Are you worth more than you think?

You think you're broke. And if you have negative equity, you have every reason to be alarmed. But, says Justin Urquhart Stewart, if you make a list of your assets and liabilities, you may find that things aren't so desperate
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The Independent Online
Monomania noun: attention being occupied exclusively on one subject, possibly to the detriment of others. Monomania is not - despite the way it may sound - some awful subset of the train-spotting fraternity. Nor does it reflect an unhealthy obsession with gramophone records from the pre-stereo age.

Monomania, that is financial monomania, afflicts 99 per cent of the population and causes significant harm to hearts, minds and bank accounts.

Few people enjoy dealing with bills, pensions, insurance plans and the like. The tendency is to stack these bits of paper on top of the microwave and ignore them for as long as possible.

These financial matters tend to fall into two categories - first, the depressing ("yet another demand, and far more than I expected"), and second, the unintelligible ("looks important but what on earth does it mean?"). The latter group includes most pension and life assurance statements.

Most of us sit down glumly from time to time and deal reluctantly with the most pressing item. After taking a deep breath, we write a cheque, post it and then relax in the knowledge that one payment, at least, is behind us.

Whether it is a credit or store card bill, bank or mortgage statement, insurance or pension plan, each transaction requires a single, sustained burst of concentration - and is dealt with in complete isolation from any other financial issue at hand.

This is the monomaniac at work. But by dealing with bills on a random, individual basis, we are constantly fighting to lop the heads off this dreadful financial Hydra without managing to kill the beast itself. In isolation, the personal finances of many of us can look pretty dire. And we can frighten ourselves even more by thinking about all those things that might happen in the future.

But if we looked at the Hydra's body rather than just at the individual heads we would get a clearer picture of our assets and liabilities. Once we see the the wood for the trees the situation might look a little brighter.

Here's how to put the bigger picture into focus. Write down your main valuables, include your house or flat, car, and personal items (items such as jewellery and, in my case, an overpriced pedigree cat). Then add in your bank balance plus any shares, unit trusts and savings plans. And don't forget your pension and life assurance policies. Don't worry if you don't know the value of these: ring up on Monday and ask them for an up-to-date valuation.

Now do the same with your liabilities, including mortgage, credit card bills and bank loans. These are easier to indentify as you tend to get reminders of them rather more frequently.

If you have a partner, do all this for him or her as well. The result is a far clearer idea of your net worth. You may find that things are considerably more encouraging than you imagined. The completion of this personal balance sheet tends to bring two things immediately to light. First, if you have an expensive short-term loan, you might be able to juggle your finances so that you can reduce the monthly cost, or even pay off the debt entirely. Secondly, you might become aware of anomalies in your personal financial situation. It might be, for example, that you have several long-term life assurance policies - but no private pension.

Don't worry about this right away. What matters is that you will have started seeing how your various financial strands tie together. Perhaps you will need to make changes, perhaps not. But the information you have gathered will certainly put you in a much stronger position if you decide to seek specific financial advice.This sort of exercise can be particularly useful to victims of negative equity. For those in such a position, and for the many more who are close to it ( a group rarely mentioned or addressed), it really is worth doing.

You may still end up with negative equity in your property, but the wider picture - your individual or family balance sheet - may well come out positive.

This matters, not just psychologically, but in a very real way if you are about to enter negotiations with your bank or building society.

So there is no need to remain a monamaniac, fighting a losing battle against a multi-headed financial Hydra. Tame the beast - and get a life!

The author is business development director of Barclays Stockbrokers.

how it adds up


Property (house/flat) 70,000 Mortgage 80,000

Personal valuables (incl cat) 7,500 Overdraft 500

Pension 80,000 Credit/store cards 1,500

Bank & building society accounts 2,000 Hire purchase agreements 2,000

PEPs & TESSAs 6,000 Car loan 4,000

Shares/UK Investment trusts 2,000

Life insurance policies 15,000

Total 132,500 88,000

Negative equity -pounds 10,000

Net worth +pounds 44,500

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