The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Davids on May 03, 2015, 01:33:56 PM
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Do you include the value of your car in your net worth calculation? Me personally I do not but I have seen others on here who do. If one still owes on the car then I would include it as a liability to reduce net worth but I do not include the value of my car in my net worth calculation since it is a depreciating asset. The only exception I suppose would be if you owned a classic car (i.e. 60s Mustang) which has value.
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If you use 'mint' for tracking your finances like I do, you can include the value of your car. Mint updates the value of your car frequently based on the KBB value
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If you just like feeling rich, then sure. If your net worth calculation is to see if your portfolio is big enough to FIRE, then no. For the latter, only include assets that provide investment returns.
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I don't, simply because our only car is a 1996 Honda Odyssey minivan with 204,000 miles on it.
It's probably worth about $1,000... but we plan on running it into the ground. So I expect it's final value will be that of scrap someday (hopefully far in the future).
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My husband has a car he drives and a classic car that we don't do much with. We are planning on selling both of them soon, so I count them in our NW (but maybe I shouldn't until we have the cash in hand).
We plan on keeping my car for another 20 years at least, so I don't count it as part of our NW.
I think the key distinction is whether you are planning on/willing to sell the car.
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I wouldn't. I only look at a vehicle as a sunk cost but I'm very conservative when it comes to calculating expenses and net worth.
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I do to be "correct." But in the grand scheme of things it doesn't really matter.
If you're including it, you also probably need to include some monthly or yearly expense for depreciation. This is actually more important IMO than having the asset in your net worth. It gives you a real cost of ownership and some estimation of how much you need for replacement someday.
In my case I don't use any official depreciation schedule. I just adjust the value down once a year to make it match estimated book value. (I average kbb and edmunds and call that "good enough.")
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I do not track my vehicle in my net worth primarily due to personal preference. I'm still early in my journey and the value of my car is actually a significant number compared to my investments. Since I have no plans to sell it in the future and it's not going to generate any income or appreciate in value, I choose not to include it.
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I don't bother with the $1,200 KBB value on mine. If that makes a difference, I have bigger problems.
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I include my cars' value. I then decrease the value (according to KBB) once a year and count it as a depreciation expense. This way when I eventually sell a car the increase in my checking account doesn't come from nowhere.