Last week I had two friends talk to me about Your Money or Your Life.  My evangelizing had convinced them to listen to the book and they both happened to get to the section on calculating your net worth.  Their reactions were identical.  “You didn’t actually do this, did you?!?”

I assured them I had. Though I did it over ten years ago, it had such an impact I still remember how it made me feel. 

So let me explain this net worth exercise.  It is not the one a financial planner would have you do where you list all your investments, cash and maybe the value of your house and car on one side and your debts on the other.  Oh no.  It is much, much more than that.  

It starts with those things but then it has you inventory everything worth more than a dollar that you own.  You note what you paid for it and what you could get for it if you had to sell it. Room by room and your attic, basement, garage, shed, storage unit, basically any place you have stuff.

I tackled one room at a time.  Looking around my living room as I write this, I would include the couch, the chairs, the ottomans, the side tables, the rug, the pillows, the candle holders on the mantle, the mirror over the mantle, the books and puzzles on the shelf, the glass paperweight I bought at an art show, the dog toys… You get the picture.  I would list each item, approximately what I spent on it and what I think I could get now if I sold it.

Here is a subset of what’s in my living room, just as an example:

Item	Bought For	Sell For
Couch	$3000	$400
Candle Holder	$55	$5
Mirror	$400	$75
Art Books	$1500	$200
Dog Toys	$240	$0
TOTAL	$4,195	$680

What an eye opener!!  First, realizing how much stuff I own. Second, realizing how much money I spent. Third, realizing how dramatically it all depreciated. 

I remember when I did my whole house inventory I was amazed at the number of serving platters I owned.  They were purchased over the years, sometimes on trips, painted with designs and colors that looked so beautiful in those locations but just not right in my New England home.  Some of them I had never used. They had obviously appealed to me when I bought them but now they no longer did.  I had spent hard-earned money on things I now couldn’t wait to get rid of!

That was a huge light-bulb moment for me.  I had spent my money on things that cluttered my house and that I now had to spend time and energy getting rid of.  (Not to mention the environmental impact of buying stuff I didn’t need.) 

Your Money or Your Life is very clear about doing the exercise with no judgment or shame.  It is just information.  Ultimately what you are looking to do is align your spending with what is important to you.  I don’t know about your financial life, but in mine, money is finite.  What I spend on serving platters I can’t spend on things that I really value like travel or sketch books.  

Unless you are a minimalist, you are most likely going to cringe when you do this exercise.  That’s okay.  Don’t let that discomfort dissuade you from trying.  Maybe it looks too daunting to even attempt.  So do one room.  Maybe do the “easiest” one.  Once you get that under your belt, do the hardest one.  I promise you, what you learn will be worth the effort.

Read all the articles related to Your Money or Your Life:

• How Much Time Does Your Job Cost You?
• How Much Money Does Your Job Cost You?
• How Much is Your Stuff Worth? (this article)