Saturday, January 3, 2009

Madd Money: Using NetworthIQ to Track Your “Game Score”

There are a lot of tools out on the net that allow people to track how they are doing and do something to see where they stand. While many of these tools vary based on their complexity and what they track, personally, I like something that gives someone a high level view to see if they are gaining or losing ground. I liken it to a quote an old colleague of mine said some years back… “my favorite game is Quicken, and I try to beat my high score each month” (LOL!)). To that end, I have found the NetworthIQ tool to be rather cool (I was introduced to this tool via Meg over at “The World of Weath”). If you like something that lets you look at your finances with a feeling of “getting the high score in a game”, then this might be right up your alley :).

NetworthIQ is designed to keep track of your assets and your liabilities in a way that’s fairly straightforward. There are a lot of different ideas as to what constitutes an asset and what constitutes a liability (some people include their house as an asset, others do not consider their primary residence an asset, since it requires money to maintain and does not create actual revenue beyond potential appreciation value or when it gets sold). Regardless of philosophy, NetworthIQ lets you keep track of key areas and determine what your bottom line financial health may be.

NetworthIQ lists the following areas as assets:

Stocks (those not held in retirement accounts)
Bonds (also those not held in retirement accounts)
Retirement (all 401(K), ROTH IRA and whatever other retirement options you have are listed here)
Home (I use the general consensus price from ).
Other Real Estate
Cars (values derived from “Fair Market Value” at
Personal Property
Other (I put my kids 529 plans in this category)

On the liability side, NetworthIQ lists the following:

Home Mortgage
Other Mortgages
Student Loans
Credit Cards
Car Loans

The NetworthIQ page then calculates your total net worth appreciation (or depreciation) and compares it with your monthly liabilities (increaded or decreased) over the previous month, and provides a handy little graph to show how you are doing. What’s more, for those who are a little more willing to “let it all hang out”, you can get a “badge” to display on your site or your blog that gets continuously updated and shows your ups and downs.

My own net worth statement looks *really* skewed by comparison to many others, but that’s because I have no liabilities and own my home free and clear. If I were to exclude my house as an asset in the net worth calculation, we would be about at the median of people in our age group, with perhaps a little less in retirement (unfortunately, that also includes the recent market downturn). The good news is that, since the market has been so battered, this could be a *great* time to bag some investments at a fire sale price (provided of course that my logic of investing in the entire US and International market via index funds is a long term good plan. I’m long term optimistic, but we shall see :) ).

I think this is one of the neater tools out there in that it tracks at a very macro level and just says where you have gone up and where you have gone down. For some, that can be extremely motivating. What’s also interesting is that you can see how you rate compared to other NetworthIQ accounts (though, to be frank, some of these numbers look screwy and I have a strong feeling that some of the entries are totally bogus on the top end). Still when using the median values, you can see some interesting trends as relates to others on the site and their tracking.

I like that NetworthIQ is easy to update, the criteria is easy to understand, and the program is objective. What’s also cool is that you can share this information with others if they want to know where you stand, or if you feel so compelled to share it with others.

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