True net worth: the Smiths are taking steps to ensure that what they own outweighs what they owe.

IN THE SMITH HOUSEHOLD, SUNDAYS are reserved for three things: church, family meals, and business meetings. Since taking their marriage vows four years ago, Latrice Mosley-Smith and Ervin L. Smith, who reside in a suburb of Chicago, have looked at ways to increase their income and savings. Even the newest member of the family, 17-month-old Ashlyn Tiffany, has a seat at the table, observing her parents handling money matters. "During our business meetings we have our net worth statements listing assets and liabilities. We have a chart with the life insurance policies and motor vehicles--we own two Cars and lease another--real estate properties, and anticipated assets," explains Latrice, a 35-year-old pre-sentencing investigator with the U.S. Probation Office. "We talk about our bank accounts and retirement plans as well as expenses and future goals." The couple also does their homework by regularly reading personal finance books.

The agenda for their Sunday business meetings, run jointly by Ervin, a 36-year-old truck driver for Canteen Corp., and Latrice, includes a weekly review of paid bills and financial goals. For instance, the couple plans to buy two rental properties over the next two years and have set target dates for these purchases. Right now, they own three properties, including their home (a three-bedroom townhouse), a single family home, and a two-flat building.

Together, the couple earns six-figures. While Ervin makes less than his wife--his annual salary is $50,000 and she earns $85,000 a year--he realizes that engaging in sound financial practices will help him acquire wealth and attain financial freedom in retirement. The couple's biggest liabilities are their mortgages: a $80,000 balance on the townhouse, purchased in 2001 for $115,000; $65,000 owed for the single-family rehab that they bought in 2004; and a $122,000 mortgage on a two-flat brick building they purchased in 2005 for $130,000. Also, Lattice has a $75,000 student loan balance. The Smiths no longer have any credit card debt since they believe in using cash to buy low-ticket items. They factor in personal and household expenses, such as groceries and grooming, with their other bills.

Due to the value of their properties and their savings and retirement funds, the Smiths have been operating in the black. In fact, their total net worth is roughly $329,530. The couple has hilly embraced DOFE Principle No. 5: to measure personal wealth by net worth, not income.

Many people make the mistake of evaluating their net worth based on the size of a paycheck or the draw from a business. If you owe more than you own, you have negative net worth. Being in such a financial position signals that, in most cases, you are Overburdened by debt and that your loved ones may be in dire straits in the case of your untimely demise. If you have positive net worth, you are likely to be on track to secure a solid financial future for your family.

Declaration Of Financial Empowerment

From this day forward, I declare my vigilant and lifelong commitment to financial empowerment. I pledge the following:

1] To use homeownership to build wealth

2] To save and invest 10% to 15% of my after-tax income

3] To commit to a program of retirement planning and investing

4] To engage in sound budget, credit, and tax management practices

5] To measure my personal wealth by net worth, not income

6] To be proactive and knowledgeable about investing, money management and consumer issues

7] To provide access to programs that wig educate my children about business and finance

8] To support the creation and growth of profitable, competitive black-owned enterprises

9] To use a portion of my wealth to strengthen my community

10] To ensure that my wealth is passed on to future generations

5 PRINCIPLE

To measure personal wealth by net worth, not income.

Through this wealth-evaluation process, you can structure a comprehensive financial plan. Here are a few things that you can do to maximize your net worth:

Take financial inventory. Develop your own net worth statement. Create two columns. In the first column, list your assets, including the fair market value of property, retirement funds, the book value of automobiles, and checking and savings accounts. In the second column, indicate your liabilities, including student loans, mortgage balance, and credit card debt. Subtract the total of column A from column B and you'll have a figure that represents your financial position. Review your net worth statement quarterly.

Set wealth goals. To achieve your wealth potential, write down some realistic objectives and distinguish between your short-term and long-term goals. Hake sure your strategic plan includes homeownership and debt management. In the case of the Smiths, they stuck to their game plan and, as a result, will be able to purchase another property in 2007. To do so, they plan to sell the single-family home first and rent out the townhouse. In the near future, the couple intends to buy another two- or three-flat building. Within the next few years, however, they intend to leverage their real estate holdings to acquire a multi-complex building in the suburbs. "We want to buy the smaller properties first, have them generate money, sell them, and then put that money into something like a 24-unit complex," says Latrice.

Fully fund your retirement. Max out of your 401(k) plan or at least make a real effort to contribute as a much as you can to employer-sponsored retirement plans. The money will be deducted from your taxable income. After those plans are fully funded, put $3,000 per year into an IRA. Currently, Latrice contributes 10% to her 401(k); Ervin places roughly 5% of his income into his plan. Also, use worksheets and calculators to figure out your retirement income needs.

Save and invest. There's an old money management maxim: it's not what you earn but what you keep. To hold on to more of your dollars, give yourself an allowance. By doing so, you can keep track of how much you spend weekly and monthly. Asserts Latrice: "Once we get paid, we give each other $200 each week. That's $800 a month. If I run out of money that week, I don't go back into my checking or savings accounts. I may ask to borrow from his $200 if he hasn't spent it all."