The Neothink Society · Prosperity and Wealth · January 2010
Wealth is a position that can be measured to the dollar. Most people carry it as a feeling, a vague sense of comfort or anxiety, and so they never know where they actually stand. The Society teaches members to know exactly, because what can be measured can be controlled.
Start by clearing away the myth that wealth in America belongs to a handful of names at the top. A small number of people are super wealthy. Bill Gates, Warren Buffett, and Donald Trump are public examples, and the taxes they pay in a single year exceed what most people earn in a lifetime. That tier is not the subject here. The subject is the ordinary balance sheet, the one any working person can draw up on a single page.
The Definition
The crossover from poor to wealthy occurs at the exact point where assets exceed debts. That is the whole definition. Everything else is detail.
So define the term precisely. Locating that point takes two tallies. Begin with debt. Add the balances on every credit card, every loan, and every mortgage. The total is what is owed.
Then tally net assets. Add the value of bank accounts, the home, retirement holdings (IRAs, CDs, 401Ks), and anything that could be resold at a real price: vehicles, precious metals, art, and the like. The total is what is held.
Subtract the debt from the assets. The result is the exact position.
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Worth more than is owed: the line has been crossed. That is wealth, by definition.
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Owed more than is worth: the gap is now a number, and a number is a target. The figure that was missing is the figure to build.
The Crossover
The shift from poor to wealthy happens at one dollar of net worth above debt.
Wealth is not a feeling or an income bracket but a measured balance-sheet position, and it begins the moment net assets exceed debts by a single dollar.
One dollar of net worth above debt is the moment the position turns from poor to wealthy, and from there the work is measured in direction and distance.
Part 2 takes up what happens after the line is crossed, and how the position compounds once the arithmetic turns positive.
Common Questions
How does the Neothink Society define wealth? Wealth is a balance-sheet position, not a feeling or a tax bracket. It is the amount by which net assets exceed debts, a figure that can be measured to the exact dollar. Because the figure is exact, the position can be known and controlled rather than guessed at.
Where is the line between poor and wealthy? The line falls at the precise point where assets equal debts. Below that point more is owed than is held; above it more is held than is owed. The crossover from poor to wealthy occurs at one dollar of net worth above debt.
How do you calculate net worth? In two tallies. First add every debt: credit card balances, loans, and mortgages. Then add every net asset: bank accounts, the home, retirement holdings, and anything resellable at a real price. Subtract the debt total from the asset total, and the result is the exact position.
Why are Bill Gates and Warren Buffett not the subject? Super-wealth is a separate tier and a distraction from the working definition. The point is not the handful of names at the top but the ordinary balance sheet any working person can draw up on a single page. Wealth is defined by the crossover, not by membership in the top tier.
Why does measuring net worth matter? What can be measured can be controlled. A vague sense of comfort or anxiety cannot be acted on, but a single net-worth figure can. Once the gap between assets and debts is a number, that number becomes a target to build toward.
What counts as a net asset versus a debt? Net assets include bank accounts, the home, retirement holdings such as IRAs, CDs, and 401Ks, and anything resellable at a real price, including vehicles, precious metals, and art. Debts include every credit card balance, loan, and mortgage. The difference between the two totals is the wealth position.
Further Reading
- Net Worth: the single figure that locates a person's exact wealth position to the dollar.
- Financial Self-Leadership: running money by measured position rather than by feeling.
- The Self-Leader: the individual who controls a life by knowing where it actually stands.
- Value Creation: the work that moves a positive net worth from one dollar to a fortune.
- Why Americans Should Be Wealthy, Part 2: what happens after the line is crossed and how the position compounds.
Membership is by application.