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Savings/assets - debt (amt owed on mortgage, credit card, student loan, medical, etc.) = net worth.
Mostly right but for mortgage, it's what is owed vs either current value (somewhat variable) or purchase price if relatively recent.
So if you purchased a $250k house, and still owe $240k on it, you don't subtract $240k from your net worth. You subtract $250 - $240, and therefore it is worth a positive $10k to your overall net worth. Or if using current value and it is underwater and only worth $150k, then you subtract $150 - $240, and is worth a negative $90k.
Mostly right but for mortgage, it's what is owed vs either current value (somewhat variable) or purchase price if relatively recent.
So if you purchased a $250k house, and still owe $240k on it, you don't subtract $240k from your net worth. You subtract $250 - $240, and therefore it is worth a positive $10k to your overall net worth. Or if using current value and it is underwater and only worth $150k, then you subtract $150 - $240, and is worth a negative $90k.
Agreed, just be wary if that mortgage amount makes up most of your net worth. A lot of people felt pretty good because their net worth looked great on paper during the bubble.
Mostly right but for mortgage, it's what is owed vs either current value (somewhat variable) or purchase price if relatively recent.
So if you purchased a $250k house, and still owe $240k on it, you don't subtract $240k from your net worth. You subtract $250 - $240, and therefore it is worth a positive $10k to your overall net worth. Or if using current value and it is underwater and only worth $150k, then you subtract $150 - $240, and is worth a negative $90k.
Nothing wrong with his method. What you described is already accounted for in his savings/asset value.
Mostly right but for mortgage, it's what is owed vs either current value (somewhat variable) or purchase price if relatively recent.
So if you purchased a $250k house, and still owe $240k on it, you don't subtract $240k from your net worth. You subtract $250 - $240, and therefore it is worth a positive $10k to your overall net worth. Or if using current value and it is underwater and only worth $150k, then you subtract $150 - $240, and is worth a negative $90k.
Mostly right but for mortgage, it's what is owed vs either current value (somewhat variable) or purchase price if relatively recent.
So if you purchased a $250k house, and still owe $240k on it, you don't subtract $240k from your net worth. You subtract $250 - $240, and therefore it is worth a positive $10k to your overall net worth. Or if using current value and it is underwater and only worth $150k, then you subtract $150 - $240, and is worth a negative $90k.
I personally also factor in how much it would cost to sell.
Location: Chapel Hill, NC, formerly NoVA and Phila
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Quote:
Originally Posted by msdmoney
Agreed, just be wary if that mortgage amount makes up most of your net worth. A lot of people felt pretty good because their net worth looked great on paper during the bubble.
Well you can say the same for stock or a 401(k) made up of mutual funds. One's net worth is only for a given moment, really. It can change from one minute to the next or one day to the next, whether their funds are in stocks, mutual funds, real estate, or even cash.
For these youngins who have 100k by their 25 or so or under. Are we taking out the 50k in student loans?
Just wondering.
Yes, all my debts subtracted (which is just mortgage currently but 2 years ago when I was 26 it was mortgage and a small amount of student loans).
My parents couldn't afford to pay for my college so we split the loans right down the middle. It was right around $50k, so I took $25k and they took $25k. But by 26 I was 4 years working and out of school and so the loan was down very low (I paid it off last year at 27).
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