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Old 07-02-2017, 11:22 PM   #61
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I include all assets and all liabilities.
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Old 07-02-2017, 11:32 PM   #62
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No. It's relatively insignificant anyway.
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Old 07-03-2017, 05:37 AM   #63
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What are you including it for? Is there some calculation you are doing based on your total net worth?
Yes, as I get closer to 500k it seemed like a slam dunk to start including it in my calculations. I do not include my car, or clothes and I do not own a home, so just whatever else I have gets included. My savings and checking never had that much in them before, so I never thought much about it. I know that it [savings+checking] is going to be pretty consistent now, so I that is why I added it . 500k for me seems to be a tough nut to crack, but I will get there eventually.
In that case, I'd include savings and checking, especially since you are working towards a personal goal that has been "a tough nut to crack".
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Old 07-03-2017, 05:40 AM   #64
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For purposes of tracking and deciding when I've finally reached FIRE, no. I'm still working, so it's what pays the bills, is highly variable, and doesn't really accumulate. If it does get too high, I skim from the top and invest. Then I count the part that just got invested.
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Old 07-03-2017, 06:41 AM   #65
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If I were to calculate my NW, yes, I would include everything. I wouldn't specifically count every possession in my house, but I'd make some estimate of them for NW. Thing is, I don't really care and don't calculate my NW.

What I do is figure out if I can retire and for that, I look at all investments and cash versus any liabilities. In that process, I don't consider my house or property (possessions). Thankfully, I am also pretty much debt free (monthly credit card balance - always paid off, car loan - zero interest rate).
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Old 07-03-2017, 07:00 AM   #66
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I count all my accounts and real property. I leave out personal property. I calculate each quarter so I can adjust my spending plan if needed. We do keep a large cash sum in Ally Bank and Synchrony Bank waiting for DW to find that perfect home on the Jersey shore. Also to mitigate against any large market downturns. Whichever comes first.
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Old 07-03-2017, 11:24 AM   #67
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yes, they are assets whether you want to include it.
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Old 07-03-2017, 11:51 AM   #68
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In the past I haven't included either one. But then I realized that there is over 11k every month between the two, and they are pretty much within 2k of that yearly. So I started including it in my net worth calculations. Am I wrong? What do you do regarding this?
Don't really understand the question. Why would you NOT include it?
Beside maybe the fact that, hopefully, it is a very small to negligible portion of your overall portfolio
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Old 07-03-2017, 12:03 PM   #69
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Net Worth is an accounting concept and is very clearly defined as Assets minus Liabilities. Since cash in a chequing account is an asset, it should be included.

There is a concept of materiality in managerial accounting. If something is immaterial in the big picture, it is permissible to omit it. So, for example, a decamillionaire who has $100 in a chequing account could argue that the 0.001% of assets in the chequing account is immaterial. OTOH, if one has assets of $500K including $50K in cash, that 10% most certainly is material.

I have several chequing accounts and their total balance is never more than 1% of my NW. I do consider that to be material. My philosophy is to follow accounting definitions and to be consistent.
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Old 07-03-2017, 12:26 PM   #70
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Don't really understand the question. Why would you NOT include it?
Beside maybe the fact that, hopefully, it is a very small to negligible portion of your overall portfolio
Yes, as I said in a previous post, it was a small portion,and IMO, it wasn't worth counting in the past. Now I have a lot more in both, so that is why I started including it.
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Old 07-03-2017, 12:29 PM   #71
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With MM rates so low, I've been keeping a pretty large amount in my checking account. For awhile I was getting the same petty interest rate there so why not? At that point I decided it was worth counting the checking account for both net worth (or whatever you want to call it) and as part of my asset allocation calcs.


Re: credit card balances, I pay those monthly so they are transient and small in comparison. Never 5 figures, like my checking account very often is.
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Old 07-03-2017, 06:03 PM   #72
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Ah, the net worth question. Always spawns a flurry!
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Old 07-04-2017, 06:34 AM   #73
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It's your net worth, heck, include the value of your cat if you want. My point is it's yours. I know about what my net worth is, but let's face it, it's just for me and DW's nice to know list. I can't see, other than comparing to my neighbor's of what value it is.


Completely agree. Well put!
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Old 07-04-2017, 11:15 AM   #74
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Yes I include checking and savings in net worth as we have about three years living expenses there as a cushion. I do not include mortgage-free home, cars or furniture or toys. We pay off credit cards monthly.
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Old 07-04-2017, 01:52 PM   #75
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Help me understand the reason why one needs to know the exact value of one's net worth? I mean what's the purpose for ? Except to participate in polls online.
Of course I know the strict sense of the accounting term, I was once an accounting major. While we are at it? Determine net worth. Should I add my frequent Miles awards to my net worth too?
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Old 07-04-2017, 02:02 PM   #76
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I'm wondering too. Does a higher net worth get you access/entry to anything?

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Help me understand the reason why one needs to know the exact value of one's net worth? I mean what's the purpose for ? Except to participate in polls online.
Of course I know the strict sense of the accounting term, I was once an accounting major. While we are at it? Determine net worth. Should I add my frequent Miles awards to my net worth too?
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Old 07-04-2017, 02:14 PM   #77
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I'm wondering too. Does a higher net worth get you access/entry to anything?
More taxes in some countries.
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Old 07-04-2017, 02:30 PM   #78
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Help me understand the reason why one needs to know the exact value of one's net worth? I mean what's the purpose for ? Except to participate in polls online.
Of course I know the strict sense of the accounting term, I was once an accounting major. While we are at it? Determine net worth. Should I add my frequent Miles awards to my net worth too?


I need net worth to obsessively plug into online simulators like FIREcalc. Sure, the last two hundred times it said I was fine, but that might have been a glitch...
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Old 07-04-2017, 02:37 PM   #79
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Since, on ER, this number has no set meaning, any comparison must be taken in context.

When an $800K home is not part of one's net worth, the rest of the items that may or may not be included, is meaningless.
Savings account
Life insurance value
Cars
Realtime inflation/deflation amounts
Net sale differentials... taxes, attorney costs, commissions etc.
Assessed value of antiques, collections
Foreseeable gains/losses.

Naturally, if one's Net Worth exceeds $10M, the perspective of value will differ from the hopeful ER member who is feeling good about having attained a Net Worth of $300K.

The difference extends beyond this, for those of us who look to our net worth as the source of income for our waning days, and those who look to preserve their net worth... using only the investment income to live out their days.

We're all different. Good to know that despite the differences, we can all get along...
Yes we are all different but if we can't agree on basic terminology, discussions become muddled. We don't see topics like:

Do you include money from part time work in INCOME?

Do you include money spent on food in your EXPENSES?
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Old 07-04-2017, 09:31 PM   #80
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I include everything in my cash accounts, retirement, and home equity. Anyone who doesn't is playing a game on slanted numbers, which is also fine if that suits them. If you own expensive classic cars or jewelry, including their resale value would be perfectly normal.
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