retire@40
Thinks s/he gets paid by the post
- Joined
- Feb 16, 2004
- Messages
- 2,670
Even though including your house or even the pencil on your desk is not incorrect as far as the net worth formula goes, my own personal formula for determining net worth for purposes of ER only includes assets that I would use to derive income. So unless you plan on selling your house and not buying another, doing a reverse mortgage, converting it to rental property, or something like that, I would not include the house in my ER net worth formula.I agree. I don't "count" any of that stuff - just my house.
So I guess to "standardize" the net worth formula, I would say only include assets that you expect to produce a cash outflow to you in the future. If it's a pencil on your desk that you expect to sell at a yard sale for 5 cents, then include that pencil in your net worth.