Wow, lots of controversy here.
Personally, I use the terms pretty distinctly when discussing finances.
Net Worth - I use the pretty standard definition of assets minus liabilities, without counting depreciating goods or anything I'm not immediately willing to sell (vehicles, guitars, etc). So going back to the original post, I'd say option #1 is how I would define net worth. Include everything! Hell, MMM himself pretty much spells this out in his
How Rich Are You? post. Not that we all need to agree with him on everything, obviously. But this is how most people would define the phrase net worth, even though it may or may not actually reflect how close you are to your FI number. I would say the OP is a millionaire!
http://www.mrmoneymustache.com/2015/01/26/calculating-net-worth/Stash - If you're in the FI community though, and you're asking how to define your stash - or how close you are to your FI number - I would only include accounts I planned on using to live on. Personally, I plan on having a stash of $1M, PLUS a paid off house. Meaning my invested/liquid stash would need to be >= $1M, and my house also needs to be paid off with zero mortgage.
So when I'm looking at my finances, I don't include my home equity in the calculation toward my number. But I do include it in my net worth. In my personal Excel sheets I made to track all this stuff, I actually have distinct rows for net worth, and stash. I want to know both, for different reasons.