Reply #16: Are you well off? You may be surprised

[54anickel]

http://www.chron.com/disp/story.mpl/business/4451423.html

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You can start by answering a handful of questions.

All are simple.

You won't need anything more complicated than a pencil, a sheet of paper and the basket of documents you use for doing your income tax return.

• What is your net worth?
This is the sum of all your assets and liabilities.

This means your financial assets, your home or condo, if you own one, and your household assets such as cars, furnishings, artwork and jewelry.

Once you get the total assets, you subtract all of your debts.

It's a scary number for lots of people because it's often negative. You can get an idea of where you stand relative to others your age by checking the wealth scoreboard on my Web site, www.scottburns.com. Hint: A million dollars isn't what it used to be.

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• What is the composition of your assets?
You get these figures by dividing each of your asset categories by your total assets. If the percentage in household assets — cars, furnishings and other household items — is large and growing, you're probably heading for trouble.

Why? Because your household assets may be precious to you, but they're mostly yard sale junk to everyone else.

Worse, if you have valuable items, middlemen will take about half their sale value.

The greater your household assets relative to your other assets, the more vulnerable you are to income loss because you've got a lot of stuff to support.

While all of us like goodies, our long-term security is determined by the growth of our financial assets. They are the assets that earn cash returns.

Did Paulson write that one?

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