Hello, my name is Gary Shotton I’m here in my machine shop. I’m enjoy teaching these lessons. I hope they are beneficial to you. And today, I’m going to talk about keeping the Score but keeping it a little bit differently than when I teach on the subject of “Profit”. See, Profit is the ability and the amount of profit in a business is the score board for how your business is doing. Just like you have an athletic event. But in life there’s another score another scoreboard. It’s not greed but it is your “Personal Net Worth” and I’m an advocate as an entrepreneur, that it’s not wrong, I think it’s actually healthy to document and keep track of your Personal Net Worth. Now, what do I mean by Personal Net Worth? So we’re all on the same page. Well, if you hear somebody on the newspaper they say they were worth 10 million dollars they’re probably referring to their Personal Net Worth. Or you can hear that their Personal Net Worth was nothing and their relatives, friends, or family had to pick up the tab for their funeral because they had prepared for it. So their Personal Net Worth was probably zero or less. And so the way you calculate your Personal Net Worth is by first, adding up all of the things that you own that has value. They’re called assets. This could be your house, it could be some land, or it could be a car. But maybe, not because you have to be fare with what its real value is not what you paid for it. It could be some stocks, it could be some oil, I mean things that you would leave in an inheritance to your family and your and your children possibly. And then you also add up the things that you owe and the things that you owe are maybe you own the house and maybe it’s worth a certain dollar amount but that’s only half paid for it so whatever figure you want to use that you would have a dollar figure for the house that’s on your asset list but over on your liability list is what you owe on that piece of property. So if your house would pay for in full then you would have an asset on the plus side but you have no liabilities for it. So, I’m going to pull out what I have used for the last 15 years and I mean that I pull out what’s called my loan application for the bank and my wife is a trained and skilled she fixes this for me not that I trained her basically this loan application is actually just two pages long and there’s a segment here that i’m going to talk about I don’t expect you to read it right here but it gives you the reality that this is what the bank wants to see. And on the left-hand side, what is called a Balance Sheet, and its basiclly called just what i said, here are the Assets. And, you list of everything you own, that if your bank had to cash it in, they would say, “I could sell this house for this amount”, “I could sell this car for this amount”, and “I could sell this land” “I could sell this stock”. These are your assets. And on the left-hand side they also, as I’m making this loan application, I’m filling out those things that I owe, and I’m listing them and frankly the entire rest of the two or three pages of that loan application is supporting documents. So a very short piece, just a very short piece of the paragraph that tells you that you’ve mathematically add up everything you own. And there’s a dollar amount or figure of numerical some of everything. And then you add up everything you owe to someone, and that’s the figure than if you subtract the figure from that you owe from that that you own that is your Personal Net Worth. In other words if you added your liabilities plus your Personal Net Worth that would equal all your assets I’m saying the same thing. And I will joke with my banker friends I I know them pretty well and know at least a dozen of them and they like to know about you I mean you can say there’s Snoopy but it’s kind of their business and I will guarantee you that if you hand them this loan application, if you just watch their eyes, if you’re meeting for the first time their eyes know where to look and within the first 15 seconds, they’ve zeroed in on that and they’re saying “this guy is worth” and that’s what ever that amount is. And unfortunately or fortunately whichever one, that’s how they tap you. And it starts immediately putting to them. “How much could I loan them? How much could I risk with this person? Because I will make a point to secure all of that Personal Net Worth in case the loan goes bad. That’s just banking. That’s this business. So, I joke with them to say they cannot keep their eye off that number. And, I gave it to them liberally and freely. So, what I would do with this? Well, starting 15 or 18 years ago when i was doing banking, I filled out my form, this same form, and I dated it. And, I said my Personal Net Worth as of January 1, 2000 or whatever year it was, I filled out this paperwork, lets say a year later I would say January 1st of the year 2001 that’s what I’m worth and then a year later (and it wasn’t on a yearly basis) but basically every time I had a loan application or need to show something to the bank, I would ask my wife to help me. She knows how to do this and we work together on it and we make the adjustments. Now here’s what you want to do. You just want to know, wherever you’re at, even if the number is negative, just what if you owe more then you own then you have a negative Personal Net Worth but don’t freak out. There’s quite a few people in that category, as long as you are watching the score and the score is going in the proper direction. In other words, if the score was negative your first goal is to get “zero”. And, if the score is “zero” then your next goal is maybe they have a Personal Net Worth of $10,000. and if it’s $10,000, your personal goal would be how would i get to $100,000. And where this is helpful, and then how would I get to one million. I mean there are people on this earth that have a Personal Net Worth of a “B”, billions. That’s just numbers as far as I’m concerned the principles the same. That, if you’re working in the right direction you’re working to gaining on your Personal Net Worth. And you want to see that number rise. And so, as you’re making choices on your expenditures you will be calculating and thinking more in that way, this scoreboard. If I make this purchase? After I make the purchase what is its real value? And how fast will it go down to nothing? That’s why cars not necessarily a great asset because when you buy it and as soon as you pull it off the lot, and especially if you borrowed most of the money, which you can how these days. Then as soon as you pulled it off the lot nobody’s going to pay, if you had to sell it, for the same amount that you do pay for it off the lot. So, it’s not necessarily a good investment. Now you can have an antique car and that’s now an automobile and you bought it for something and due to its value and that the fact that it’s an antique and you don’t owe you any money. And next year it well be worth more, so its value is going up. So, if you follow what I’m saying, your goal as a person: not greedy, not egotistical, not to brag, but you are judging whether your Personal Net Worth is going up, staying the same, or going down. And, it’s a simple calculation. I’d like to talk about if you have a Personal Net Worth that’s positive and i’m not going to go into depth on that I just you know that in my case I do have a positive Personal Net Worth. I’m not disclosing that is nobody’s business but mine and my family’s. But my personal opinion is that have I pulled my adult children into the picture. And they know what my Personal Net Worth is. And we’ve talked in depth about what would happen if I were to pass on or my wife were to pass on, what would be expected. That’s my style i’m not keeping this a secret. Others could be view this differently, they could say, “you know, I’m not gonna share. That when I die they can have the reading of the will and everybody be surprised”. Well that’s not my mode of operation that somebody else’s that’s fine with me. Because, I want my children to be knowledgeable about it. I want them to be involved with it. I want to hear from them on the decisions I’m making. I want them to know that they have some vested interest in this. I’ve taken another personal position that “I never want money to be the guiding force, the directing force, for my children to do anything.” So, I’ve tried to take this out of the picture in this way, I tell them “hey, Dad may just give it all away so keep out there making your own job”. I’m not promising you anything I’m not playing games with you but they’re going to be happier more satisfied with life, more content with their accomplishments in life, if they’re the ones that are accomplishing good things in their life. They’re not going to be, in my opinion, as happy if they inherited the money and had to do nothing for it. And they’re starting a process, that in my opinion, is not healthy.