{"id":79191,"date":"2018-08-19T11:00:18","date_gmt":"2018-08-19T17:00:18","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=79191"},"modified":"2024-02-13T18:31:11","modified_gmt":"2024-02-14T01:31:11","slug":"2016-07-30-retire-earlywealthuseless","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2016-07-30-retire-earlywealthuseless","title":{"rendered":"Want to Retire Early? Sorry, But Much of Your Net Worth May Not Help"},"content":{"rendered":"

In spite of certain political talk to the contrary, it\u2019s pretty clear to most of us now that we\u2019ve just come out of a recession. It\u2019s likely that more and more Americans are feeling pretty good about their finances. It\u2019s likely that folks haven\u2019t been richer in many years than they are today, except for maybe in 2006 during the peak of the housing bubble.<\/span><\/p>\n

It\u2019s likely that folks are making decent money again and that they don\u2019t feel like every day is a struggle to stay afloat. People might even be putting away some money for retirement and seeing their paper wealth begin to grow.<\/span><\/p>\n

Except they\u2019re doing it all wrong.<\/span><\/p>\n

After reading this article, you aren\u2019t going to like me very much. It\u2019s going to start out informative, and I\u2019ll show you how to calculate your net worth. Some of you will feel good about yourselves after calculating that number, and others will feel pretty lousy. <\/span><\/p>\n

But then, I\u2019m going to make most of the folks who\u00a0read this feel lousy by pointing out why almost all of your wealth might be completely useless, why your net worth has almost no impact on your ability to make day-to-day decisions, and why you are really deep in a financial mess that chains you to your job and makes you a slave to money.<\/span><\/p>\n

In this article, you are going to see what the difference is between net worth and <\/span>useful <\/span><\/i>net worth. You\u2019re going to see how most folks under 40 with a goal of <\/span>not<\/span><\/i> being forced to work for a salary until the age of 59 and a half are in pretty poor financial shape and are taking almost no action to improve their positions.<\/span><\/p>\n

Worse than that, they <\/span>think <\/span><\/i>that they are making the right choices in life. Choices that conventional wisdom tells us are correct and responsible.<\/span><\/p>\n

Take a deep breath, and let\u2019s dive in.<\/span><\/p>\n

\"due_diligence_save_money\"<\/p>\n

What is Net Worth?<\/h2>\n

One\u2019s net worth is simply the number of assets that one owns, minus the debts that one <\/span>owes<\/span>. Folks track net worth in a variety of ways and have a variety of theories about the best way to do this.<\/span><\/p>\n

Related:<\/strong> At Age 26, I\u2019m on the Brink of Financial Freedom: Here\u2019s How I Did It<\/a><\/em><\/p>\n

Here\u2019s a common example of how a typical American might track his or her net worth:<\/span><\/p>\n

Sam has the following assets to his name:<\/span><\/i><\/p>\n