First Steps to Solvency

getmore4less

ryanm8655 said:

enthusiasticsaver said:

Goodness lots going on over on your diary today @alt80. I won't go on about your wife as I think I have already said most in the past. I did wonder if the BS she was giving you was a reaction to provoke you and I agree that you both seem to have fallen into a pattern of you infantilising her by protecting her from real life (possibly something her parents did too) and then showering her with gifts when you do something bad like the substances or whatever. I still think you need to give her some responsibility for part of the budget so she feels she has some control like personal spends in a separate account so long as you also do the same. So household account for bills and debt and  entertainment and you apportion a certain amount to you and her. Yes it means you can't control her spends but she has to stay in budget. It worked for us and relieved me of so much stress as I no longer had to chase my DH for details of his spends. Your choice though and given you are going to be using a 0% purchase card for variable spends so you can meet the deadlines on the CCs it might be something to consider when those are cleared. 

Useful exercise on the net net worth and I have always done this as I think I said right at the beginning of your diary. You can't say you have a 7 figure portfolio when it is heavily leveraged and now you are thinking clearly you can see that. The cars bring it down but you know that. I do think you are selling yourself short though as from the sound of it you have two successful businesses which provide you with an income most people dream about so you have to include that too. Any pension? Get the personal finances running like your business and you could well get those cars for cash with a substantial discount. Obviously not many have 6 figures in cash but some of us have it in investments which can be quickly turned to cash so still working for you. You have a good head for figures and seem good at the planning so at some point you should learn about investing, stocks and shares isas and SIPPs which are the most tax efficient way of investing particularly for high earners. When I say investing I mean a properly thought out investment strategy not stock picking or currency trading. That's for the future though when the debt is gone and you have an emergency savings buffer. 

Big congratulations on month 1 of staying sober and you deserve an award for dealing with the upsets with your wife. I think she needs to really think about what she wants from her life and how she can take responsibility to make that happen. 

Exactly my thoughts and I guess my own net worth is less depressing when I consider my pensions 😂

Quite an important part of the totals 
many gear there net worth to longer term savings/investments while they are getting income, often directed to  pensions, ISA and paying down debt(buying a house).

That leaves the in hand assets often just house equity  and enough to keep going( emergency fund ) with income covering the needs and wants
There are ISA millionaires now that have a tax free income stream in their futures.

Yours is the retained in the business so less visible than a pension pot or an ISA,  just a bunch if unlisted shares in couple of Ltd companies.
 
I value the state pension and any fixed income like final salary pensions at 20-25 time the income they provide as that is 4%-5% from a pot of cash(many now forecast at lower rate as yields are down)

You are pulling effectively £150k+ gross from your business that makes them worth at least £3m as an asset to you(if you own the shares).

Although you are currently a fee earner, I suspect you could restructure to have that sustained income with you doing very little with both business ticking over nicely chucking loads of money at you.

You are successful no reason to stop now
A saying that come to mind.
What's the difference between a millionaire an a multimillionaire?
The millionaire stopped when they got to the first million. 

You could think of this as an inheritance from your old self  to your new self.
See what the new self can achieve with this as the starting point 
Can you improve on what old self achieved starting from nothing?

Smashing the Alcohol free(you, not me)

getmore4less

Stumbled on a couple of reads this morning.

Some interesting points in this one.
https://www.businessinsider.com/millionaire-habits-how-to-build-wealth-time-energy-money-2019-4?r=US&IR=T

like this one
He added: "A budget is great for the early phases of a financial plan, but if you can grow your income and develop self-discipline not to spend, it's not vital to your success later on."

This little story has some interesting life lessons also had me guessing to the end the company he made it with as I was active in the sector at that time, many will recognise the name when they see it.
In the early 2000s, I was an early employee at a Silicon Valley technology company that designs and markets cutting-edge computer processing chips. When I started, there were a few dozen other people.
https://www.cnbc.com/2017/03/28/i-was-a-multi-millionaire-by-27-heres-what-i-learned.html

RelievedSheff

Out of interest I did a similar exercise to your net worth this morning @Alt80. Hadn't really done this before as I didn't think it necessary but just out of interest here were the figures as of yesterday.

Feb-21                Balance                            Value                

C3                      £2896.00                            £-          

C4                      £5078.00                           £-          

C5                      £8078.00                           £-          

Loan                   £200.00                            £-                                 

                                

Total Debt         £19,432                 

                                          

Res Mortgage    £181, 500                   £215,000      

Hyundai             £ 3180                        £6,500

Sierra                £0                                £10,000

Nissan              £0                                 £500

Boat                  £0                                £28,000

Savings            £0                                  £1134

Pension           £0                                   £83,000

                                         

Total Debt +  Res Mortgage  £200,932                  

Total Assets       £344,134   

Net Worth         £143,202

I was pleasantly surprised to be honest.

Willowtree222

Think I'd be surprised with mine too x

alt80

Happy Friday! Day off with son today so been a part timer this week ha. Also 31 days no substances actually pretty pleased with that. @RelievedSheff think of me when you’re cracking that first bottle open lol almost feel like a drink to toast not having a drink FML. Decent night’s sleep though def got 7 hours no interruptions, !!!!!! miracle for me ha.

Counting the value (- liabilities/ taxes (no accountant so some savings no doubt ha)) of the business/ portfolio/ comm & dev property a realistic net worth assessment falls between £2.25-£2.5M (I’ll be in the right ballpark for main business but ultimately have a somewhat rarefied appreciation (given my profession) that a business from the POV of it being sold as a going concern is 100 only worth what someone is willing to pay and the seller is willing to let it go for lol). I’ve never counted the main business/ commercial even in my BS - always regarded that as irrelevant as I’ve no intention of selling up at any point. From a personal point of view at my stage in life, if I liquidated the business assets tomorrow (hypothetically) I could def have a few years living like a king but what would I do after that? - I’d have nothing and need to start from scratch again at 45 lol or I could reinvest the cash into more passive investments but that wouldn’t generate the same income for me or the growth from the business side (reinvestment of retained) so it’s a bit pointless counting this stuff. Absolutely no idea where you’re getting the £3M figure from @getmore4less even I can’t come up with a multiplier like that to value my main ltd ha however seems you’re valuing as what it’s worth to me (over 20 years? - banking on me being dead by 60 lol?) rather than the idea of actually selling the lot?

I appreciate looking at it from this point of view makes my debts/ position look not so bad, that’s the road I’ve been down for years but 100 the banks still want their money at the end of the day and not going to wait for me deciding to sell my business or portfolio or that really would be way into the never never haha. The bulk of the figure is tied up in the value of my main business and portfolio/ commercial/ development property. I was already a bit silly with the cash that made it’s way into my hand at the end of the month but the moment I saw myself as being ‘worth 7 figures’ I stopped being the lad who went to the shop three times before buying haha (counted as personal assets and value of residential portfolio but it works out there or thereabouts the same doing it ‘properly’). My point is this doesn’t change things being somewhat stretched for me day to day or the need to rein in my personal spends. Likewise I’d equate counting pensions for those of you employed as largely irrelevant if you’re aiming to achieve what I was from the exercise - how bad things are from a personal POV right now not counting business assets or pensions; which @enthusiasticsaver I have none if we’re talking the traditional sense and yes I know that’s stupid too at my age/ given the tax advantages to be had. Actually come to the conclusion it’s possibly not really a net worth calc at all, it’s something else and this is where the confusion has arose.

@getmore4less I did the calc including business behind the scenes and have tried to mentally put myself in the place of this being new start see where I get from here - no more crazies. 

The tech start up guys are def on a much higher level to me ha will read though thanks.

Sun_Addict

Well done on the 31 days no booze or drugs, that’s a great achievement. You must feel better for it.

alt80

@Sun_Addict 100% and thank you. 

enthusiasticsaver

You have to include your business and pensions/investments or it's not a net worth valuation even if you are not in a position or want to liquidate right now. There are different types of pensions though which actually can be accessed from 55 at the moment even if still working. Similarly you CAN liquidate your business even if you don't want to so it is still an asset you can value. As you say things like goodwill on the business is difficult to assess as it depends on when you sell and how much a buyer is prepared to pay but I am sure there is a calculation you can do based on annual profits. You may consider it a pointless exercise but at some point it will have to be sold either by you or your heirs. 

Yes honestly having no pension when you are a high earner is daft when it is the most tax efficient way of investing/saving for the future. I can't dress that up any other way but your choice. 

RelievedSheff

alt80 said:

@Sun_Addict 100% and thank you. 

How many more days do you plan to stay sober?

enthusiasticsaver

I think you are talking about cash flow rather than net worth.