Vehicles, furniture, appliances, stocks, real property or real estate are other examples of personal and real proper-ties or assets. Liabilities are what is owed. These include bills, charge accounts, loans for a mortgage and educational vehicles. These obligations may be due within the year or for a longer time as with a mortgage loan. A home mortgage loan can be written for up to 40 years.
Net worth is determined by subtracting total liabilities from total assets.
Net worth provides an exact picture of your family s financial situation. Ideally, assets are greater than liabilities and net worth increases each year. Net worth also measures progress toward reducing debt loan. It is very important for a family to know their total debt loan. A family s total debt loan, not including a mortgage loan, should be less than 20 percent of your annual take-home pay.