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Old 01-04-2013, 12:20 PM   #141
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Originally Posted by FIREd View Post
But I do kind sir. Money is money. DW will never walk by a penny on the street without picking it. That's how we roll here (how we roll the coins of course).
Which reminds me, I need to collect all my pennies and take them to the bank before they become obsolete......

Phasing out the penny
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Old 01-04-2013, 01:39 PM   #142
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Calculating net worth can be more involved than just counting cash value.

This situation could be a case in point.
With no other ongoing source of income than SS... Married... House paid for... Limited net worth.

If... one spouse should go into a nursing home @$85,000/yr., six years could cost a half million dollars, which would have to come from savings.

When the cash assets are depleted, Medicaid takes over nursing home costs.
The healthy spouse lives in the house. When the nursing home patient dies, the surviving spouse still has the value of the house.

Obvious to most perhaps, but in the matter of longevity planning, this could be a major factor in considering the consist of net worth. In effect, an insured investment.
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Old 01-04-2013, 03:02 PM   #143
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Net worth is a balance sheet calculation while budget is an "income and expense" or P&L. If net worth is assets minus liabilities, deferred tax on income and unrealized capital gain is very much a liability.
I've never seen deferred taxes or unrealized capital gains as a liability on a "personal" net worth statement. Obviously, they are nice to know and some sort of calculation should be used when budgeting for the future. As mentioned above, it's quite possible you can have distributions of tax deferred accounts that end up being non-taxable. It would be really hard to figure out what the liabllity would be.

Having said that, a business balance sheet is going to have a deferred taxes as a liability, so from a strictly GAAP standpoint, you're correct. I just don't think you'd probably include it on a personal net worth statement. But, based on reading this thread, there are about a zillion ways to calculate net worth!
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Old 01-04-2013, 03:30 PM   #144
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Which reminds me, I need to collect all my pennies and take them to the bank before they become obsolete......

Phasing out the penny
Negative. Hoard the copper ones, so you can capture the 3X melt value when the penny is phased out and the melt ban is lifted. Kidding, I turned in over 12,000 pennies last year, at least half were copper ones.
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Old 01-04-2013, 03:37 PM   #145
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Our net worth was up 15.5% - we leave our home equity out of the calculation since we don't want to have to depend on that, it is too unpredictable.

For us the growth is roughly equivalent to 6 years of our planned withdrawal from savings once I retire, so that definitely has me thinking to move the date in closer.
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Old 01-04-2013, 03:59 PM   #146
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For the first time in 30 years I have not calculated my net worth with the new year. When I was younger I counted EVERYTHING I possibly could. In 1982 I still came out about $80.00 in the hole.
As of yesterday I actually hit "The Number" for the first time. The number for liquid assets where I would FIRE no matter what. No mortgage and no need to count the houses. We'll see how that holds for awhile.
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Old 01-04-2013, 04:03 PM   #147
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NW up 23.8% saving like crazy and huge dividend from company stock. Portfolio value up by around 12% ex contributions.
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Old 01-04-2013, 04:48 PM   #148
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Only 8.4% but we did build a new house in 2012 that drained some of our cash. Oh well, our NW still hit an all-time high :-)
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Old 01-04-2013, 05:55 PM   #149
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Up 14%, but that includes significant new savings. We are at about 40% stocks, aiming for 50% AA. Much of our money from prior to 5 years ago or so are in VERY conservative investments. I did it all totally backwards
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Old 01-04-2013, 07:45 PM   #150
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I know I will be whipped, but do you subtract taxes from tIRA's and 401k's balances ? You don't really own that money, and how do decided what tax rate to use.

My 7 year FIRE'd anniversary was yesterday, Ms G had to remind me.

I don't include my paid off ranch, and I didn't subtract taxes on deferred accounts, 9.2%.
I do. A few years ago I built what I call my "hard core" balance sheet...if its wrong, its conservative...

My rules:
1) Apply future taxes as a liability to all tax deferred accounts. I use my current marginal tax rate.

2) Carry the present value of my children's future college education as a liability against the college savings. I mark this liability to the market cost of college each year so the liability grows with time as the savings do. (eye opening when you're dragging a net-negative on your balance sheet as you build college savings...)

3) Any unvested or vested-but-unexercised stock options are not on the balance sheet. They're carried in a seperate schedule.

4) Mark the cars to market annually using KBB

5) Mark the house to market annually using trulia/zillow

I also broke the balance sheet into short-term/liquid vs. long-term/illiquid...helps me keep an eye on how things are balanced.

I've been doing this for three years. I love how it keeps us from getting too happy about 401K and college savings assets...

My $0.02
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Old 01-04-2013, 08:17 PM   #151
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Hot diggity! Our retirement value went up 41% in one year (DINKS, 36 and 34).

I don't know what the mortgage value was a year ago, but the value probably stayed the same, so whatever we paid on the principle can be added to that net worth.
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Old 01-05-2013, 06:52 AM   #152
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Didn't we discuss this a few weeks ago already ? I forgot what I answered then but I am still not sure how to calculate my NW. Anyway, since I am mostly in CDs, munis and cash, I guess in my case it is about 3%-4% without addition. Additions have been in the $100k-200k range after tax I guess.
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Who cares about the complexity of your portfolio or your returns for 2012 ! The real question is, how much did your net worth change from 1-1-2012 to 12-31-2012 ?


??
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Old 01-05-2013, 06:55 AM   #153
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I also have to agree with others here. I don't really care about my NW. It's all being happy living the life I want with the cash flow I need when I finally FIRE.
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Old 01-05-2013, 10:23 PM   #154
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Wow, guys, it's amazing that this thread is still open.

I'm not surprised to see 334 different ways of calculating net worth, each one the only one true path to happiness.

So I sat down with a cup of coffee, analyzed each one of the various methods, and applied them to our portfolio.

I realized that we donated to charity in 2011, which meant that we had more than we needed.

I realized that we donated to charity in 2012, too, which meant that we still had more than we needed.

That concludes my calculations of our net worth. See you next year. Ooh, look, there's surf on the North Shore!

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I couldn't agree more. We are so lucky that we retired just after the 2008 crash. I expect we'll see similar in the future but. Each year that passes with net worth increasing increases the confidence that the financial part of retirement is going to work out just peachy.
That's pretty much how we were on 1 June 2002...
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Old 01-06-2013, 09:30 AM   #155
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I only read to page 3 so this may have been said already. I would not count my house which is paid off in my net worth. Yes it's part of the total but until it is sold it really is not accessible nor do I really know it's actual value. You wouldn't (or shouldn't) count SS or pension payments for the same reason as they are all part of future assets.
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Old 01-06-2013, 09:33 AM   #156
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I only read to page 3 so this may have been said already. I would not count my house which is paid off in my net worth. Yes it's part of the total but until it is sold it really is not accessible nor do I really know it's actual value. You wouldn't (or shouldn't) count SS or pension payments for the same reason as they are all part of future assets.

Agree 100%.
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Old 01-08-2013, 09:49 AM   #157
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Up 14%, but that includes significant new savings. We are at about 40% stocks, aiming for 50% AA. Much of our money from prior to 5 years ago or so are in VERY conservative investments. I did it all totally backwards
Almost exactly the same results and situation for me.

I'm doing sets of "dollar value averaging" investments into equities starting last fall to get my AA a bit more aggressive. This will continue for about 2 years. The conservative allocation snuck up on me due to not paying attention. That won't happen again.
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Old 01-08-2013, 09:53 AM   #158
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I only read to page 3 so this may have been said already. I would not count my house which is paid off in my net worth. Yes it's part of the total but until it is sold it really is not accessible nor do I really know it's actual value. You wouldn't (or shouldn't) count SS or pension payments for the same reason as they are all part of future assets.
This is how I did my calculation.
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Old 01-11-2013, 09:23 AM   #159
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Old 01-11-2013, 09:29 AM   #160
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Eh, a lot of people claim their net worth is up, but did they account for inflation?

And then, what is this chained CPI that Congress talks about? You've got to compute that way too.
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