Anonymous
08/29/2024 13:07
Subject: FYI: Don't include home equity in net worth
Point is moot for us, as our stock portfolio far exceeds the value of our real estate property, but you're wrong, OP. Primary residence equity does count in net worth.
Anonymous
08/29/2024 13:04
Subject: FYI: Don't include home equity in net worth
Anonymous wrote:Anonymous wrote:Net Worth = investments that make money like saving accounts, bonds, stocks, brokerage and rental property (just the net income).
Here's why. NW is a calculation of assets that are making money for you. Your house is a cost center. Tax, repairs, ect. Even if you have equity, it still doesn't count because you don't really know what you'll earn until you get that check on closing day.
Feel free to argue all you want but it's true for financial planning purposes.
Okay let me get this straight. So if a couple has a paid off home valued at ~1.5 million in Arlington Virginia (which they bought because their jobs require them to be in the DC area and they wanted to be in a good school district) but plan to downsize to a condo in their hometown of Omaha once they have retired…that $1.5 million asset should have no bearing on their financial planning for retirement?
An even more stark example:
Two couples own identical houses that are next to each other. Couple 1 has no mortgage, and $100k in savings. Couple 2 has a $1m mortgage, and $200k in savings. OP apparently believes that couple 2 has double the net worth of couple 1.
In related news, OP is an idiot.
Anonymous
08/29/2024 12:57
Subject: FYI: Don't include home equity in net worth
Our home is making us about $30k a year after taxes and expenses.
Anonymous
08/29/2024 12:56
Subject: Re:FYI: Don't include home equity in net worth
I don’t count the home we need to have a roof over our heads but equity in other real estate absolutely counts. We have three homes - the one I don’t count in NW is the one we will live in when we retire.
Anonymous
08/29/2024 12:53
Subject: Re:FYI: Don't include home equity in net worth
Anonymous wrote:Does not make sense at all!
My homes appreciate in value, just like my market investments.
Bought one home 10 years ago for $1.2M, did only routine maintenance (no renovations) of about $35K (had to repaint exterior and new hot water heater and new furnace), sold it 8 years later for $2.4M.
Between what we paid and what we put into our two homes, I've spent $5.5M. However, they are worth over 6.5 currently.
Sure I'm not going to sell my home just to "get some cash", but if I truly needed to I could sell both homes, get $6-7M and rent somewhere (or buy a cheaper place to live). No way that $6M+ is NOT part of my Net worth. If we drop dead, the kids will inherit those $6.5M homes and can sell and get the cash.
Kids can also get a stepped up basis!
Anonymous
08/29/2024 12:52
Subject: Re:FYI: Don't include home equity in net worth
Does not make sense at all!
My homes appreciate in value, just like my market investments.
Bought one home 10 years ago for $1.2M, did only routine maintenance (no renovations) of about $35K (had to repaint exterior and new hot water heater and new furnace), sold it 8 years later for $2.4M.
Between what we paid and what we put into our two homes, I've spent $5.5M. However, they are worth over 6.5 currently.
Sure I'm not going to sell my home just to "get some cash", but if I truly needed to I could sell both homes, get $6-7M and rent somewhere (or buy a cheaper place to live). No way that $6M+ is NOT part of my Net worth. If we drop dead, the kids will inherit those $6.5M homes and can sell and get the cash.
My homes appreciate in value, just like my market investments.
Bought one home 10 years ago for $1.2M, did only routine maintenance (no renovations) of about $35K (had to repaint exterior and new hot water heater and new furnace), sold it 8 years later for $2.4M.
Between what we paid and what we put into our two homes, I've spent $5.5M. However, they are worth over 6.5 currently.
Sure I'm not going to sell my home just to "get some cash", but if I truly needed to I could sell both homes, get $6-7M and rent somewhere (or buy a cheaper place to live). No way that $6M+ is NOT part of my Net worth. If we drop dead, the kids will inherit those $6.5M homes and can sell and get the cash.
Anonymous
08/29/2024 12:51
Subject: FYI: Don't include home equity in net worth
On the first day of accounting class, one learns that assets - liabilities = equity.
Some of you need to attend the first day of accounting class!
Some of you need to attend the first day of accounting class!
Anonymous
08/29/2024 12:41
Subject: FYI: Don't include home equity in net worth
Net worth has a specific meaning - all assets minus all liabilities. Your personal financial planning method does not change the definition.
Anonymous
08/29/2024 12:41
Subject: FYI: Don't include home equity in net worth
Anonymous wrote:Net Worth = investments that make money like saving accounts, bonds, stocks, brokerage and rental property (just the net income).
Here's why. NW is a calculation of assets that are making money for you. Your house is a cost center. Tax, repairs, ect. Even if you have equity, it still doesn't count because you don't really know what you'll earn until you get that check on closing day.
Feel free to argue all you want but it's true for financial planning purposes.
Okay let me get this straight. So if a couple has a paid off home valued at ~1.5 million in Arlington Virginia (which they bought because their jobs require them to be in the DC area and they wanted to be in a good school district) but plan to downsize to a condo in their hometown of Omaha once they have retired…that $1.5 million asset should have no bearing on their financial planning for retirement?
Anonymous
08/29/2024 12:35
Subject: FYI: Don't include home equity in net worth
So, stocks don't go down more than equity minus repairs and selling costs? If any, I have more control over selling and repairs. I can count for those expenses and still count equity.
Imagine having a million dollar house with $1000 left to pay, and still not consider equity in my NW because selling costs/ repair. I can go on and on how wrong you are.
Imagine having a million dollar house with $1000 left to pay, and still not consider equity in my NW because selling costs/ repair. I can go on and on how wrong you are.
Anonymous
08/29/2024 12:31
Subject: FYI: Don't include home equity in net worth
Here we go again.
Count the equity in your house, not its value.
Count the equity in your house, not its value.
Anonymous
08/29/2024 12:29
Subject: FYI: Don't include home equity in net worth
What on earth are you on about?
Desperately feeling the need to hear yourself talk and no one in real life is willing to listen to you?
Desperately feeling the need to hear yourself talk and no one in real life is willing to listen to you?
Anonymous
08/29/2024 12:28
Subject: FYI: Don't include home equity in net worth
Anonymous wrote:Anonymous wrote:Net Worth = investments that make money like saving accounts, bonds, stocks, brokerage and rental property (just the net income).
Here's why. NW is a calculation of assets that are making money for you. Your house is a cost center. Tax, repairs, ect. Even if you have equity, it still doesn't count because you don't really know what you'll earn until you get that check on closing day.
Feel free to argue all you want but it's true for financial planning purposes.
This is factually inaccurate. NW is a caculation of all assets minus all liabilities. It's not a calculation of investments or interest bearing assets. I don't understand why we have to have these posts every six weeks with a presumably new OP demanding that the definition of NW be ignored by everyone on Earth or redrafted to suit their preference instead of people just saying "I don't find NW as useful as invested assets, so that's the number I focus on in my planning".
100%. OP is ridiculous.
Anonymous
08/29/2024 12:27
Subject: FYI: Don't include home equity in net worth
Anonymous wrote:Net Worth = investments that make money like saving accounts, bonds, stocks, brokerage and rental property (just the net income).
Here's why. NW is a calculation of assets that are making money for you. Your house is a cost center. Tax, repairs, ect. Even if you have equity, it still doesn't count because you don't really know what you'll earn until you get that check on closing day.
Feel free to argue all you want but it's true for financial planning purposes.
This is factually inaccurate. NW is a caculation of all assets minus all liabilities. It's not a calculation of investments or interest bearing assets. I don't understand why we have to have these posts every six weeks with a presumably new OP demanding that the definition of NW be ignored by everyone on Earth or redrafted to suit their preference instead of people just saying "I don't find NW as useful as invested assets, so that's the number I focus on in my planning".
Anonymous
08/29/2024 12:21
Subject: FYI: Don't include home equity in net worth
Net Worth = investments that make money like saving accounts, bonds, stocks, brokerage and rental property (just the net income).
Here's why. NW is a calculation of assets that are making money for you. Your house is a cost center. Tax, repairs, ect. Even if you have equity, it still doesn't count because you don't really know what you'll earn until you get that check on closing day.
Feel free to argue all you want but it's true for financial planning purposes.
Here's why. NW is a calculation of assets that are making money for you. Your house is a cost center. Tax, repairs, ect. Even if you have equity, it still doesn't count because you don't really know what you'll earn until you get that check on closing day.
Feel free to argue all you want but it's true for financial planning purposes.