Comments on: Debtor's Prison

By: Paying down debt … an instant Net Worth fix? « How to Make 7 Million in 7 Years™

Fri, 27 Mar 2009 09:49:48 +0000

[...] Diane asks: I’m withdrawing the funds in the IRA to pay [some of my] debt. So, is my Net Worth actually [...]

By: Adrian

Adrian — Tue, 17 Mar 2009 13:26:50 +0000

@ Diane – My pleasure!

BTW: I think I’ve turned this ‘math lesson’ into a post, because it’s a common error … you get top billing – it’s the cost of ‘doing business’ with me

By: Diane

Diane — Tue, 17 Mar 2009 00:07:29 +0000

Hey! Thanks for that math lesson, Adrian…and to think I used to be a whiz at math…we are too computer-dependent and I art guilty as the rest.

I made $20 bucks last week that I a quite proud of. It’s like making the first $1 in a new venture. But I am still spending money in pursuit of that $20 becoming $20k and then more…another lesson here – where I spend it to increase the worth…

Thanks, Adrian!

By: Adrian

Adrian — Sat, 14 Mar 2009 08:05:59 +0000

@ Diane – That’s actually not the case; try updating your NWiQ profile by, say, taking $10k from your retirement account and reducing one of your debts by the same amount … you’ll see that your Networth does not change.

What will change is that you will earn less in your retirement account, but you will save more interest on your debts. You have to decide which of those two changes put more money into your pocket ….

… it’s what you do with THAT money that will dictate what happens to your future Net Worth!

So, the real issue right now, is that you are doing nothing to increase your Net Worth … simple solution, mate: add income. No worries.

By: Diane

Diane — Sat, 14 Mar 2009 02:57:11 +0000

No more 401k, Adrian – it’s all in IRAs now.

I’m also withdrawing the funds in the IRA to pay the debts mentioned above. So, the NetWorth is actually decreasing.

With the need to pay taxes next, I expect a huge decrease and then a re-evaluation of where that leaves me for that final question of yours (picture the hands to the sides of the face): What to do, what to do…

But that is when the question needs to be revisited – once the reckoning has been done with the IRS for 2008 and 2009-to-date.

No worries, eh, mate?

By: Adrian

Adrian — Fri, 13 Mar 2009 07:22:43 +0000

@ Diane – Right now, from what I can gather, you are not earning an income? If that’s not correct, we’ll pick it up in the next post ….

If so, you have money in a retirement account that you can move from the left hand side (ie asset) of your NWiQ statement to the right hand side (ie liability).

However, you will see no immediate change in your NetWorth!

Longer term, of course, you will see a return as the income from your 401k is likely to be offset by the interest that you are paying on the loans and you can then accumulate the net savings.

So, what to do … what to do?

By: Mark

Mark — Fri, 13 Mar 2009 04:28:22 +0000

@Diane – I’m sure tings will turn around. We all hope it is sooner rather than later.

By: Scott

Scott — Thu, 12 Mar 2009 15:00:13 +0000

Diane, I certainly know what you are going through. Money Making 101 can be a real struggle to work through and my wife and I certainly went through the hard-knocks as we struggled through it ourselves for a few years. Keep up the good fight, it is well worth it!