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How this family went from debt to a seven-figure net worth

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(BPT) – When they first got together, Andy and Nicole Hill thought they were doing fine financially. They made about $130,000 a year. They bought what they wanted and went out to dinner when they felt like it. When they decided to figure out their net worth, they were in for a shock: It was negative $50,000.

Between their mortgage, student loans and other debts, they owed more than they owned. They knew it was time for a change — so their negative net worth motivated them to achieve financial goals that were important to them.

While you may think “net worth” only applies to celebrities and billionaires, everyone has one. Net worth is simply the total of your cash, investments and assets, minus your debts. Knowing your net worth is an important step towards financial independence and wealth building as it provides a picture of your overall financial health, and can help you focus attention on meaningful financial goals.

The Hills’ primary goal was enough financial security so that Nicole could raise their children at home. As their kids grew older, new goals emerged. But what they achieved is something everyone can learn from: They grew their net worth from negative $50,000 to a million dollars in 10 years.

Figuring out your net worth

To determine your net worth, you need to add up your cash, savings and checking accounts, investments and retirement accounts, plus significant assets such as your home. Then subtract debts: home mortgage, car loans, student loans, credit card debt, etc. The remaining figure is your net worth.

Sound challenging? There are some great free tools available to help you accurately track your net worth to the penny and continue to track it over time as your financial situation evolves. Personal Capital’s financial dashboard features a Net Worth Calculator that allows you to calculate and track your net worth over time.

Tips for building net worth

The Hills followed sound financial practices — spending less, saving more — to build their net worth. Start with these simple steps:

  • Figure out where your money goes. Track monthly income and expenses, to see what you’re earning and spending. Determine which expenses are essential, and where you can trim. Short-term sacrifices can help you achieve long-term goals.
  • Pay down debt. Reducing debt makes a big impact on your net worth. Pay down high-interest credit cards or loans to keep debt from increasing, and avoid using credit. Pay more than monthly minimums whenever you can.
  • Earn more. Consider seeking higher-paying work, increasing your hours or getting a side hustle to boost your earnings. The Hills also sold items they didn’t need online for extra cash.

Above all, be flexible when life events interfere with your plan.

“It’s OK to adjust your budget throughout the year or as changes happen,” said Daniel Kellogg, CFP, a financial planning income specialist with Personal Capital. “Building good savings habits, both in the short run with an emergency fund and the long run with retirement savings, helps make your budget more resilient and adaptable.”

Set goals

When forming your own financial plan, having a concrete, meaningful set of goals helps. Possible goals include:

  • Saving for college
  • Funding a small business
  • Going on vacation
  • Buying a home
  • Making home renovations
  • Retiring early

How do you compare?

It can also be insightful to see where you stand in comparison to others your age. Personal Capital conducted proprietary research to determine the average and median net worth of the American investor at different ages.

Based on aggregated, anonymized data pulled on 3/31/2021 and rounded to the nearest dollar, here’s what it looks like:

  • 20s — $10,010
  • 30s — $88,405
  • 40s — $260,445
  • 50s — $439,597
  • 60s — $608,002
  • 70s — $537,941
  • 80s — $450,867

Your earning power and financial responsibilities change over time. People in their 40s through 60s are in their peak earning years, while those in their 70s and older are using that wealth through retirement. Saving as early as possible helps you build your net worth over the decades, using tactics like maximizing your employer’s retirement benefits. If you’re starting later, you may need to be more aggressive in reducing debt and investing.

To meet financial goals, it helps to see the big picture. Understanding your net worth is an effective way of doing that.

To use the Net Worth Calculator and other free financial tools, visit

Featured individual is not a client of PCAC and does not make any endorsements or recommendations about securities offerings or investment strategy.