting business in central Florida several years back.   Not only are these guys excellent craftsmen, but they were able to use their networking skills to establish contacts in insurance and related industries at a time when hurricanes were ripping through their area at an alarming rate. 

   Today, with sound financial management and their high school educations, they run a crew of around 15 people providing not only painting services but high quality custom remodeling as well.  They have also begun to expand (diversify) into post-construction clean up and other services.   These 2 brothers managed to turn their skills in painting, remodeling and most importantly networking into a million dollar enterprise inside of 10 years in business together.

2. There is a major problem with debt management in our country that is now up against a wall of tough realities that in many cases will start with rising interest rates followed by inflation and unfortunately will destroy a lot of families as it ends in bankruptcy and financial despair.Understanding where you are financially will make getting where you want to be much more likely.  To start, figure out what your net worth right now really is.  You can do this by subtracting all of your liabilities (debts like car pmts, credit cards and loans) from the sum value of your assets (savings, investments, equity in your home, value of your cars, etc).  If you need some help with this here is a simple tool, or you can just setup a spreadsheet like I did and keep track as things change monthly / quarterly, etc.  If your net worth is less than you thought or even worse…a negative value, here is the best and most simple advice anyone can give you: 

   Stop spending all of your money before you have earned it.

   You will not likely hear this from the financial institutions that keep sending you credit and home equity loan offers, but trust me, this piece of advice is truly priceless.

3. Think like a winner and don’t let Bozos grind you down. The idea behind this is not so much about psyching yourself into believing that you can do anything you set your mind to.  That would personally be too cliché for me to subscribe to.  The notion behind this step is to put behind all of the negative thoughts, fears and anxiety that is preventing you from moving onward and upward in your life.

   There is a second side to this and it has to do with the people around you. Guy Kawasaki has a term for certain people, which I agree is aptly suited.  He refers to them as Bozos.  Avoid them at all costs. Not the people that encourage you and maybe even look to help you to succeed.  I’m talking about those who gave up on themselves long ago who are now looking to bring down anyone they can sink their teeth in to.

4. Never, ever, ever give up.  Giving up will never get you anywhere.  If amassing considerable wealth was easy, then everyone would be rich.  The fact is that most people are not rich or anywhere close to it because most people do not have the will, discipline or determination to make it happen.

   This step is as much about persistence as it is about believing in you.  More often than not, both are necessary.  If you haven’t gotten to a place in your life where you believe in yourself as you should, refer back to #3.