What Does Net Worth Below Zero Mean
Net worth below zero means total debts exceed total assets. It is also called negative net worth or being underwater financially. A person calculates it by subtracting all liabilities from all assets.
Common Causes of Negative Net Worth
Common causes include high consumer debt, unpaid student loans, medical bills, and mortgage balances that exceed home value. Job loss, reduced income, or unexpected expenses can also push a household into negative territory quickly.
How to Improve a Negative Net Worth
Start by listing all debts and assets. Focus on paying down high interest debt first, such as credit cards. Increase income through additional work or skill development, and reduce unnecessary spending. For more guidance on managing debt and building financial stability, visit the Consumer Financial Protection Bureau at https://www.consumerfinance.gov/.
