Author Topic: Article - Negative Net Worth numbers  (Read 2874 times)


honeybbq

  • Handlebar Stache
  • *****
  • Posts: 1468
  • Location: Seattle
Re: Article - Negative Net Worth numbers
« Reply #1 on: August 11, 2016, 10:05:49 AM »
I'm actually surprised it's not a LOT higher, considering they are talking about overall net worth, including mortgage.

I actually think it's amazing it's only 1 in 7....

thd7t

  • Handlebar Stache
  • *****
  • Posts: 1348
Re: Article - Negative Net Worth numbers
« Reply #2 on: August 11, 2016, 10:11:57 AM »
I'm actually surprised it's not a LOT higher, considering they are talking about overall net worth, including mortgage.

I actually think it's amazing it's only 1 in 7....
Well, a mortgage is backed by an asset, so unless you are under water, you get a real push in the positive direction.

honeybbq

  • Handlebar Stache
  • *****
  • Posts: 1468
  • Location: Seattle
Re: Article - Negative Net Worth numbers
« Reply #3 on: August 11, 2016, 11:47:59 AM »
I'm actually surprised it's not a LOT higher, considering they are talking about overall net worth, including mortgage.

I actually think it's amazing it's only 1 in 7....
Well, a mortgage is backed by an asset, so unless you are under water, you get a real push in the positive direction.

Maybe I'm reading it wrong, but the way I interpreted it was that if you have a 250k mortgage on a house you 'paid' 300k on, you'd be -200k in the hole.

Dancing Fool

  • 5 O'Clock Shadow
  • *
  • Posts: 33
Re: Article - Negative Net Worth numbers
« Reply #4 on: August 11, 2016, 11:57:29 AM »
I'm actually surprised it's not a LOT higher, considering they are talking about overall net worth, including mortgage.

I actually think it's amazing it's only 1 in 7....
Well, a mortgage is backed by an asset, so unless you are under water, you get a real push in the positive direction.

Maybe I'm reading it wrong, but the way I interpreted it was that if you have a 250k mortgage on a house you 'paid' 300k on, you'd be -200k in the hole.

I think you're doing the math a little funny. For net worth, you'd consider the total value of the home (i.e. $300k) as an asset, then consider the mortgage balance ($250k) as a liability. So your example would end up +$50k for house&mortgage contribution to net worth.

Mortgage lenders are a lot tighter now on LTV, so it's unlikely to see someone underwater on a newer mortgage (FHA loans with just 3% down and/or property value drops could still cause it, but it's much rarer). But there are also still many old mortgages on the books originated back when home values were much higher in some parts of the country.

Chris22

  • Magnum Stache
  • ******
  • Posts: 3770
  • Location: Chicago NW Suburbs
Re: Article - Negative Net Worth numbers
« Reply #5 on: August 11, 2016, 12:30:48 PM »
Reading between the lines, it's almost all either A) younger people with student loans who haven't had time to accumulate much yet or B) people with a modest (<$10k) amount of debt but very little offsetting savings (classic paycheck to paycheck).  Only 19% (I think that was the number) of people with a negative net worth were homeowners. 

webguy

  • Bristles
  • ***
  • Posts: 302
Re: Article - Negative Net Worth numbers
« Reply #6 on: August 12, 2016, 08:13:12 AM »
It's pretty crazy to me that the average age of someone with a negative net worth is 43! I can understand maybe if you're under 30, but by mid forties you'd think they'd have their shit together!

 

Wow, a phone plan for fifteen bucks!