Net Worth - A wider view

[aja8888]

The downside of renting versus owning a paid off house... the extra income needed to pay rent is usually taxed.

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Only if you are using taxable income to pay rent.

You can sell the house, hopefully exempt from taxes at that time, and use those funds to pay rent for a good long time.

 

[Helena]

Only if you are using taxable income to pay rent.

You can sell the house, hopefully exempt from taxes at that time, and use those funds to pay rent for a good long time.

True... unless lawmakers change the rules and tax all home equity.

http://www.early-retirement.org/for...indignity-to-old-age-94055-3.html#post2119019

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[pb4uski]

You mean mortgage, not equity, right?

Yes.... mistyped it... fixed it.

 

[Badger]

If you don't include the equity of your house in your net worth can you sell the house, invest the money and then count that as part of your net worth?


Cheers!

 

[pb4uski]

^^^^ good point

 

[Toocold]

I've been tracking net worth on a quarterly basis since 2003 and I include everything but (other) personal possessions. I include the house, the cars, investment properties, vested stock options, deferred compensation, etc. With that, I fare well compared to Financial Samurai's aggressive scenario.

Over the past 3 years, I've also been focused on generating passive income (e.g. dividends, interest, and rental income) and I calculate % of quarterly and trailing 12 month spend covered by passive income, while deferring all of my W-2 compensation, to experiment on how I react to having $0 paycheck. I found this to be a good experiment to prepare mentally for when I finally pull the trigger.

I think I'm a money nerd.

 

[Alan]

If you don't include the equity of your house in your net worth can you sell the house, invest the money and then count that as part of your net worth?


Cheers!

We did this before we retired, invested the money, lived in “lock and leave” apartments then spent 7 years traveling before settling down and then buying a house.

I’ve always included the house in the net worth calculation, and also calculated the investable assets for use in withdrawal rate calculations.

 

[NW-Bound]

I don't track the values of my 2 homes for the following reasons:

1) They are not liquid assets. When they go up/down, there's not much I can do about that. I cannot sell/buy as I do with my stocks to lock in gain, or to pick up bargains. So, other than to feel good/bad with the knowledge of the market values, there is not much I can do with the info.

2) Their values are not a big percentage of my assets. I guess if they were worth $1M each the same as in California, I might pay more attention. But then, there's not a whole lot that I can do with the info unless I plan to move to a place less expensive.

3) If I care about the liquidation value of my homes, it means that my investable assets are shrinking and I need to look for backup financial sources. Ugh! That situation is not good, and I hope to never get there. If and when I get there, I will worry about it then.

So, it's all about feeling good/bad when the house values go up/down. Out of curiosity, I do want to see what the comps are in my area, but I spend more time tending to my investable accounts.

 

[53anddone]

I've been tracking net worth on a quarterly basis since 2003 and I include everything but (other) personal possessions. I include the house, the cars, investment properties, vested stock options, deferred compensation, etc. With that, I fare well compared to Financial Samurai's aggressive scenario.

Over the past 3 years, I've also been focused on generating passive income (e.g. dividends, interest, and rental income) and I calculate % of quarterly and trailing 12 month spend covered by passive income, while deferring all of my W-2 compensation, to experiment on how I react to having $0 paycheck. I found this to be a good experiment to prepare mentally for when I finally pull the trigger.

I think I'm a money nerd.

I think you are doing the exact right thing. I did the same and just retired at 55 when the numbers just kept showing a no brainer.

I live by my NW actual, trend, and forward projections.