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I don't understand all this confusion of Net Worth either. This forum is odd in how they treat standard accounting practices. It would be helpful if the people that are going to make up definitions would make up their own terms with those made-up definitions so those that understand standard terms are not confused. Net Worth is not up for interpretation.
How to treat the home you live in has always been a debate. I mean when we bought our 2nd home we paid cash so over night 250k switched pockets.
The same thing happened when we sold .
I don't count personal items , even fine art work.
Until the day comes that i am willing to part with the pieces they remain consumption items and expenses as i have them insured and paid for.
Quote:
Originally Posted by mysticaltyger
Blech. I still don't think a house should be counted unless you KNOW for sure you're going to liquidate it at some point for profit (i.e. buy a cheaper house elsewhere). I think including the house (and the car) gives a distorted view of a person's financial flexibility.
I'm sure you'll disagree.
You guys are still arguing on whether or not something counts towards an Asset based on it's convenience or your willingness to liquidate (sell it off) at once.
If that's the case, then why do you count non-dividend paying Stocks as Assets then lol? Some Stocks people have the intention for holding them literally forever (or let's say, over 30 - 40 years), so if you aren't counting your HOUSE, your ARTWORK, nor your CAR, which all have asset value, why do you count your Stocks?
Lol, guys, an Asset is an Asset, a Liability is a Liability. Net Worth is Assets - Liabilities. Period. It doesn't matter how you want to look at your House, Car and Artwork, they all have appraised resell value and that value is an ASSET. Period.
Now, some people buy Houses stupidly and end up underwater on them, which is when the outstanding mortgage balance (liability) on the House is worth more than the current appraised value of it.
This sort of attitude almost always goes back to really bad/traumatic experiences in childhood or adolescence. People who do this find it easier to write off the whole opposite sex as a way of protecting themselves. People are generally more motivated by avoiding loss (i.e. loss aversion) than achieving gains.
Obviously, JoTucker overcame the poverty mindset, but has some serious scars with the relationship stuff that he either doesn't recognize or doesn't want to deal with.
You guys are throwing out strawmans, then arguing against the strawmans you just threw out.
- I never said I hated women, that's what YOU guys said, I didn't say that. I date women often and my credit card statements (due to the costs for dating them) shows it lol.
- I (like many other people) didn't have a Cosby Show childhood, but I'm not sure what in the world that has to do with discussing the inefficiencies of the Family Court System? What does that have to do with the fact that in 2015, a Judge still awards an ex-spouse LIFETIME alimony? What does that have to do with the fact that in 2015, Judges are awarding excessive child support payments?
So a guy makes $1 million a year right, he might have to pay $100,000 per year in child support which is $8,333 a month. What in the blue devil hell are you buying a damn infant for $8,333 a month? If that money has to be allocated to the child, shouldn't at least 80% of it be going into a mandatory trust fund or college fund for the child instead of to the Mother?
You guys are still arguing on whether or not something counts towards an Asset based on it's convenience or your willingness to liquidate (sell it off) at once.
If that's the case, then why do you count non-dividend paying Stocks as Assets then lol? Some Stocks people have the intention for holding them literally forever (or let's say, over 30 - 40 years), so if you aren't counting your HOUSE, your ARTWORK, nor your CAR, which all have asset value, why do you count your Stocks?
Lol, guys, an Asset is an Asset, a Liability is a Liability. Net Worth is Assets - Liabilities. Period. It doesn't matter how you want to look at your House, Car and Artwork, they all have appraised resell value and that value is an ASSET. Period.
Now, some people buy Houses stupidly and end up underwater on them, which is when the outstanding mortgage balance (liability) on the House is worth more than the current appraised value of it.
While i do think a personal residence should be counted as part of net worth there are many things it would not count towards.
In many instances like hedge funds or private country clubs they only count investible assets.
Those are assets that can be traded or sold because they are not being consumed.
When the house is liquidated and no longer being consumed the money is counted as liquid assets.
I guess it goes back to the fact that " investable assets " are used as a filter since there are loads of house rich americans but not that many with substantial investable assets.
Last edited by mathjak107; 09-27-2015 at 05:16 PM..
While i do think a personal residence should be counted as part of net worth there are many things it would not count towards.
In many instances like hedge funds or private country clubs they only count investible assets.
Those are assets that can be traded or sold because they are not being consumed.
When the house is liquidated and no longer being consumed the money is counted as liquid assets.
I guess it goes back to the fact that " investible assets " are used as a filter since there are loads of house rich americans but not that many with substantial liquid assets.
I agree, a lot of other financial advisers and even investment groups do NOT count include every single asset into their net worth calculations. It's just insane to me, but an asset is still an asset.
But yes, I would think that if someone is investing properly, the bulk of their assets should be non-liquid. Why would someone need to have majority of their assets in liquid form? As I mentioned, some people have intentions of holding an asset forever (never selling it) which means it's never liquidated.
- Take people who hold strong share positions in growing corporations and companies for example, why would they EVER liquidate that if they don't need the cash?
- Take people who buy antiques and hold them for decades (sometimes even holding them so long it passes down to their grandchildren).
ETA:
DEBT: $2k medical, $7k student loans, $750 CC (and yes I'm paying off my debits now)
I didn't count my car because I don't technically own my car (It's in my dad's name and he pays the annual registration fee & insurance. It's probably worth $4,000; 2006 Volkswagen Jetta w/ 120k+ miles).
I agree, a lot of other financial advisers and even investment groups do NOT count include every single asset into their net worth calculations. It's just insane to me, but an asset is still an asset.
But yes, I would think that if someone is investing properly, the bulk of their assets should be non-liquid. Why would someone need to have majority of their assets in liquid form? As I mentioned, some people have intentions of holding an asset forever (never selling it) which means it's never liquidated.
- Take people who hold strong share positions in growing corporations and companies for example, why would they EVER liquidate that if they don't need the cash?
- Take people who buy antiques and hold them for decades (sometimes even holding them so long it passes down to their grandchildren).
the term for the filter is usually not liquid assets , it is investible assets . it means you are not using the asset for your own use .
it has no relationship to how long it takes to sell . it is a tactful way of saying "does not include the home you live in or possessions you have no intention of selling whether they have value or not . "
like i mentioned earlier i own a few fine art pieces , but they are for personal enjoyment and heirlooms which are not at this point invest-able assets . they may never be invest-able assets unless the day comes i decide i no longer want to keep them for my own use or heirlooms and will sell them .
just because something has value does not make it an invest-able asset ., many times they only represent an expense if you are consuming it yourself . the artwork on my wall is strictly and expense , i paid to buy them , i pay to insure them , i paid to hang them . i have zero interest in selling them .
they may remain an expense forever as the kids may never have interest in selling them either when they get them . .
although i don't , i could add them to my net worth but no they would not be investable assets .
Last edited by mathjak107; 09-27-2015 at 05:40 PM..
I was not planning to post since I don't fit the norms on this board when it comes to salary, NW and age so I didn't see the point. But I realize while numbers are nice, it is not everything. I am a single mom living in the very high cola Bay Area earning a wage that most in this area would not consider "livable wage". Wealth comes in many different forms, I get to live in an amazing area, have loving relationship with my precious child, many wonderful friends, no debts of any kind so I sleep well at night, fun and non-stressful job that allows me to enjoy my time outside of work and experience what the Bay Area has to offer. I am more than content.
Age 39
Income 50k
NW 105k
You should be proud. I would be uf i were you. Raising a child, and loving them is a super achievement. Life is not about money. It helps. But i can vouch that the pursuit of money had made me richer but not whole.
I was not planning to post since I don't fit the norms on this board when it comes to salary, NW and age so I didn't see the point. But I realize while numbers are nice, it is not everything. I am a single mom living in the very high cola Bay Area earning a wage that most in this area would not consider "livable wage". Wealth comes in many different forms, I get to live in an amazing area, have loving relationship with my precious child, many wonderful friends, no debts of any kind so I sleep well at night, fun and non-stressful job that allows me to enjoy my time outside of work and experience what the Bay Area has to offer. I am more than content.
Age 39
Income 50k
NW 105k
I live in the Bay Area and make about the same as you. You can still do a lot with a lowish income if it's a priority. My job is also pretty low stress so I can relate to that.
But my lowish income also puts other kinds of stress on me. My rent is going up by a lot in a few months. At some point, I worry about being priced out of the area, and that's no fun. I'm not waiting until I'm living payday to payday to make some tough decisions.
An impoverished snake hasn't got a pit to hiss in.
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