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Difference Between Assets and Liabilities
To put a clearer distinction on the difference between assets and liabilities, we will outline a few of each to help you determine the difference. online cash advance
As mentioned above assets are the things that you own. However, what you own and what you owe can get a little confusing sometimes. online cash advance
A home is a perfect example and is considered an asset, but it is also a liability. When creating a financial baseline by determining your net worth, you need to record the equitable portion of your home’s value as an asset and the rest of which you owe, as a liability.
For example, if my house was worth $200,000 and I still owed $80,000 on the home’s mortgage, I would declare $120,000 as an asset, because selling the home tomorrow would yield the equitable portion of the mortgage that has been acquired through both appreciation over time as well as individual monthly payments.
Cars should be done the same way. With cars you will want to get the blue book value and compare that to what you may still owe on the auto online cash advance.
Other Assets to Include
Other things that would be considered assets would be the current values in your checking and savings accounts, 401k’s or other retirement accounts. If you have any stocks, bonds or mutual funds you will want to be sure to include those in your asset allocation as well. online cash advance
Other Liabilities to Include
Liabilities are a little more straightforward. Anything that you owe is considered a liability. Outstandingpersonal online cash advances, online cash advances, auto online cash advances and credit card balances are all examples of liabilities.
The Final Calculation
Now that you have determined what your assets and liabilities are as well as the values of each, you will want to subtract the total value of your liabilities from the total value of your assets. The difference will be your net worth.
Below is an illustrated example : online cash advance
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