Wednesday, June 12, 2013

Calculating Net Worth

I don't post my net worth on my blog but after reading numerous blogs about their June 1st net worth. I decided to calculate my net worth just out of curiosity. This is my dilemma. What all do people usually include for physical assets? All vehicles? Motorcycles? I don't feel right about including certain things of value like my wedding ring. I'm not ever selling that. Same thing with my furniture.

What all do you include? All vehicles? Anything else outside of your house or condo?


  1. I include all checking/savings accounts, all loans, my house value and rental house value, and any credit cards I don't pay in full.

    I only include my car value at my end of the year, closing my books net worth calculation. I'm not planning to sell it - I will be running it to the ground (though I tell my car that I would be fine if she lasted the rest of my life - I do not want to go car shopping; I'm 30 & I also tell my dog this, but I'm not so sure either of them will listen). I also do not have a car loan - if I had a car loan, I would be calculating this every month to offset the loan amount.

    My home values: I track these a) to offset my mortgage amount, and b) to track the market. I use my rental as income, and my current home will eventually become a rental when we move. If/when the markets skyrocket again, I will unload them both/all. I won't know when they're going up & hit my threshold amount unless I track them. I'll need prep time.

    Credit cards: I pay all interest-bearing credit cards in full every month. I DO NOT pay interest - ever. I do not use these credit cards in my net worth calculations. I do, however, have several 0% interest credit cards that I rack up and float the money / earn rewards. These, since I don't pay them off completely every month, I do include in my net worth calculation.

    I think my philosophy is: If I ever plan to sell it, or I have a loan on it that may need to be payed off/offset, I track it. Otherwise I think of it as sunk costs & ignore it (such as furniture & my wedding ring, like you mentioned).

  2. I guess there's no rule set on stone for this. I personally include all of my debt and for assets, Quicken includes my 401k/IRA, but I don't include the car since it is paid off and it's likely I will never get a penny for it (once I'm done with it, it will go to a younger sibling or back to my parents). I guess you could leave the car out, but I definitely would leave furniture and jewelry out.

  3. Tanner is right, there is no set rule. For me, I total up my monetary assets like savings and stocks. Then I total up my financial debts and subtract the two.

    I don't include the value of my car, one because it is always depreciating and secondly, because it isn't that easy to liquidate. I also don't really see myself selling it just like that so I don't look at it as a normal asset. It's more of a toy, no different from my cell phone. If I had a car loan though, I would include it in my debts.

    I don't own a house but I guess I would treat it much the same way as the car. I wouldn't add it to my assets but I would add the mortgage to my liabilities. Although, with a house, if you don't add it's value, your net worth would be really deep in the negative region so it depends on you.

    I personally love calculating my net worth every month. It's one of my favourite things in personal finance.

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