I have written about income, expenses and building savings, but I also need to address the issue of assets, debt and net worth.

You should create a simple balance sheet.  List all your major assets on one side and list all your debts on the other side.  If your assets exceed your debt then you have positive net worth.  If your debts exceed your assets, you have balance sheet problems.

Debt is a personal obligation – remember YOYO – you’re on your own.  How are you going to get your debt level to a manageable level?  It is not something you can achieve in a short time, so back to a YOYO rule – start with small goals.  What can you do this year to help you achieve your debt reduction goals?

A few rules of thumb to help you review your list of debts:

* Your car loan should not exceed 10% of your take home pay

* Your student loans should not exceed what you expect to earn during your first year after getting your degree

* You should be able to pay off your student loans within ten years

Many financial plans include the following three goals:  build savings, reduce debt and invest for the future.  The next few posts will focus on managing your debt.

Financial fact:  As of 2012 43% of 25 year olds have student loans with an average loan balance of $20,326.  Over half of all student debt is held by households whose net worth is under $8,500.  (Bloomberg BusinessWeek, Correlations – Student Debt Explodes, Evan Applegate)

Comment:  I’m blogging in Chicago, so here is a view of the city from North Pond in Lincoln Park.