How do YOU figure your Net Worth

[73ss454]

Bongo, where do I get the life annuity for 500K that pays 100K a year from an AAA company?

[greg]

Originally Posted by 73ss454

Bongo, where do I get the life annuity for 500K that pays 100K a year from an AAA company?

I think a former spin-off from Enron now sells that very annuity. If you want, I'll find out the name and you can send me the money to get started.

[bongo2]

Originally Posted by 73ss454

Bongo, where do I get the life annuity for 500K that pays 100K a year from an AAA company?

Exactly. I wanted to make the example dramatic to avoid the whole "annuities are junk" discussion.

[mathjak107]

interesting loophole i guess. i think it would be catagorized the same as say a person you sold property or a business to and held the note. for a life time of payments.

to be honest, im not quite sure how id figure it and that would depend on what im trying to figure and why

[lowflyer]

When investment totals are small, adding home equity, cars, etc. make the numbers look bigger, which might make you feel better. As investments grow, there's less need to add those items. Regardless, it's still total assets minus total liabilities. Pretty straightforward I would think...

[S]

I have a blog on which I occasionally post my net worth. It's a very rough calculation:

cash + retirement accounts + value of house at purchase 3 years ago
- mortgage - car loan - student loans

We don't have any expensive jewelry or toys to complicate things.

[SecondCor521]

I calculate two net worths. One for tracking progress over time and one for evaluating FIRE status. The first is calculated as:

checking
savings
retirement accounts
kids' college accounts
some household goods
house
car
accounts receivable

minus

mortgage
student loan
CC balances

For my FIRE status, I adjust by the NPV of my social security, my kids' college expenses and my child support payments. I value at zero a likely inheritance and future promised gifting from my parents.

2Cor521

[Keim]

I figure in stocks, retirement plans, checking, savings, and something I call "cash in house" (appraised value-mortgage+debt repayment).

Example: House currently worth 180,000. Bought it at 105000 back in 98. Have paid 39919.70 on mortgage. 180000-105000+39919.70. Cash in house=$114420.

I've come up with this on my own. Any pros or cons to how I'm doing it?

Also, while I'm asking questions (my 1st post here), what is a "DH"? It seems to refer to a spouse, significant other, etc. What do the letters stand for?

[REWahoo]

Keim, welcome to the forum. You can find a list of acronyms here:

http://early-retirement.org/forums/i...p?topic=5392.0

[SecondCor521]

Originally Posted by Keim

I figure in stocks, retirement plans, checking, savings, and something I call "cash in house" (appraised value-mortgage+debt repayment).

Example: House currently worth 180,000. Bought it at 105000 back in 98. Have paid 39919.70 on mortgage. 180000-105000+39919.70. Cash in house=$114420.

I've come up with this on my own. Any pros or cons to how I'm doing it?

Also, while I'm asking questions (my 1st post here), what is a "DH"? It seems to refer to a spouse, significant other, etc. What do the letters stand for?

The way you're doing it isn't typical. I would (and do) use equity (what you call "cash in house) = current market value - current mortgage balance. Your formula doesn't seem to account for any money you put down on your house.

2Cor521

[kcowan]

Originally Posted by SecondCor521

The way you're doing it isn't typical. I would (and do) use equity (what you call "cash in house) = current market value - current mortgage balance. Your formula doesn't seem to account for any money you put down on your house.

2Cor521

Also if you want to be really conservative, get the 15-year average appreciation in your neighborhood, and apply that to your purchase price. Consider any difference from that number and current market value estimates to be a short-term market abberation. This is particularly useful in the superheated parts of the country.

There is a parallel here in that we count conservative market returns and not instantaneous valuations when doing our future planning. Unrealized values on paper may not be realistic for any equities.

[GMueller]

In my opinion "net worth" represents a snapshot of the net value of your assets at any given point in time. It is the net proceeds you would have left if you "cashed out" all of your assets (in a non-distress sale) and paid off all your debts. Obviously, if you "cashed out" you would have to pay taxes on any gains. As for myself, I maintain a single page spreed sheet that lists all of my assets and liabilities. I have one column that calculates my "net worth" without any adjustment for taxes, and another column that calculates my "net worth" minus estimated taxes that would be due if I liquidated. The difference is presently about $120K. In my view many folks take an overly optimistic approach to calculating their net worth. Even including the value of a pension is problematic -- have you ever tried to sell one? If an asset isn't generating income, it has little value to me in calculating my net worth.

[kcowan]

Originally Posted by GMueller

...Even including the value of a pension is problematic -- have you ever tried to sell one? If an asset isn't generating income, it has little value to me in calculating my net worth.

I only use the present value of the pensions to compute asset allocation. I agree with your column 2 approach if you are contemplating a move overseas and for estate planning purposes.