Introduction to Net Worth.

1. How much are
you worth?
(Net Worth)
Money Suit by flickr user zoomar

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5. Mr. T’s family has decided to buy a larger home, and the date of
possession is April 1.
HOMEWORK
The price of the home is $135 000, and he has $45 000 as a down
payment. He will buy homeowners insurance on the new home for
$425, but will receive a refund of $300 from his previous home
insurance policy. He has the new home appraised by a real estate
agent, and the fee is $250. The bank requires a land survey which costs
$550. His legal fees, including land transfer taxes and disbursements,
are $875.The movers charged $1200 for moving his furniture and other
belongings, and the company he works for paid half of this. The family
decided to install new carpets into part of the house at a cost of $2400
plus PST and GST (7% each). He did the installation himself, and so
there were no installation charges. They also bought a new fridge for
$940 plus PST and GST (7% each) to replace the old one that did not fit
into the new kitchen. The previous owner had paid the property taxes of
$2350 for the period January 1 to December 31, and he had to pay for
his share of the taxes. The cost of hooking up telephone and TV are
$45.
Determine the additional costs of moving for Mr. T and his family.

6. Ms. Johnston has decided to buy a home. She requires a $65 000
mortgage. The mortgage interest rate is 7.75%, and she will repay
the mortgage with monthly payments. She needs to decide whether
she will select a 20- or 15-year amortization term. How much do her
monthly payments increase, and how much money will she save if
she chooses a 15-year term instead of a 20-year term? Would you
advise Ms. Johnston to get a 15- or 20-year mortgage? Why?
HOMEWORK

7. The Meaning of Net Worth
Net Worth is the difference between your assets and your
liabilities. The term assets refers to the value of everything you
own, including any cash or bank deposits, material goods, and
investments. A liability is any debt you need to pay.
Net worth = Assets - Liabilities
Equity is the same as net worth. Note that
equity and 'total assets' are not the same.

8. Assets
When completing a Net Worth Statement (which will be shown
later), it is useful to subdivide the assets into three categories:

9. Assets
When completing a Net Worth Statement (which will be shown
later), it is useful to subdivide the assets into three categories:
1. Liquid Assets: These include cash accounts (i.e., your
chequing and savings accounts), T-bills, money market funds --
any money you can get at quickly and without penalty. This is
money available in case of emergency, and also in case of
investment opportunities.

10. Assets
When completing a Net Worth Statement (which will be shown
later), it is useful to subdivide the assets into three categories:
1. Liquid Assets: These include cash accounts (i.e., your
chequing and savings accounts), T-bills, money market funds --
any money you can get at quickly and without penalty. This is
money available in case of emergency, and also in case of
investment opportunities.
2. Semi-Liquid Assets: These include longer-term investments
such as stocks, bonds, mutual funds, RRSPs, or real estate.
These investments are intended to provide for major future
needs such as purchasing a house or retirement.

11. Assets
When completing a Net Worth Statement (which will be shown
later), it is useful to subdivide the assets into three categories:
1. Liquid Assets: These include cash accounts (i.e., your
chequing and savings accounts), T-bills, money market funds --
any money you can get at quickly and without penalty. This is
money available in case of emergency, and also in case of
investment opportunities.
2. Semi-Liquid Assets: These include longer-term investments
such as stocks, bonds, mutual funds, RRSPs, or real estate.
These investments are intended to provide for major future
needs such as purchasing a house or retirement.
3. Non-Liquid Assets: These include material goods such as
your house, car, computer, and other personal property. These
items are intended for your long-term personal use, and are not
easily converted to cash.

12. Liabilities
Liabilities are divided into two types:

13. Liabilities
Liabilities are divided into two types:
1. Short-Term Debts: These are debts that must be paid within
the next 12 months. These include credit card debts, consumer
loans, and smaller personal debts.

14. Liabilities
Liabilities are divided into two types:
1. Short-Term Debts: These are debts that must be paid within
the next 12 months. These include credit card debts, consumer
loans, and smaller personal debts.
2. Long-Term Debts: These are used for two purposes:
• to pay for investments such as real estate, including your home
• to pay for major purchases such as a summer cottage, motor home,
or car