How much of your net worth does your car represent?

[powerplay]

I have 2 vehicles and one is 19 years old and the other is 15 years old. Both would be a negligible portion of my net worth. Now when I decide to get a new vehicle I will have to dip into that NW and reduce it some but I will survive!

 

[sengsational]

0% , as I don't include it in NW, like most folks.
Cars are just an expense like electricity.

Not to pick on you Sunset, but to yours and all of the posts that say your NW doesn't include your car, why not do this:

(value of car) / ((value of car + NW) ) * 100

Not too tough, eh? I know, I know, you're making a point...cars maybe "don't belong" in your net worth. Certainly not your investable NW. There are so many definitions around here for NW that I like to avoid the term all together if I can, and instead describe the number (investable assets, investable assets + real estate, investable assets + real estate + present value of income streams, etc). Of course there will be "discussions" about meaning of those too, hehe!

 

[Sunset]

Not to pick on you Sunset, but to yours and all of the posts that say your NW doesn't include your car, why not do this:

(value of car) / ((value of car + NW) ) * 100

Not too tough, eh? I know, I know, you're making a point...cars maybe "don't belong" in your net worth. Certainly not your investable NW. There are so many definitions around here for NW that I like to avoid the term all together if I can, and instead describe the number (investable assets, investable assets + real estate, investable assets + real estate + present value of income streams, etc). Of course there will be "discussions" about meaning of those too, hehe!

Ouch.... Ok, but really I was pretty right on saying 0% as we have 2 really old cars and I just looked up the private sale value on KBB for both.
So our cars are worth: 0.2 % , round that off and you get zero.

 

[3800Fiero]

1.3% 30 year old car, 15 year old SUV and a 10 year old car. Buy a good vehicle, do the required maintenance and drive into the ground.

 

[Keim]

.018% total net worth, .027% invested net worth. I wish this indicated I was rich! It actually means my cars are old.

 

[Major Tom]

.018% total net worth, .027% invested net worth. I wish this indicated I was rich! It actually means my cars are old.

If you owned a Lamborghini or a DeLorean, we'd be impressed with these percentages

 

[Delawaredave5]

Fun thread. We're in the "few percent" group like many here. Met a guy other day bragging about the $50,000 he spent on a pickup truck. I didn't know that was possible.

Hell, I added up all the cars I bought for myself (not counting wife) over the last 30+ years and the total was less than $50k - most I ever spent for my car was around $8,000.

 

[REWahoo]

Met a guy other day bragging about the $50,000 he spent on a pickup truck. I didn't know that was possible.

Piece of cake...

 

[Walt34]

Fun thread. We're in the "few percent" group like many here. Met a guy other day bragging about the $50,000 he spent on a pickup truck. I didn't know that was possible.

Piece of cake...

REWahoo is being conservative. It is not a strain to get to $70k or more.

 

[RonBoyd]

Of course, the FnI guy wanted to add in some crap (warranty, undercoat, all the scams)...

And why would he bring these "scams" up simply because you mentioned financing? What is the relationship you are connecting between the two (scams/financing)? Does one enhance the other in some manner?

 

[Surewhitey]

When we bought it 12 years ago...
.1%

Now after depreciation...
.0035%

 

[Sunset]

I think the relationship between financing and scams is that there are many people who cannot do math and rack up debt without too much thought of the expense of it. So its very easy to up-sell a few thousand extra dollars of stuff to someone on credit, compared to selling it to them from the cash in their pocket/bank account.

So the relationship is: credit -> easy sales , actual cash -> harder sales.

 

[sengsational]

And why would he bring these "scams" up simply because you mentioned financing? What is the relationship you are connecting between the two (scams/financing)? Does one enhance the other in some manner?

Scam might be too strong. How about "high margin add-ons".

 

[samclem]

And why would he bring these "scams" up simply because you mentioned financing? What is the relationship you are connecting between the two (scams/financing)? Does one enhance the other in some manner?

It is possible that those who go to the dealer for financing (where it often costs more) and who care primarily about the monthly payment (rather than more accurate measures of a vehicle's cost) might not be the customers who are interested in/capable of discerning the very best value for their dollar. To the degree such buyers have already identified themselves by walking up to the dealer's financing desk, it makes good sense to hit them hard with the [-]scams[/-] upsell opportunities.

 

[RonBoyd]

So the relationship is: credit -> easy sales , actual cash -> harder sales.

Exactly my point -- they are separate issues. It doesn't, however, show that the cost of not financing (or financing at 0%) is somehow hidden in the final price of the vehicle.

I guess I could better explain it by saying that in this marketplace -- lots of dealership competition and Internet shopping, for instance -- it would be difficult for an individual dealer to outbid another one with "hidden" fees. Even if the dealership carried the paper and was dependent upon that income as part of its business model, I don't see how they could add the expected interest on to the sale price of the vehicle, if the customer paid cash (or 0% interest), without the customer walking. (Yes, I know I am speaking of a "savvy" shopper and that there are a lot of folks with extra money to throw around by not "shopping.")

 

[Keim]

If you owned a Lamborghini or a DeLorean, we'd be impressed with these percentages

Yes indeed! Sounds much less impressive when you know my cars are:
2004 Honda CRv
1993 Ford F150xlt
1976 Chevrolet Monte Carlo

 

[KrissK]

My car is cute, fast, and 12 years old. It represents .003 of my net worth.

 

[RonBoyd]

So as this thread crawls to an end, does anyone still believe that a rapidly depreciating asset (a vehicle in this case) belongs in the Net Worth computation?

(Not a facetious question. I am truly curious.)

An after thought: Wouldn't that make an interesting Poll?

 

[aja8888]

So as this thread crawls to an end, does anyone still believe that a rapidly depreciating asset (a vehicle in this case) belongs in the Net Worth computation?

(Not a facetious question. I am truly curious.)

An after thought: Wouldn't that make an interesting Poll?

If you were to drop dead tomorrow and had cars that could be sold for cash, I believe they (the value) would be counted in your ending net worth.

 

[EastWest Gal]

Too insignifcant a number to even bother doing the math.

+1


Sent from my iPhone using Early Retirement Forum

 

[jkern]

So as this thread crawls to an end, does anyone still believe that a rapidly depreciating asset (a vehicle in this case) belongs in the Net Worth computation?

(Not a facetious question. I am truly curious.)

An after thought: Wouldn't that make an interesting Poll?

Absolutely yes. It would not be fair if someone had a $50K car loan under "Liabilities" and didn't get to count the car value under "Assets" to off set that. Same goes for a house. You would have to count the mortgage as a liability so you should count the house value as an asset.

After all, NW=assets-liabilities. That is not the same as income producing assets or investable assets or retirement planning in general.

 

[Cobra9777]

...does anyone still believe that a rapidly depreciating asset (a vehicle in this case) belongs in the Net Worth computation?

OK, against my better judgment, I'll take the bait. As you stated yourself, vehicles are assets. How quickly they depreciate does not change that basic fact. Cars are not, as several people have asserted in this thread, "just an expense like electricity." The money you spend on fuel, insurance, repairs, maintenance, taxes, registration, interest on a loan, etc... those are expenses. Even the depreciation in value is an expense, although most individuals don't use the accrual method of accounting in their personal finances. But the value of the vehicle itself is an asset. As such, it belongs on the balance sheet. Net worth is just a personal version of a company's balance sheet, subject to many of the same reporting expectations and measurement criteria. See AICPA SOP 82-1.

Now... you certainly may choose to exclude it from your own personal net worth calculation for whatever reason you want. The most common legitimate reason for this is immateriality, as evidenced by most, but not all, of the answers on this thread. I exclude cars from my current NW calculation for that reason. But if I went out tomorrow and converted $50K cash into an F-250, yes, I would include it, as my financial position at that moment is unchanged by the transaction.

I also see people on this forum make comments like, "I don't include my house in net worth because I have to live somewhere." Same issue, only more problematic because house values are generally material to NW. And I think in both cases, the problem is derived from the fact that this is a forum dominated by topics about retirement planning. Generally, what the person really means is: "I don't include my house in the subset of assets from which I expect to derive retirement income because I have to live somewhere." The problem stems from a simple misunderstanding of what is actually meant by net worth, which is much closer to aja8888's description:

If you were to drop dead tomorrow and had cars that could be sold for cash, I believe they (the value) would be counted in your ending net worth.

 

[LoneAspen]

Fun thread. We're in the "few percent" group like many here. Met a guy other day bragging about the $50,000 he spent on a pickup truck. I didn't know that was possible.

Guy where I work bought a brand new Roush F150 Raptor pickup that I think stickered for over $80,000 fully loaded. And I don't think he talked them down much, so probably paid close to full price.

 

[Meadbh]

OK, against my better judgment, I'll take the bait. As you stated yourself, vehicles are assets. How quickly they depreciate does not change that basic fact. Cars are not, as several people have asserted in this thread, "just an expense like electricity." The money you spend on fuel, insurance, repairs, maintenance, taxes, registration, interest on a loan, etc... those are expenses. Even the depreciation in value is an expense, although most individuals don't use the accrual method of accounting in their personal finances. But the value of the vehicle itself is an asset. As such, it belongs on the balance sheet. Net worth is just a personal version of a company's balance sheet, subject to many of the same reporting expectations and measurement criteria. See AICPA SOP 82-1.

Now... you certainly may choose to exclude it from your own personal net worth calculation for whatever reason you want. The most common legitimate reason for this is immateriality, as evidenced by most, but not all, of the answers on this thread. I exclude cars from my current NW calculation for that reason. But if I went out tomorrow and converted $50K cash into an F-250, yes, I would include it, as my financial position at that moment is unchanged by the transaction.

I also see people on this forum make comments like, "I don't include my house in net worth because I have to live somewhere." Same issue, only more problematic because house values are generally material to NW. And I think in both cases, the problem is derived from the fact that this is a forum dominated by topics about retirement planning. Generally, what the person really means is: "I don't include my house in the subset of assets from which I expect to derive retirement income because I have to live somewhere." The problem stems from a simple misunderstanding of what is actually meant by net worth, which is much closer to aja8888's description:

Thank you, thank you, thank you! Very well stated. You must be an accountant.

 

[Walt34]

Guy where I work bought a brand new Roush F150 Raptor pickup that I think stickered for over $80,000 fully loaded. And I don't think he talked them down much, so probably paid close to full price.

I had to Google that, I didn't know it was possible to spend that much on a 1/2 ton pickup.

Kinda disappointing to learn that it is limited to 110 mph because of the drive train and tires. If I was going to spend that much on a vehicle I'd buy a Corvette.