Do you include your home equity in net worth ?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Home equity is BY FAR the least important (though NOT smallest) part of my net worth. It’s not far from fool’s gold.

Why? Explain.

Until I sell, it’s not going to pay for one bill or meal.

Imputed rent is a concept you might want to look into.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Home equity is BY FAR the least important (though NOT smallest) part of my net worth. It’s not far from fool’s gold.

Why? Explain.

Until I sell, it’s not going to pay for one bill or meal.

Imputed rent is a concept you might want to look into.

Irrelevant

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Home equity is BY FAR the least important (though NOT smallest) part of my net worth. It’s not far from fool’s gold.

Why? Explain.

Until I sell, it’s not going to pay for one bill or meal.

Imputed rent is a concept you might want to look into.

You might want to step away from the thread. No need to repeat yourself.

[Anonymous]

Who has more? Someone with $2M in a brokerage, 401K, or home equity?

[Anonymous]

Anonymous wrote:Who has more? Someone with $2M in a brokerage, 401K, or home equity?

Depends on the home equity. If it is in my second house then they are comparable since that is a saleable asset (and in my case one that has appreciated more than my brokerage accounts in the last few years). If I am getting ready to downsize and move to something much less expensive then a good portion of the home equity is comparable to cash assets.

Not sure why you are harping on this topic. As others have pointed out, net worth means assets minus liabilities. If you have a mortgage it has to be in your liabilities and the house is the offsetting asset. It would be crazy to include the debt and not include the house value.

[Anonymous]

I would include home value. No one really needs to know or has ever asked for my net worth besides me / my husband. So I guess we can calculate it however we want.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Who has more? Someone with $2M in a brokerage, 401K, or home equity?

Depends on the home equity. If it is in my second house then they are comparable since that is a saleable asset (and in my case one that has appreciated more than my brokerage accounts in the last few years). If I am getting ready to downsize and move to something much less expensive then a good portion of the home equity is comparable to cash assets.

Not sure why you are harping on this topic. As others have pointed out, net worth means assets minus liabilities. If you have a mortgage it has to be in your liabilities and the house is the offsetting asset. It would be crazy to include the debt and not include the house value.

We’re not talking about second homes. We’ve also been talking about the makeup of the net worth calculation. Not sure why you’re so bothered by that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Home equity is BY FAR the least important (though NOT smallest) part of my net worth. It’s not far from fool’s gold.

Why? Explain.

Until I sell, it’s not going to pay for one bill or meal.

Imputed rent is a concept you might want to look into.

You might want to step away from the thread. No need to repeat yourself.

That was the first time I mentioned anything.

[Anonymous]

Anonymous wrote:Who has more? Someone with $2M in a brokerage, 401K, or home equity?

It depends.

Does the home equity person plan to stay in house forever? Can they downsize for significantly less? What is left after selling and fees are paid? What is left once alternate living arrangements are made? How much will a house appreciate over the period to time before selling?

With 2M in brokerage, 401K, how is it invested? What kind of growth rate? And what kind of market are they living in? In a crash? In a run-up?

I, personally, would rather take the risk of putting money into the market. Though I know plenty of people whose NW is tied up in their house.

These questions really only matter after a person no longer can make income. We can be invested however we want as long as we are covering our expenses with income.

[Anonymous]

Calculate your net worth however you want, people. When I opened an account at Schwab, and they asked for my net worth, they had a helpful explanation of what to include. People who are really interested in your net worth will make it easy for you! My wealth is structured such that my small home's value is a rounding error in my stock portfolio. Others might have most of their assets in their home. Calculations will therefore differ.

So you can stop arguing and enjoy what's left of your Sunday.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Home equity is BY FAR the least important (though NOT smallest) part of my net worth. It’s not far from fool’s gold.

Why? Explain.

Until I sell, it’s not going to pay for one bill or meal.

Imputed rent is a concept you might want to look into.

You might want to step away from the thread. No need to repeat yourself.

That was the first time I mentioned anything.

DP. I’m the one that mentioned imputed rent the first time, so they think you already mentioned it. It’s a basic concept that many of the “your house doesn’t count” people on here appear unable to understand.

[Anonymous]

Anonymous wrote:

Calculate your net worth however you want, people. When I opened an account at Schwab, and they asked for my net worth, they had a helpful explanation of what to include. People who are really interested in your net worth will make it easy for you! My wealth is structured such that my small home's value is a rounding error in my stock portfolio. Others might have most of their assets in their home. Calculations will therefore differ.

So you can stop arguing and enjoy what's left of your Sunday.

+1. But the pedantic crowd won't let you. They insist everyone include home equity in their net worth!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Calculate your net worth however you want, people. When I opened an account at Schwab, and they asked for my net worth, they had a helpful explanation of what to include. People who are really interested in your net worth will make it easy for you! My wealth is structured such that my small home's value is a rounding error in my stock portfolio. Others might have most of their assets in their home. Calculations will therefore differ.

So you can stop arguing and enjoy what's left of your Sunday.

+1. But the pedantic crowd won't let you. They insist everyone include home equity in their net worth!

For the majority of Americans with more than a negligible net worth, home equity is the single largest asset. Further, for almost everyone else not in the top 1%, home equity would still comprise a significant portion of their net worth even if it’s not the largest asset.

Therefore, saying that home equity shouldn’t count “because you can’t spend it” is absurd, and it is in no way pedantic for us to point out this absurdity.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Calculate your net worth however you want, people. When I opened an account at Schwab, and they asked for my net worth, they had a helpful explanation of what to include. People who are really interested in your net worth will make it easy for you! My wealth is structured such that my small home's value is a rounding error in my stock portfolio. Others might have most of their assets in their home. Calculations will therefore differ.

So you can stop arguing and enjoy what's left of your Sunday.

+1. But the pedantic crowd won't let you. They insist everyone include home equity in their net worth!

For the majority of Americans with more than a negligible net worth, home equity is the single largest asset. Further, for almost everyone else not in the top 1%, home equity would still comprise a significant portion of their net worth even if it’s not the largest asset.

Therefore, saying that home equity shouldn’t count “because you can’t spend it” is absurd, and it is in no way pedantic for us to point out this absurdity.

I count it, but it's the least important of the major categories because accessing it is a major hassle and means leaving your home and finding another. I can plan a vacation with my 401k and brokerage accounts. I cannot with my home equity. So if it's the biggest part of somebody's home worth, fine...count it to feel better about a big number, knowing you'll eventually have to find a way to convert it.

[Anonymous]

Maybe somebody answered this, but thinking not. For all those who are not including home equity in net worth, are you including your mortgage balance (if any) as a reduction to your net worth? And please explain how that is a logical choice, since as another poster has mentioned, it seems inconsistent (to say the least).