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Home equity should count in your savings. It is something you have to understand isn't the same as cash but it still counts. If you are absolutely never willing to sell your house or take out a heloc then you personally shouldn't count it but that doesn't mean everyone else shouldn't
I'm covered just by the equity in my house.. I assume that counts?
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Originally Posted by Grumpty
What about equity in investment properties? Do those count?
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Originally Posted by ncole1
Does anyone else see an inconsistency? Home equity doesn't count....but it does count. :think
IMO yes it counts toward net worth, but it should be set on a different column as the access is more difficult and amount does or can change with the market. It's not really savings in the traditional sense as you don't have the same access to that money. The money is accessed either by loan or selling. If you have cash in savings checking money market etc it's cash. It may have less value if there is a market drop but the amount doesn't change.
We're well over the guidelines but that's partly because we're not huge spenders so we save and invest. I do think theses guidelines are full of bull.
If I cash out and move elsewhere with a lower COL I'll be so far ahead it won't be funny. I can do a real estate 1031 exchange and be sitting pretty in a different state. Or I could get run over by a train and be in traction for a few years
I'm only going to worry so much. I'll do what I can to secure my future but I'm not going to bite my fingernails at night over it either.
while it counts in our net worth i really don't count it anymore than i count what i can sell my car or furniture for .
i have no intention of selling the art work ever at this stage and for now it is a consumption item . unless i am dead and my heirs want to sell it , it has no value to us either way .
if i wanted to do a " feel good " net worth could throw it in . but in practice it appears in nothing we calculate yearly since there is no reason to ..
Last edited by mathjak107; 03-05-2017 at 09:12 AM..
do you count your car ? your furniture if you sold it ? jewelry ?
there are many reasons for computing your worth .
if it is for estate tax purpose that is one thing , if it is to feel good that is another . in our case i only count what is liquid since that is all that matters when we set our spending goals each year in retirement . if i don't want to or can't sell it then it is not in that tabulation . i have no reason to want to count anything else .
what don't i count ?
car ,jewelry ,furniture , art work , a life insurance policy cash value i have , ear marked for our kids when i die and likely a few other assets i have no intention of selling ..
it has been decades since i had any reason to bother to add up everything of value i owned whether i was selling it or not . a divorce was the last time there was a reason for a full snap shot .
Last edited by mathjak107; 03-05-2017 at 09:47 AM..
I don't count my home equity as savings per se, but I do consider it in retirement planning because I will have a paid off house when I retire (either current house will be paid off or I will sell with more than enough equity to downsize and buy something smaller for cash). I will have to put some money towards property taxes, maintenance, most likely some sort of HOA/condo fee, but still much less than a mortgage or rent payment would be for a comparable home. So my savings goals are more modest than someone who has to calculate covering a rent or mortgage payment in the amount of money they will need each month in retirement.
the bad thing is while you can save more later on in life after the house is paid your biggest friend when investing is time . compounding over time is what takes the bits of money we manage to save and turns it in to meaningful amounts .
the later you start the less effective it can be
Very true - which is why I'm not in favor of paying down a house extra fast. You can re-fi with a lower interest rate (without restarting the mortgage period) but with rates as low as present compared to market returns don't dump all your money into the house.
That psychological lift of being mortgage-free does have a price in terms of (in many places) the value not increasing as fast as your 401k.
Very true - which is why I'm not in favor of paying down a house extra fast.
That psychological lift of being mortgage-free does have a price...
It can be a low price though... if you can manage it right.
But whether you HELOC for improvements or cash-out refinance for other purposes
or keep it all very simple with a straight up paid to the end first mortgage...
over the course of a typical 40 year working life... get it all paid off before retirement.
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