### Author Topic: Net Worth?  (Read 5040 times)

#### KBCB

• Stubble
• Posts: 109
• Burning to Fire
##### Net Worth?
« on: September 26, 2019, 06:39:12 PM »
Newbie Question:

Can someone point me to the direction in calculating net worth?

In the throw down the gauntlet do all the "race" threads use net worth?

I want to join one of those threads and do it right :)

#### EngagedToFIRE

• Bristles
• Posts: 349
##### Re: Net Worth?
« Reply #1 on: September 26, 2019, 07:34:54 PM »
I just use Personal Capital.

• Posts: 43
• Location: USA
##### Re: Net Worth?
« Reply #2 on: September 26, 2019, 08:12:54 PM »
Assets = Add up all your current balances in all your checking, savings, 401k, IRA, brokerage accounts, and any equity in your house (if you own one). Liabilities = add up everything you owe on credits cards, student loans, car payments, and remaining house mortgage.  Net worth = assets - liabilities.

Don't just join a thread to compare yourself to others. Know your numbers because you should know your numbers (so you can take action to positively change them).

#### dogboyslim

• Bristles
• Posts: 451
##### Re: Net Worth?
« Reply #3 on: September 27, 2019, 12:57:25 PM »
Net worth is addition of assets minus all debts.

Example (these are made up numbers):

Assets:
Checking: \$300
Savings: \$1,500
Money Market \$ 10,000
Home: \$250,000 (many people use Zillow's Zestimate.  I use the zestimate minus selling fees of 7%)
401k: \$60,000
Car: <I don't include cars as assets, have at it if you want to>

Total Assets: \$321,800

Liabilities:
Student Loan: \$25,000
Car Loan: \$10,000
Mortgage Loan: \$200,000
CC Debt: \$4,000

Total Liabilities: \$239,000

Net worth = Assets - Liabilities = \$321,800 - \$239,000 = \$82,800

People often track something else in the race threads.  Some to liquid assets only, some to taxable investments only, others do NW...track what makes sense to you and motivates you to stay on track!

#### mschaus

• Stubble
• Posts: 151
• Location: Chicago
##### Re: Net Worth?
« Reply #4 on: September 27, 2019, 04:53:47 PM »

#### KBCB

• Stubble
• Posts: 109
• Burning to Fire
##### Re: Net Worth?
« Reply #5 on: September 28, 2019, 06:33:14 AM »
I just use Personal Capital.

So yeah.. what do you mean by personal capital?

#### KBCB

• Stubble
• Posts: 109
• Burning to Fire
##### Re: Net Worth?
« Reply #6 on: September 28, 2019, 06:33:33 AM »
Thank you all for the replies!!!

#### Malkynn

• Handlebar Stache
• Posts: 1932
##### Re: Net Worth?
« Reply #7 on: September 28, 2019, 06:41:07 AM »
Newbie Question:

Can someone point me to the direction in calculating net worth?

Depends on what you are trying to calculate exactly and why. One person might include their home equity, another person might include their car value, another may include neither. Depends on the purpose of the number at the end.

In the throw down the gauntlet do all the "race" threads use net worth?

[bIDepends. If they plan on staying in their home in retirement, then often no. [/b]

I want to join one of those threads and do it right :)

It's pretty hard to do it wrong since it's based on what you want it to be based on. You can always change your mind and clarify further if you want to.

Overall, when it comes to "calculations" here, their meaning is highly subjective. Say whatever you are trying to say, members will give you feedback if what you say sounds off.

#### Raenia

• Handlebar Stache
• Posts: 1237
##### Re: Net Worth?
« Reply #8 on: September 28, 2019, 07:36:13 AM »
When it comes to the "race" threads, it's important to note that not everyone is counting the same.  Some are counting only retirement accounts, some married people are only tracking their own accounts, some count home equity and some don't, etc.  Because of this, you're really racing against yourself, and just hanging out together for the fun of it.

There is no doing it right, just doing what works for you.  So jump in!

#### BTDretire

• Magnum Stache
• Posts: 2729
##### Re: Net Worth?
« Reply #9 on: September 28, 2019, 07:47:21 AM »
I just use Personal Capital.

So yeah.. what do you mean by personal capital?

It's an online tool to keep track of your finances.
https://www.personalcapital.com/land/getStartedExtended/

#### Bateaux

• Handlebar Stache
• Posts: 1528
• Location: Port Vincent
##### Re: Net Worth?
« Reply #10 on: September 29, 2019, 10:57:14 AM »
It's not so much the number of your networth, but what your networth does for you.  How will it help you to FIRE.  Some here with half my networth are able to comfortably retire.   What kind of income does your assets generate?  If it's real estate, does it make you money or does it cost you money?  If property doesn't generate income, it can be a drag on you due to maintence and taxes.  Our real estate doesn't generate income, but it's less than 20% of our total net worth.
« Last Edit: September 29, 2019, 10:58:48 AM by Bateaux »

#### KBCB

• Stubble
• Posts: 109
• Burning to Fire
##### Re: Net Worth?
« Reply #11 on: September 29, 2019, 11:54:50 AM »
Don't just join a thread to compare yourself to others. Know your numbers because you should know your numbers (so you can take action to positively change them).

I am hoping to join a thread for motivation!

#### KBCB

• Stubble
• Posts: 109
• Burning to Fire
##### Re: Net Worth?
« Reply #12 on: September 29, 2019, 11:56:41 AM »
Newbie Question:

Can someone point me to the direction in calculating net worth?

Depends on what you are trying to calculate exactly and why. One person might include their home equity, another person might include their car value, another may include neither. Depends on the purpose of the number at the end.

In the throw down the gauntlet do all the "race" threads use net worth?

[bIDepends. If they plan on staying in their home in retirement, then often no. [/b]

I want to join one of those threads and do it right :)

It's pretty hard to do it wrong since it's based on what you want it to be based on. You can always change your mind and clarify further if you want to.

Overall, when it comes to "calculations" here, their meaning is highly subjective. Say whatever you are trying to say, members will give you feedback if what you say sounds off.

Totally makes sense! Thank you for the input.

#### Undecided

• Handlebar Stache
• Posts: 1088
##### Re: Net Worth?
« Reply #13 on: September 30, 2019, 08:35:34 PM »
It's not so much the number of your networth, but what your networth does for you.  How will it help you to FIRE.  Some here with half my networth are able to comfortably retire.   What kind of income does your assets generate?  If it's real estate, does it make you money or does it cost you money?  If property doesn't generate income, it can be a drag on you due to maintence and taxes.  Our real estate doesn't generate income, but it's less than 20% of our total net worth.

Seems like you’re talking about effects of allocation. While there are costs to changing allocation, one can do it, and in that sense, more is better.

#### SwordGuy

• Walrus Stache
• Posts: 6005
• Location: Fayetteville, NC
##### Re: Net Worth?
« Reply #14 on: October 01, 2019, 06:15:18 AM »
Newbie Question:

Can someone point me to the direction in calculating net worth?

The value of what you own minus the amount you owe.

(Now, I don't bother to track the value of my household furnishings and cars.  If my financial situation is so dire that what I can get for those items is important, then I should be working a 3rd job instead of spending time on my net worth spreadsheet. )

Quote
In the throw down the gauntlet do all the "race" threads use net worth?

Net worth is a very flawed measurement if your purpose is to track whether you've reached FI or not.

That's why I set up this race thread, which uses a metric of "What % of my intended FIRE expenses can I cover?"

https://forum.mrmoneymustache.com/throw-down-the-gauntlet/race-to-100-fi!/

#### fat-johnny

• Posts: 36
##### Re: Net Worth?
« Reply #15 on: October 01, 2019, 10:40:43 AM »
I am not sure I quite understand these posts where people DON'T count the value of their car(s) in the asset column, yet they do count the car loan in the debit column?

FJ

#### SwordGuy

• Walrus Stache
• Posts: 6005
• Location: Fayetteville, NC
##### Re: Net Worth?
« Reply #16 on: October 01, 2019, 11:49:54 AM »
I am not sure I quite understand these posts where people DON'T count the value of their car(s) in the asset column, yet they do count the car loan in the debit column?

FJ

You're quite right in the sense that both the value of the cars and the loans should be counted.   That's the proper version of net worth.

Technically, I should include the value of each item I own, even including those worth a penny.  I fully concede the point.

But that's too much work.   Our cars aren't worth gobs of money when we buy them and they'll be worth almost nothing when we sell them.   The last one I sold, a couple of weeks ago, went for  0.0001% of our net worth.

When we bought it 10 years ago, when our net worth was a tiny fraction of what it is now, it was a whopping 0.09% of our net worth.

It's simply not worth the bother of tracking its dollar value.  Same with my underwear.  :)

• Posts: 10
##### Re: Net Worth?
« Reply #17 on: October 01, 2019, 12:58:27 PM »
I am not sure I quite understand these posts where people DON'T count the value of their car(s) in the asset column, yet they do count the car loan in the debit column?

FJ
I agree @fat-johnny
You should count everything you own as an asset, whether it's a good investment or not, similar with debts.

Basically, Net worth is the amount of money you would have if you sold everything you own and paid all your debts.

How useful that number is, is up for debate.

#### Dogastrophe

• Stubble
• Posts: 152
• Location: Nova Scotia
##### Re: Net Worth?
« Reply #18 on: October 01, 2019, 01:19:48 PM »
Newbie Question:

Can someone point me to the direction in calculating net worth?

In the throw down the gauntlet do all the "race" threads use net worth?

I want to join one of those threads and do it right :)

There is no "right" method to join / report in the Race threads.  Pick what works for you and go with it.  If you decide to change what you report, change it.

I use investments only in my Race - these are what I am banking on for retirement.  I don't bother with my condo value even though my equity in it would bump me into a new race.  I am racing against myself; no one else so for me, my method is the right one.

#### Scortius

• Bristles
• Posts: 467
##### Re: Net Worth?
« Reply #19 on: October 01, 2019, 02:25:29 PM »
For the cars, it's probably because cars depreciate, and most people here drive them until they depreciate down to basically zero. They really have no 'utility' as an asset. Beyond the factual definition, I think net worth is often though of as the functional value of what you own, and if you're not planning on reselling the car, its net worth is really reflected in the loss of the need to buy another car. Conversely, the car debt is tangible and uncorrelated the value of the car over time.

I think this is a good example of why pure net worth is a poor metric. I think it's also a good argument for why you may not want to calculate the value of your primary residence in your calculations. Unless you plan on downsizing later, it really has no bearing on how and when you'll be financially independent.

• Handlebar Stache
• Posts: 1022
##### Re: Net Worth?
« Reply #20 on: October 01, 2019, 02:31:18 PM »
Newbie Question:

Can someone point me to the direction in calculating net worth?

In the throw down the gauntlet do all the "race" threads use net worth?

I want to join one of those threads and do it right :)

There is no "right" method to join / report in the Race threads.  Pick what works for you and go with it.  If you decide to change what you report, change it.

I use investments only in my Race - these are what I am banking on for retirement.  I don't bother with my condo value even though my equity in it would bump me into a new race.  I am racing against myself; no one else so for me, my method is the right one.

Since my intent is to sell my home, I do include it in my number (and even include conservative appreciation).

Personal finance is...personal.

#### catprog

• Posts: 35
##### Re: Net Worth?
« Reply #21 on: October 01, 2019, 08:19:16 PM »
For me I am using my investment accounts. Not including my bank accounts.

As for my student loan as the payment is based on income and only inflation linked(no intrest) I don't include that as a liability

#### alienbogey

• Posts: 44
##### Re: Net Worth?
« Reply #22 on: October 01, 2019, 10:18:50 PM »
FWIW, the race thread you're joining may well have rules set by the OP for how to count for that race.

For example, the one I'm in says, in the OP,  "As with the "2" thread, I'm counting investable assets.  Not house, not rental property, not cars, not silver coins.  Too easy to cheat with stuff that needs to be valued, in my humble opinion."

So, that race counts investable assets.  Others may differ.

#### DeniseNJ

• Bristles
• Posts: 252
##### Re: Net Worth?
« Reply #23 on: October 02, 2019, 06:53:16 AM »
If you had to sell every single thing today and pay off all your debts, how much would you have left over?  That's your net worth.  Not very useful unless you're going on the lam.

I don't count my car bc I need a car and if I sold it I would have to buy another one.  Also the car is a depreciating asset, so I'm not putting the sale money toward retirement bc it may be worthless by then.  I do count my car loan--if I had one--bc that is money that I owe no matter what and it is also a monthly payment I have to make.  It impacts my savings and what I'll have in retirement.

So it's up to you and what you need that number for.  Do you want to count the value of your old car in your stash?  It's not like I'm goining to spend 4% of my car in retirement.

#### Chris Pascale

• Stubble
• Posts: 119
##### Re: Net Worth?
« Reply #24 on: October 02, 2019, 07:30:06 AM »
Great job taking this step.

I tell my students

WHAT YOU OWN - WHAT YOU OWE = WHAT YOU HAVE

Home                \$400,000             \$300,000              \$100,000
Cash                     \$5,000                                            \$5,000
Visa CC                                          \$10,000              (\$10,000)
Net worth                                                                 \$95,000

#### dignam

• Stubble
• Posts: 226
##### Re: Net Worth?
« Reply #25 on: October 02, 2019, 02:24:29 PM »
I am not sure I quite understand these posts where people DON'T count the value of their car(s) in the asset column, yet they do count the car loan in the debit column?

FJ

Totally agree.  If you're counting the debt, you should count it's current estimated market value.  Makes no sense to leave it out.

#### Malkynn

• Handlebar Stache
• Posts: 1932
##### Re: Net Worth?
« Reply #26 on: October 02, 2019, 04:02:28 PM »
I am not sure I quite understand these posts where people DON'T count the value of their car(s) in the asset column, yet they do count the car loan in the debit column?

FJ

Totally agree.  If you're counting the debt, you should count it's current estimated market value.  Makes no sense to leave it out.

It makes as much sense as leaving out any possession. The debt is a totally separate entity to the car and has no connection to the car's value once purchased.

Does one count the resale value of furniture if one buys it on store credit??

• Posts: 10
##### Re: Net Worth?
« Reply #27 on: October 03, 2019, 10:26:01 AM »

It makes as much sense as leaving out any possession. The debt is a totally separate entity to the car and has no connection to the car's value once purchased.

Does one count the resale value of furniture if one buys it on store credit??

Short answer... yes, just because it is a depreciating asset doesn't mean it has no value, it just means on some cadence you need to reduce the value of the asset.

The furniture example is more difficult because it's hard to determine net present value, personally I add a flat number like 20K for all my "stuff" into my net worth. Figure if I had an estate sale, I'd probably get around that for my junk regardless of what I paid for it.

#### Uturn

• Pencil Stache
• Posts: 672
• Age: 49
• Location: Holly Springs, NC
##### Re: Net Worth?
« Reply #28 on: October 03, 2019, 10:58:19 AM »
I am not sure I quite understand these posts where people DON'T count the value of their car(s) in the asset column, yet they do count the car loan in the debit column?

FJ

I don't count my car in my NW because the only reason I track NW is to know if I have enough to live on.  I'm not ever going to live on the value of my car.  However, if there was a loan, I would definitely count that as a debit because it still needs to be paid.  I'm sure that line of thinking makes the accountants cringe, but it make perfect sense to me.

#### DeniseNJ

• Bristles
• Posts: 252
##### Re: Net Worth?
« Reply #29 on: October 03, 2019, 11:42:56 AM »

It makes as much sense as leaving out any possession. The debt is a totally separate entity to the car and has no connection to the car's value once purchased.

Does one count the resale value of furniture if one buys it on store credit??

Short answer... yes, just because it is a depreciating asset doesn't mean it has no value, it just means on some cadence you need to reduce the value of the asset.

The furniture example is more difficult because it's hard to determine net present value, personally I add a flat number like 20K for all my "stuff" into my net worth. Figure if I had an estate sale, I'd probably get around that for my junk regardless of what I paid for it.
It just depends on what you are really calculating and why, then you can decide what to include.  I try to calculate my NW to figure out when I can retire.  So I don't add my car and furniture--so it's not really NW but it's the number I use when keeping track.  If I were trying to figure out what to I'd leave my heirs, then the market valuse of every single thing, minus debts to be cleared would be a meaningful figure.  But I hope to blow most of it before I die. :)

Also, if I had a \$100K car, I'd count that since I could sell that and buy a piece of crap and pocket the money.  If I sell my crap car then I'd have to spend the same amount to get another crap car and that wouldn't put any cash in my pocket.  I guess if you don't really need a car then go ahead and count it as money in your driveway.

#### Jim Fiction

• Stubble
• Posts: 178
• Location: Connecticut
##### Re: Net Worth?
« Reply #30 on: October 03, 2019, 01:43:14 PM »
I am not sure I quite understand these posts where people DON'T count the value of their car(s) in the asset column, yet they do count the car loan in the debit column?

FJ

I don't count my car in my NW because the only reason I track NW is to know if I have enough to live on.  I'm not ever going to live on the value of my car.  However, if there was a loan, I would definitely count that as a debit because it still needs to be paid.  I'm sure that line of thinking makes the accountants cringe, but it make perfect sense to me.

It could be just me, but as an accountant I do not include the value of my car in my net worth. Nor have I done so for any clients when creating personal financial statements for them.

Ultimately this boils down to personal preference and the goal of whatever it is you are trying to portray.  In my case, I only include cash/equivalents and investments (401k/IRA/HSA/etc...) and net out any debt (currently only credit cards). Others might choose to include their car or other items that I personally wouldn't and as long as it is realistic is a perfectly fine choice.

I have given some thought to adding some collectibles I have - for example I have a record collection. Its over 500 records in total, mostly LPs. I have several records worth hundreds of dollars, others are virtually worthless, most are in between. I could probably take an hour and figure out a rough value of the entire collection, but ultimately I just don't see the point. I am not holding them as an investment and its not an income producing asset. Keeping an accurate idea of its FMV would be cumbersome. If I sold the collection all in one shot, it would most assuredly have to be to a re-seller so I would be lucky to get 50% of its actual FMV. I also don't have the time to engage in a mass sale, so selling it would be a long, slow process. If and when I sell anything (I actually sold two records this past weekend!) then the cash generated with be added to my net worth. Until then I simply don't see a reason to bother.

#### dignam

• Stubble
• Posts: 226
##### Re: Net Worth?
« Reply #31 on: October 07, 2019, 02:22:20 PM »
I am not sure I quite understand these posts where people DON'T count the value of their car(s) in the asset column, yet they do count the car loan in the debit column?

FJ

Totally agree.  If you're counting the debt, you should count it's current estimated market value.  Makes no sense to leave it out.

It makes as much sense as leaving out any possession. The debt is a totally separate entity to the car and has no connection to the car's value once purchased.

Does one count the resale value of furniture if one buys it on store credit??

This isn't a fair comparison because the used market for furniture is no where near as active as used cars.  I would bet you are far more likely to buy a used car vs. used furniture (gross).

#### life_travel

• Stubble
• Posts: 166
• Location: Australia
##### Re: Net Worth?
« Reply #32 on: October 07, 2019, 03:16:44 PM »
Used furniture is gross ?? Pretty much all our furniture is second hand now after downsizing slowly over last 6 years . You'll be shocked that some of our clothes are second hand too :)

#### Malkynn

• Handlebar Stache
• Posts: 1932
##### Re: Net Worth?
« Reply #33 on: October 07, 2019, 03:45:14 PM »
I am not sure I quite understand these posts where people DON'T count the value of their car(s) in the asset column, yet they do count the car loan in the debit column?

FJ

Totally agree.  If you're counting the debt, you should count it's current estimated market value.  Makes no sense to leave it out.

It makes as much sense as leaving out any possession. The debt is a totally separate entity to the car and has no connection to the car's value once purchased.

Does one count the resale value of furniture if one buys it on store credit??

This isn't a fair comparison because the used market for furniture is no where near as active as used cars.  I would bet you are far more likely to buy a used car vs. used furniture (gross).

So then where is the line drawn?
Jewelry? Collectibles?

My point is that it's as rational to leave off a car's value from your net worth as it is any other depreciating asset, especially if the purpose is to track how close one is to a future targeted net worth.

ETA: As someone who used to have a house filled with generational antiques, I'm really not getting how used furniture is gross???
« Last Edit: October 07, 2019, 04:59:13 PM by Malkynn »

• Handlebar Stache
• Posts: 1022
##### Re: Net Worth?
« Reply #34 on: October 07, 2019, 03:56:54 PM »

This isn't a fair comparison because the used market for furniture is no where near as active as used cars.  I would bet you are far more likely to buy a used car vs. used furniture (gross).

I find used furniture at yard sales all the time.

Everything in our house was bought used. The sectional couch was gross, but we spent some time vacuuming and scrubbing and ended up with a great deal as a result.

#### js82

• Stubble
• Posts: 160
##### Re: Net Worth?
« Reply #35 on: October 07, 2019, 04:20:56 PM »
Unless you're filing some document for legal purposes, don't worry so much about what's "right" - do it in a way that works for you, and be consistent in the way you do it.  If you're doing it for legal reasons, find out the applicable laws in your area, and follow them.  Otherwise, it's a personal decision and it's all about what you find helpful.  If you're worried about whether or not you should count your bicycle or your furniture, you're probably overthinking it.

In principle, Net Worth = Assets - Liabilities.  In practice, people may choose to exclude certain things, either because they're relatively illiquid, they don't have an exact value for an item, or the value is small enough that it's ignorable.

In my personal case, I don't count:
-Any benefits/incentives/stock options that are not yet fully vested(even if I know I'm going to stick around to see them vest)
-Car Value(difficult to get an exact value + I'm going to drive it until the wheels fall off, so I don't expect to get any value back)
-Any other non-house possessions(trying to figure out the current value of my bike, skis, computer, and furniture is not a good use of my time)

If I had a high-value asset that I didn't expect to lose the vast majority of its value to depreciation over time I'd probably count it.
« Last Edit: October 07, 2019, 04:26:33 PM by js82 »

#### marty998

• Walrus Stache
• Posts: 6544
• Location: Sydney, Oz
##### Re: Net Worth?
« Reply #36 on: October 08, 2019, 03:16:19 AM »
I am not sure I quite understand these posts where people DON'T count the value of their car(s) in the asset column, yet they do count the car loan in the debit column?

FJ

Totally agree.  If you're counting the debt, you should count it's current estimated market value.  Makes no sense to leave it out.

It makes as much sense as leaving out any possession. The debt is a totally separate entity to the car and has no connection to the car's value once purchased.

Does one count the resale value of furniture if one buys it on store credit??

Yep, my running shoes are not an asset for the same reason.

Cars cost you money to operate - fuel, taxes, maintenance. In some respects you can call them liabilities because of that.

Assets normally either bring you an income or appreciate in value.

#### Fishindude

• Handlebar Stache
• Posts: 2141
##### Re: Net Worth?
« Reply #37 on: October 08, 2019, 07:44:48 AM »
Most banks can provide you with a personal financial statement form.

#### big_owl

• Pencil Stache
• Posts: 705
##### Re: Net Worth?
« Reply #38 on: October 08, 2019, 09:38:46 AM »
For our net worth I only count cash/investments/bonds.  I don't count home equity or the value of any consumer good or car.

I don't subtract out home debt just because it's getting to be pretty small at this point.  When my mortgage was larger I used to subtract that out.  I would do the same with a car loan but we just buy those cash now so it's not an issue.

#### OurTown

• Handlebar Stache
• Posts: 1193
• Age: 50
• Location: Tennessee
##### Re: Net Worth?
« Reply #39 on: October 08, 2019, 01:15:19 PM »
I include real property but not tangible personal property.  So yes on the fmv of the house but no on the cars, etc.

#### dignam

• Stubble
• Posts: 226
##### Re: Net Worth?
« Reply #40 on: October 08, 2019, 01:30:27 PM »
Something is not required to gain value for it to be considered an asset.  Definition: "property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies"

I'm sure my situation isn't like everyone's, but I own both my vehicles out right without loans.  One is a beater worth about \$3k that I drive daily and fix on my own if/when things break, the other my fun/reliable car worth about \$19k.  It is very reasonable to assume in a pinch I could post that car for sale and have at least \$18k in my pocket by the end of the week.  Why would I not include that in my calculations?  I do keep its value updated as it depreciates.

#### big_owl

• Pencil Stache
• Posts: 705
##### Re: Net Worth?
« Reply #41 on: October 08, 2019, 04:06:30 PM »
Something is not required to gain value for it to be considered an asset.  Definition: "property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies"

I'm sure my situation isn't like everyone's, but I own both my vehicles out right without loans.  One is a beater worth about \$3k that I drive daily and fix on my own if/when things break, the other my fun/reliable car worth about \$19k.  It is very reasonable to assume in a pinch I could post that car for sale and have at least \$18k in my pocket by the end of the week.  Why would I not include that in my calculations?  I do keep its value updated as it depreciates.

Personally I don't value cars or homes because, yes, in a pinch I could sell them...but then I'd have nowhere to live or no way to get around.  So they're a necessity to me that needs a replacement if I sell them.  Stocks/cash, I can sell all that tomorrow and not have to buy a replacement.  But it's all just bragging rights so it really doesn't matter how you calculate NW.  Adding house and cars increases my NW on paper by about \$600k, but nobody gives a shit so I don't count them.

#### Malkynn

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• Posts: 1932
##### Re: Net Worth?
« Reply #42 on: October 09, 2019, 05:41:58 AM »
Something is not required to gain value for it to be considered an asset.  Definition: "property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies"

I'm sure my situation isn't like everyone's, but I own both my vehicles out right without loans.  One is a beater worth about \$3k that I drive daily and fix on my own if/when things break, the other my fun/reliable car worth about \$19k.  It is very reasonable to assume in a pinch I could post that car for sale and have at least \$18k in my pocket by the end of the week.  Why would I not include that in my calculations?  I do keep its value updated as it depreciates.

No one is saying it's wrong to include cars in net worth, but multiple people upthread argued that it's wrong not to, and that we disagree with.

Either way is right, depending on what you want from the number.

#### Car Jack

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##### Re: Net Worth?
« Reply #43 on: October 09, 2019, 11:35:38 AM »
I started the race from \$2M to \$3M thread and in the first post, defined what that number is.  It's investable assets, not net worth (in that thread).  My reasoning is that while your house is worth something, it can't be used next week to pay an IRS bill or college tuition or trade for BRK.  It's investments that are able to be used for something, rebalanced, spent.  And especially if you plan to never leave your house (that's my plan), it isn't liquid.

There are those who use net worth and that's fine.  Nobody's going to drop you into the pit of eternal peril for doing so.

#### OurTown

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• Age: 50
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##### Re: Net Worth?
« Reply #44 on: October 10, 2019, 02:35:27 PM »
"Red.  No, blue!  AAaaaaaaaaaah . . ."