Reality Check

What are you worth? Can you pay your bills?

You cannot develop a plan unless you know where you are. Where you are financially right now includes two areas:

	your assets and liabilities, and
	your ability to pay your bills each month

Assets and Liabilities

Your assets (what you own, such as a car), and your liabilities (what you owe, such as the balance owing on your credit card) determine your net worth.

If you have a positive net worth, meaning what you own is worth more than what you owe, there are many strategies you can use to deal with your debts.

Paying Bills Each Month

Can you pay your bills each month? Or are you short at the end of the month? It is possible to have a positive net worth (see above), but still be unable to pay your bills each month.

For example, if you own a $20,000 car with a $15,000 car loan, you have a positive net worth. But if you can't make the car payments every month, you have a serious financial problem.

If your liabilities are larger than your assets, and you are having trouble making your payments each month, review our strategies for dealing with your money problems.

If you can't pay your bills, click here to learn what your options are.

If your debts are under control, go on to the next step: household budgeting.