Cars percentage of net worth?

[bloom2708]

We have 6 cars (3 teen drivers) for a total of ~$50k. Under 2% of NW.

We have 1 extra car (6 cars, 5 drivers). I have a cheap gas sipper so the Ford Expedition EL only needs to be driven when hauling or towing or 6-8 passengers.

As the kids fly the nest, hopefully this number goes down.

[braumeister]

This is a remarkable question to me. I've never thought about including my car in my net worth. Do people include their furniture, pots and pans, silverware, etc. as well?

[bloom2708]

Quote:

Originally Posted by braumeister This is a remarkable question to me. I've never thought about including my car in my net worth. Do people include their furniture, pots and pans, silverware, etc. as well?

If you decide to have a "life garage sale", your furniture, pots, pans, stuff in the garage, stuff in the attic is likely worth something. If you include TVs, computers, smart phones, tablets, guns, art, you may have a pretty good amount tied up into those items. Is it easy to get the money out? Maybe or maybe not.

After a house, a car is likely most peoples largest expense. Yes, the value goes down, but a car worth $20k is certainly part of your net worth.

A pot may be worth $2, so your level of tracking might only go down to $1,000 or higher. Or have a bucket like "Household Items".

[MarieIG]

Quote:

Originally Posted by braumeister This is a remarkable question to me. I've never thought about including my car in my net worth. Do people include their furniture, pots and pans, silverware, etc. as well?

I don't include vehicles, personal property or pension/ SS income in net worth. I don't see the point.

Have I ever seen it done. Yes, acrimonious probate and divorce proceedings. In one probate matter, I recall seeing a toilet bowl brush being listed.

[COcheesehead]

Quote:

Originally Posted by braumeister This is a remarkable question to me. I've never thought about including my car in my net worth. Do people include their furniture, pots and pans, silverware, etc. as well?

Being a seller on eBay, I know there is a market for almost everything. We sell household stuff all the time, so yes, we include a category for household items in our net worth statement along with cars, the house, etc. If it can be liquidated, it’s an asset to us.
Our household category right now has a conservative estimate of $62,000. My wife’s cameras, our bikes, iPads, phones, jewelry, wine, outdoor toys…it adds up.

[Car-Guy]

Quote:

Originally Posted by braumeister This is a remarkable question to me. I've never thought about including my car in my net worth. Do people include their furniture, pots and pans, silverware, etc. as well?

"Most" new cars value drop thousands when you drive them off the lot and continue to devalue as time goes by and miles are driven.

Furniture, pots and pans, etc, resale values drop to "almost" nothing once they are at home and used. (Real silverware, maybe not so much) So no, I've never counted the value of household stuff, "except" when thinking about replacement cost for insurance purposes.

Even nice TV's and PC's are throwaway prices these days. In the last 6 mos, I bough a new big flat screen TV and a new HP laptop for a total price of about $700 (at the most)...

[Sunset]

Quote:

Originally Posted by bloom2708 If you decide to have a "life garage sale", your furniture, pots, pans, stuff in the garage, stuff in the attic is likely worth something. If you include TVs, computers, smart phones, tablets, guns, art, you may have a pretty good amount tied up into those items. Is it easy to get the money out? Maybe or maybe not. ......

I find people highly over-value all the stuff they own, unless a person has a Rembrandt on the wall, the entire household of used furniture can be sold for $1K -> $5K

I see online folks giving away for free china cabinets, couches, beds and bed frames, dining tables and chairs, paintings and art, etc...

It's hard to get the money out of these things, and many of the free things I see are after the people tried to sell them for around $100.

So I don't include house contents in net worth.

[Jerry1]

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Originally Posted by MarieIG I don't include vehicles, personal property or pension/ SS income in net worth. I don't see the point. Have I ever seen it done. Yes, acrimonious probate and divorce proceedings. In one probate matter, I recall seeing a toilet bowl brush being listed.

NW includes everything. All assets minus all liabilities. It does not include income streams unless they have a cash surrender value/option. However, as a practical mater, I don’t even include my house in my net worth. I just look at my cash and investable assets. If I had to do a balance sheet for say a loan or something, I’d include my house, get a Kelly Blue Book value for my car and make an educated estimate of my personal property. I don’t see having to do that in my future. The only reason I look at or think about my NW is when I think about inheritance to my two daughters and when I think about end of life care. As mentioned earlier, I’m going to have a nice car until I can no longer drive. It’s not likely I will ever think of it in terms of my NW no matter how defined.

[MarieIG]

Quote:

Originally Posted by Jerry1 NW includes everything. All assets minus all liabilities. It does not include income streams unless they have a cash surrender value/option. However, as a practical mater, I don’t even include my house in my net worth. I just look at my cash and investable assets. If I had to do a balance sheet for say a loan or something, I’d include my house, get a Kelly Blue Book value for my car and make an educated estimate of my personal property. I don’t see having to do that in my future. The only reason I look at or think about my NW is when I think about inheritance to my two daughters and when I think about end of life care. As mentioned earlier, I’m going to have a nice car until I can no longer drive. It’s not likely I will ever think of it in terms of my NW no matter how defined.

Thanks Jerry.

[PatrickA5]

Quote:

Originally Posted by braumeister This is a remarkable question to me. I've never thought about including my car in my net worth. Do people include their furniture, pots and pans, silverware, etc. as well?

NW is Assets less Liabilities. A fork is an asset. Might only get you 10 cents in a garage sale, but it's still an asset.

But, most people pick and choose what they want to include in THEIR definition of net worth. If I wanted to, I could say I don't include my investments in my Net Worth.

[Car-Guy]

Quote:

Originally Posted by Jerry1 NW includes everything. All assets minus all liabilities. It does not include income streams unless they have a cash surrender value/option.

So two guys (or gals) retire at 65, on the exact same day and both have a cash value in their personal accounts the day before retiring of $500,000. The first person takes the company retirement lump sum settlement for $1,000,000 and is now worth 1,600,000. (not counting taxes). The second person takes the company annuity w/o survivorship so they still have a net worth of $500,000. Correct?

[finnski1]

Quote:

Originally Posted by Car-Guy So two guys (or gals) retire at 65, on the exact same day and both have a cash value in their personal accounts the day before retiring of $500,000. The first person takes the company retirement lump sum settlement for $1,000,000 and is now worth 1,600,000. (not counting taxes). The second person takes the company annuity w/o survivorship so they still have a net worth of $500,000. Correct?

Well in my mind you are correct. You can't count future cash flow or NPV of that cash flow on something that expires when you do.

[finnski1]

Well the premise of the article seems to be what percentage of your net worth can you afford to pay for a new vehicle not what percentage is your present vehicle of your net worth. A subtle distinction. Most of us appear to have well loved vehicles worth a tiny % but that is not necessarily what we would go out and spend for a new one.
Either way I would not be comfortable at all spending 5% for a new vehicle or anything near that. But I am frugal

[Major Tom]

I keep meaning to sell my campervan, which I hope to get around to in the next few months. After I've done that, I'll be back to not owning a vehicle, which will be wonderful. I view vehicles as bills and liabilities on wheels.

When the campervan is sold, I'll be back to having just a bicycle for transport. It cost me $125 off Craigslist, and about $50 to fix up. Call it $200, to be absolutely sure. It will represent about 0.0001851852% of my net worth.

Lovely!

[Jimonlimon]

Quote:

Originally Posted by braumeister This is a remarkable question to me. I've never thought about including my car in my net worth. Do people include their furniture, pots and pans, silverware, etc. as well?

There's your net worth, then there's the amount that you consider useful for planning your expenditures and budget.

I don't count the roughly $750k in equity for our 2,000 square foot house in planning for expenditures. We need a place to live and unless we move out of our region the cost difference to downsize (after closing costs, moving costs, etc) would be very little.

I do consider the home equity in thinking about leaving something to our heirs or the potential for moving to a different region- As long as we avoid expensive metro areas our equity should be enough to buy a replacement with cash.

Cars? They're just a money pit. Old ones cost for repairs and maintenance, new ones cost a lot then depreciate quickly. The value of a new car is that you get a couple years break before spending much on repairs or another new car. "Collectable" cars my be an investment but most people I know who bought, restored, and sold classic cars (whatever that means) did it at either an outright net loss or if they made a paper profit their time, garage space, tools, etc. weren't part of the equation.

[Car-Guy]

Quote:

Originally Posted by finnski1 Well in my mind you are correct. You can't count future cash flow or NPV of that cash flow on something that expires when you do.

I wonder in such a case if both would consider themselves millionaires? I suspect some do and some do not. Suspect their lifestyles "could be" the same too.

[Andre1969]

The only time I really thought about a vehicle as part of my net worth was when I bought my 2012 Dodge Ram. Even though I did the math exercise a few posts back with my old Dodge Intrepid, I had never really thought about it at the time.

However, my reasoning for thinking about the Ram, in relation to my net worth, wasn't how much it added to it, but more of a mental exercise, to psyche myself into buying it. At the time, I was really on the fence about it, even though it was a good deal. I started thinking that even if it was $25K, I had enough to buy this truck 30 times over. Or to put it another way, I could have bought the truck, given it away at the end of the year, and bought another, and done that for 30 years before running out of money. Of course, that's not taking into account inflation, market fluctuations, etc.

A dumb exercise that's really meaningless, I know, as I wouldn't give away a truck every year. But, it was just one of those mental mind tricks I used to convince myself that it wasn't much money at all, and that I could easily afford it.

[Sojourner]

Quote:

Originally Posted by Jimonlimon There's your net worth, then there's the amount that you consider useful for planning your expenditures and budget.

Exactly how I think about it. I never include the value of my cars or household possessions when calculating my investable net worth. What I'm interested in is the number to plug into FIRECalc in order to estimate my SWR.

Quote:

Originally Posted by Jimonlimon Cars? They're just a money pit. Old ones cost for repairs and maintenance, new ones cost a lot then depreciate quickly. The value of a new car is that you get a couple years break before spending much on repairs or another new car.

+1

[Andre1969]

Quote:

Originally Posted by Jimonlimon Cars? They're just a money pit. Old ones cost for repairs and maintenance, new ones cost a lot then depreciate quickly. The value of a new car is that you get a couple years break before spending much on repairs or another new car. "Collectable" cars my be an investment but most people I know who bought, restored, and sold classic cars (whatever that means) did it at either an outright net loss or if they made a paper profit their time, garage space, tools, etc. weren't part of the equation.

I was just thinking this very thing this morning. In another forum, somebody posted a link to a 5,000 mile 1977 Chevette that went for an astounding $21,000. I ran that number though an inflation calculator, and it came out to around $4300-4400 in 1977 dollars.

That Chevette? Its window sticker read roughly $5,000. Base price was only something like $3225, but it had a lot of options for a Chevette. Things we take for granted today, like a radio, a/c, rear window defroster. Back seat

Now granted, there are some classic cars out there that are worth a fortune. And some people are good at "flipping" cars (and not like an old episode of "CHiPs"). But by and large yeah, they're a money pit. I imagine most classic cars never even get back to their original MSRP in value, once you factor in inflation.

[freedomatlast]

I never though about the price of a new vehicle in terms of percent of NW.

I have thought about the price of a new vehicle in terms of how many months of after tax earnings would be equivalent.

I've also thought about the prices of new vehicles slowly approaching the price of my first house.