You should keep your personal property inventory in a

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damage. You should keep your personal property inventory in a separate place outside of the home (perhaps a safe deposit box in a bank). It is also a good idea to take pictures of valuables to prove you own them and show their condition. 6. Liabilities These are defined as debts. When you list your liabilities include everything you owe to other people. More formal kinds of debt include car loans. Your regular monthly bills are not considered liabilities. Just the total
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amount you still owe on each debt. Once you finish your list total them up. You can’t avoid liabilities when you need to borrow money for cars, houses, and college. 7. Calculate Your Net Worth Understand how to calculate net worth Understand Solvent vs. Insolvent 8. Insolvency People who are insolvent have borrowed more money than they have in assets. People who are insolvent may have difficulties paying their debt with a life changing event People who are insolvent have fewer choices because they have to keep paying their liabilities. 9. Personal Net Worth and Credit Your net worth helps you keep track of how you spend your money. What do you have to show for your spending? If you want to borrow money for a house or a car, how much interest you will pay will be based on your credit history and net worth. Creditors (people who loan your money, like banks) will review your net worth to see how well you handle your money. When banks give loans, they will want something in return in case you default on your loan (fail to repay it). Banks want you to guarantee you will repay the loan. This guarantee is called collateral.
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Collateral is defined as an item that the bank can take and sell if you don't repay the loan. Example of collateral - your car title is held by the bank until you fully pay off the loan. If you fail to pay off the loan, this asset can be repossessed. 10. Co-Signer Co-signer is promising the bank they will pay back the loan if you don’t. Be careful pledging items as collateral. You can lose these assets if you have a life-changing event. REFLECTION ANSWER THE NET WORTH REVIEW QUESTIONS ON D2L
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  • Debt, Co-Signer Co-signer

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