Definition of Net Worth
Net Worth is the difference between the value of what you own and what you owe. If all you owned was a home worth $200,000 but you owed $150,000 on the mortgage then your net worth would be $50,000.

For a more detailed explanation watch this whiteboard video: How to do a Net Worth Statement

http://youtu.be/8ZLsdileyvM
What’s the secret that doubled our net worth?
We followed Dave Ramsey’s advice. You may not agree with Dave Ramsey’s Debt Snowball Method, you might believe his investment advice is dangerous, or you might just love your credit card rewards too much to hear his message of financial independence.

What you cannot dispute is that we doubled our net worth in 8 years by following Dave Ramsey’s Baby Steps.

Note: The figures below include savings, retirement, and investment accounts. The total does not include the value of our home but does include mortgage and consumer debt. In essence, I did not include personal items or home equity into these figures. 

So, how did this happen?
Our net worth was $74,000 in 2005
Before starting our debt-free journey we had $176,000 in retirement accounts but our net worth was $74,000.

Yep. Our credit card debt, car loans, and the home mortgage caused our net worth to go in the wrong direction. We needed to get on Dave Ramsey’s plan and turn this thing around fast!

I stopped using my credit cards altogether
We created a budget
Our family stopped borrowing more money altogether

We didn’t sell any big-ticket items and I didn’t get another job. We were still able to travel and ate out, we just did it smarter. This allowed us to pay off our final debt, a car loan, in 2006.
Net worth was $121,000 in 2008
After becoming debt free we finished Baby Step 3, the big emergency fund, and started putting about $10,000 a year into retirement.

We also got hit with the Great Recession in 2008 and a bunch of our net worth got cut in half! That’s not a joke, we had an IRA lose 33% of its value, her 401(k) lost 40% and mine lost 50.14%!!!

However, we stuck to Dave Ramsey’s advice and stayed invested in the market. Besides, any investments we were buying were on sale! The market goes up and it goes down, but it eventually goes up. I knew if we stuck to our moneyplan then we’ll be OK - especially since we had an emergency fund.

I also stopped watching TV.
[Tweet "Watching the DOW is like checking your home on Zillow: Unless you are selling, today doesn't matter"]

Net worth was $234,000 in 2011

We continued to save for retirement (Baby Step 4), began saving for our daughter’s future (Baby Step 5) and even paid cash for a kitchen remodel.

No debt and no credit cards put us in a great position for saving money. We continue to budget and spend purposefully, but now we have a little extra for vacations and lifestyle - including a really cool (but expensive) annual vacation in the secluded mountains of Wyoming.

Watch as wranglers drive the horses across a snow-melted river

http://youtu.be/ebkUbjkIZwk
Our net worth is $432,000 today!
I look back at 2005 and think this number is crazy! But it’s real. Yes, the market is doing really well now - but we wouldn’t be where we are if we kept borrowing money.

How we doubled our net worth in 8 years:

We got on a budget
We stopped borrowing money
We paid off all of our consumer debt
We put 3 months worth of expenses in emergency savings
We increased our retirement contributions once we got out of debt
Our plan has us saving for our daughter’s future at least six more years
We continue to pay down our mortgage and put money aside for car replacement, new windows, etc.

While the totals above appear to be five times growth, I am not making that claim. It’s because they include the contributions we have been making during this awesome process. We have more than doubled our net worth since 2005 net of initial investments when adjusted for contributions.