Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The real debate over whether to include your house or not is dependent on whether you count your house as an asset or not. Most financial advisors would say that to do so is dependent on where you are in life and whether you want to stay in said house or downside, move on, etc.
For example, a married, retired, empty-nester couple would likely count their home (which they at least have a big dent in the mortgage paid off) as an asset for when they sell and move on with their retired lives. They could use that money as downpayment for a smaller house or as investment money.
However, the same couple with kids and mid-career would likely not count the house as an asset because it cannot contribute to the normal bottom line of the family.
At the same time, income properties ARE counted as assets.
Thus, for my wife and I who aren't even mid-career or have kids yet, our house is not an asset, even though it has appreciated roughly $60k since we bought. I do not count it as part of my net worth because I don't know if I will stay here until retirement. Them bones might not like the stairs sooner rather than later ... .
That depends on the price you ask. I could sell my house tomorrow for 50k leas than market value. Unless you have a total asset v liability it is useless to compare to others. There has to be an apples to apples compare. Someone can have 500k in house and car equity that in your equation would not be counted.
Yes, that's correct. I don't think 500K in house and car equity should be counted. Lots of people have that here where I live in the SF Bay Area, yet may have little to nothing in their 401ks or other savings. It's called being "house poor".
If you have a few bucks, nice house you can still kiss your kid! I would work harder to provide for my kids, nice home/neighborhood/education, etc.[/QUOTE
Oh I never said I don't work hard that was I guess an assumption made by you because I can admit to not having 100k in a bank somewhere and still be happy? You know what they say happens when you assume.... And by the way I provide for my children all their needs..and alot of their wants!! My mentality was attacked simply because my admitting to being poor by the 100k measure?
I counted my car just because I don't have to make car payments for the next 7 years (since my 335xi is only 3 years old and has a meagre 41k miles on it). If I can use that additional money (700*12*6=50k) and invest it in the market, why should I not count my car in the net asset just because I paid it off sooner? Compare this to someone who doesn't include their car and is paying 700 dollars a month for the next 5-6 years.
If I do have a liquidity crisis, I can always sell off this car, and start using my 01' Stang which is also completely paid off and only has 70k miles on it. (Which I haven't counted either).
To each their own, but net worth means liabilities minus assets and a paid off car is definitely an asset although a depreciating one.
On this thread - I just counted pure cash in the $100K question.
I would consider anyone who puts $100k in the bank in this country as liquid reserves without investing it in some form as incredibly foolish and squandering their money. Sure, some countries give a decent interest payment if you put that much liquid in their bank but not this country. You would be making negative returns if you take into account inflation and ****-poor interest rates.
I counted my car just because I don't have to make car payments for the next 7 years (since my 335xi is only 3 years old and has a meagre 41k miles on it). If I can use that additional money (700*12*6=50k) and invest it in the market, why should I not count my car in the net asset just because I paid it off sooner? Compare this to someone who doesn't include their car and is paying 700 dollars a month for the next 5-6 years.
If I do have a liquidity crisis, I can always sell off this car, and start using my 01' Stang which is also completely paid off and only has 70k miles on it. (Which I haven't counted either).
To each their own, but net worth means liabilities minus assets and a paid off car is definitely an asset although a depreciating one.
Who says you have to pay $700 a month for a car!?!?! And you don't have that $50K yet... so don't count your chickens before they hatch.
Based on your net worth post earlier, you are in a very precarious situation should you lose your source of income.
"Ok, I have 80K in 401K, 25K in my car at today's KBB value (paid it off this month), 5K in my checking account, 3K credit card debt, and 170K in mortgage debt on a house that is worth 240K.
I'm pretty sure my net worth is over 100k (80K+25K-3K+5K-170K+240K=167K). I'm 31 now."
In a dire situation, you would have to sell everything, put everything on credit cards, or withdraw from your 401K. Me thinks you should have prioritized an emergency account before paying off that BMW especially if it was at a low interest rate.
Personally, I don't count my primary residence nor my paid off car in my net worth calculation, so in "my world" you only have $82K. Still better than most 31 year olds though!
Who says you have to pay $700 a month for a car!?!?! And you don't have that $50K yet... so don't count your chickens before they hatch.
Based on your net worth post earlier, you are in a very precarious situation should you lose your source of income.
"Ok, I have 80K in 401K, 25K in my car at today's KBB value (paid it off this month), 5K in my checking account, 3K credit card debt, and 170K in mortgage debt on a house that is worth 240K.
I'm pretty sure my net worth is over 100k (80K+25K-3K+5K-170K+240K=167K). I'm 31 now."
In a dire situation, you would have to sell everything, put everything on credit cards, or withdraw from your 401K. Me thinks you should have prioritized an emergency account before paying off that BMW especially if it was at a low interest rate.
Personally, I don't count my primary residence nor my paid off car in my net worth calculation, so in "my world" you only have $82K. Still better than most 31 year olds though!
A decent car has a payment of 500 dollars a month or above unless you're taking a 10 year loan on your car and no, I'm not counting any chickens. I'm saying I will be able to invest more in the forthcoming years because I don't have a car payment compared to someone who is not counting their car but is making payments. So the equation differs.
In a dire situation I can take a personal loan from my 401k and still come out ahead from someone who is maintaining an emergency fund of 35-40k in liquid cash. Liquid cash is an absolute no in my world which differs from your world! If the situation is more 'dire' than that, either something is wrong with me (which is highly unlikely considering my track record for the last 12 years or there is something really wrong with the world economy in which case, I have a backup from my inheritence of 25 acres of land in the country I immigrated from and can still subsist. Not to mention my wife practices medicine and there will never be a dearth of doctors anywhere.
A decent car has a payment of 500 dollars a month or above unless you're taking a 10 year loan on your car and no, I'm not counting any chickens. I'm saying I will be able to invest more in the forthcoming years because I don't have a car payment compared to someone who is not counting their car but is making payments. So the equation differs.
In a dire situation I can take a personal loan from my 401k and still come out ahead from someone who is maintaining an emergency fund of 35-40k in liquid cash. Liquid cash is an absolute no in my world which differs from your world! If the situation is more 'dire' than that, either something is wrong with me (which is highly unlikely considering my track record for the last 12 years or there is something really wrong with the world economy in which case, I have a backup from my inheritence of 25 acres of land in the country I immigrated from and can still subsist. Not to mention my wife practices medicine and there will never be a dearth of doctors anywhere.
Id rather use that 35-40k in cash than take a loan out of my future retirement if an ermergency happens.
Id rather use that 35-40k in cash than take a loan out of my future retirement if an ermergency happens.
Umm.. good for you?! I guess.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I would work harder to provide for my kids, nice home/neighborhood/education, etc.[/QUOTE
