Anonymous
Post 01/07/2024 14:56     Subject: Do you include your home equity in net worth ?
I calculate different levels of net worth. Total net worth includes the value of my home and my son's 529/college fund, even though neither of these will contribute to my retirement income (and the latter will be gone in 5 years). Then I calculate liquid net worth, which is everything I have in my bank/investment accounts. But since I'm self-employed, this always includes a large cash buffer to get me through lean months, unexpected expenses, and tax bills. And finally there's my invested net worth, which is what I plug into retirement calculators to see what I'll have to live on once retired.

Probably overkill, but I find it helpful.
Anonymous
Post 01/07/2024 14:54     Subject: Do you include your home equity in net worth ?
Home equity is BY FAR the least important (though NOT smallest) part of my net worth. It’s not far from fool’s gold.
Anonymous
Post 01/07/2024 14:26     Subject: Do you include your home equity in net worth ?
It won't make any difference to my net worth, OP.

The inclusion of home equity usually makes a difference for the middle class. Poorer people might not be home-owners, and wealthy people have many assets and the equity on one home isn't going to change anything.

Anonymous
Post 01/07/2024 14:23     Subject: Do you include your home equity in net worth ?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:I understand academically it’s part of our net worth. But when we discuss our “number” (to retire) we don’t include it because we need a place to live and it’s also not throwing off income.


This.

OP - I don't include the home equity of my primary residence in my number (aka net worth) for the exact reason stated above. Academically, the definition of Net Worth does include all your assets less all your liabilities, but life is not an academic exercise and you need to do what makes sense to you.

Including the value of your my primary home's equity gives you a false sense of security that you have more than what you really can realistically tap into. Not including is a more conservative and practical way to track 'net worth'.

At the end of the day, do what makes sense to you. Follow the text book or follow common sense.


ARGHH, CALCULATE WHATEVER THE HELL YOU WANT, BUT WORDS HAVE MEANINGS — NET WORTH INCLUDES HOME EQUITY! This is such a pet peeve of mine.


Yes, I totally agree. It’s like people say they “retired“ when they voluntarily switch from a high to low paying job or elect to stay home with kids. Just stop already. You didn’t retire.

The definition of net worth is the value of your assets minus the value of your liabilities. Your home is an asset. End of story.


I suppose I agree, although I can't see getting worked up about it. Not one of us includes everything in their net worth calculations. Most people don't include their cars. I'd guess no one includes the cash in their pocket, the value of the unopened bottle of wine they just purchased, and hundreds of other "assets."

So, everyone (including the very vehement PPs) omits some things from net worth calculations for a whole variety of reasons. Home equity is just an extension of that.
Anonymous
Post 01/07/2024 14:19     Subject: Do you include your home equity in net worth ?
Anonymous wrote:
Anonymous wrote:What do all of you people use your "net worth" calculation for?


I look at how it changes year over year to see how we are progressing and to set financial goals. It helps to see when we need to double down on savings or can spend some money on home improvement or other big ticket items. I also use the process to take a look at the weightings in various things, although our financial advisor does that as well.

I see some people on here saying they do it monthly. I really only do it in January, although occasionally I will do a mid year update.


And how does your home equity impact those decisions.
Anonymous
Post 01/07/2024 14:15     Subject: Do you include your home equity in net worth ?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:What do all of you people use your "net worth" calculation for?


I look at how it changes year over year to see how we are progressing and to set financial goals. It helps to see when we need to double down on savings or can spend some money on home improvement or other big ticket items. I also use the process to take a look at the weightings in various things, although our financial advisor does that as well.

I see some people on here saying they do it monthly. I really only do it in January, although occasionally I will do a mid year update.


If you download an app like personal capital/empower and connect your financial stuff to it, you don’t have to track anything, ever. It does all the work for you. You can literally push a button every single day and see what you’re worth that day.


Can those apps sync with: 1) Treasury Direct (I have a lot of T-bills and I bonds) and 2) Zillow so I can include my home?
Anonymous
Post 01/07/2024 14:03     Subject: Do you include your home equity in net worth ?
Anonymous wrote:I understand academically it’s part of our net worth. But when we discuss our “number” (to retire) we don’t include it because we need a place to live and it’s also not throwing off income.


Yes, there are two ways of thinking about this. We also don't track our primary home in terms of saving for retirement. You have to live somewhere. A house is not a liquid asset. There are different ways of thinking about this obviously.
Anonymous
Post 01/07/2024 13:51     Subject: Do you include your home equity in net worth ?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:What do all of you people use your "net worth" calculation for?


I look at how it changes year over year to see how we are progressing and to set financial goals. It helps to see when we need to double down on savings or can spend some money on home improvement or other big ticket items. I also use the process to take a look at the weightings in various things, although our financial advisor does that as well.

I see some people on here saying they do it monthly. I really only do it in January, although occasionally I will do a mid year update.


If you download an app like personal capital/empower and connect your financial stuff to it, you don’t have to track anything, ever. It does all the work for you. You can literally push a button every single day and see what you’re worth that day.


Yep.. Until someone figures out how to hack those apps and harvest your credentials.


DP: I also think for many of us that the work is part of the process, when you do a review you are putting yourself in the mindset of thinking about where you are at and where you want to go. Taking the time to input everything helps you stay in that mental space a bit and earmark it as something special. I used personal capital back when it was that (I removed my account when they changed hands as I did have security concerns too) and it was great to see it all updated but I found I kind of drifted away from being on top of my finances a bit compared to when I did a monthly excel update and a 2x a year review with my spouse. I always knew where I was at financially, but the constant nature of it made me less reflective/planful.


Did/Does Empower allow you to track expenses and not keep nagging you about investment accounts? I just a free (web-based or otherwise) app that can connect to my credit card accounts and classify my expenses for me on demand. Don't need them to also track assets/investments.
Anonymous
Post 01/07/2024 13:26     Subject: Do you include your home equity in net worth ?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:What do all of you people use your "net worth" calculation for?


I look at how it changes year over year to see how we are progressing and to set financial goals. It helps to see when we need to double down on savings or can spend some money on home improvement or other big ticket items. I also use the process to take a look at the weightings in various things, although our financial advisor does that as well.

I see some people on here saying they do it monthly. I really only do it in January, although occasionally I will do a mid year update.


If you download an app like personal capital/empower and connect your financial stuff to it, you don’t have to track anything, ever. It does all the work for you. You can literally push a button every single day and see what you’re worth that day.


Yep.. Until someone figures out how to hack those apps and harvest your credentials.


DP: I also think for many of us that the work is part of the process, when you do a review you are putting yourself in the mindset of thinking about where you are at and where you want to go. Taking the time to input everything helps you stay in that mental space a bit and earmark it as something special. I used personal capital back when it was that (I removed my account when they changed hands as I did have security concerns too) and it was great to see it all updated but I found I kind of drifted away from being on top of my finances a bit compared to when I did a monthly excel update and a 2x a year review with my spouse. I always knew where I was at financially, but the constant nature of it made me less reflective/planful.
Anonymous
Post 01/07/2024 13:24     Subject: Do you include your home equity in net worth ?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:What do all of you people use your "net worth" calculation for?


I look at how it changes year over year to see how we are progressing and to set financial goals. It helps to see when we need to double down on savings or can spend some money on home improvement or other big ticket items. I also use the process to take a look at the weightings in various things, although our financial advisor does that as well.

I see some people on here saying they do it monthly. I really only do it in January, although occasionally I will do a mid year update.


If you download an app like personal capital/empower and connect your financial stuff to it, you don’t have to track anything, ever. It does all the work for you. You can literally push a button every single day and see what you’re worth that day.


Yep.. Until someone figures out how to hack those apps and harvest your credentials.


Ok weirdo. Enjoy living your life in paranoia.
Anonymous
Post 01/07/2024 13:18     Subject: Do you include your home equity in net worth ?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:What do all of you people use your "net worth" calculation for?


I look at how it changes year over year to see how we are progressing and to set financial goals. It helps to see when we need to double down on savings or can spend some money on home improvement or other big ticket items. I also use the process to take a look at the weightings in various things, although our financial advisor does that as well.

I see some people on here saying they do it monthly. I really only do it in January, although occasionally I will do a mid year update.


If you download an app like personal capital/empower and connect your financial stuff to it, you don’t have to track anything, ever. It does all the work for you. You can literally push a button every single day and see what you’re worth that day.


Yep.. Until someone figures out how to hack those apps and harvest your credentials.
Anonymous
Post 01/07/2024 13:16     Subject: Do you include your home equity in net worth ?
Anonymous wrote:
Anonymous wrote:What do all of you people use your "net worth" calculation for?


I look at how it changes year over year to see how we are progressing and to set financial goals. It helps to see when we need to double down on savings or can spend some money on home improvement or other big ticket items. I also use the process to take a look at the weightings in various things, although our financial advisor does that as well.

I see some people on here saying they do it monthly. I really only do it in January, although occasionally I will do a mid year update.


If you download an app like personal capital/empower and connect your financial stuff to it, you don’t have to track anything, ever. It does all the work for you. You can literally push a button every single day and see what you’re worth that day.
Anonymous
Post 01/07/2024 13:15     Subject: Do you include your home equity in net worth ?
Anonymous wrote:What do all of you people use your "net worth" calculation for?


I look at how it changes year over year to see how we are progressing and to set financial goals. It helps to see when we need to double down on savings or can spend some money on home improvement or other big ticket items. I also use the process to take a look at the weightings in various things, although our financial advisor does that as well.

I see some people on here saying they do it monthly. I really only do it in January, although occasionally I will do a mid year update.
Anonymous
Post 01/07/2024 13:13     Subject: Do you include your home equity in net worth ?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:I understand academically it’s part of our net worth. But when we discuss our “number” (to retire) we don’t include it because we need a place to live and it’s also not throwing off income.


This.

OP - I don't include the home equity of my primary residence in my number (aka net worth) for the exact reason stated above. Academically, the definition of Net Worth does include all your assets less all your liabilities, but life is not an academic exercise and you need to do what makes sense to you.

Including the value of your my primary home's equity gives you a false sense of security that you have more than what you really can realistically tap into. Not including is a more conservative and practical way to track 'net worth'.

At the end of the day, do what makes sense to you. Follow the text book or follow common sense.


ARGHH, CALCULATE WHATEVER THE HELL YOU WANT, BUT WORDS HAVE MEANINGS — NET WORTH INCLUDES HOME EQUITY! This is such a pet peeve of mine.


Yes, I totally agree. It’s like people say they “retired“ when they voluntarily switch from a high to low paying job or elect to stay home with kids. Just stop already. You didn’t retire.

The definition of net worth is the value of your assets minus the value of your liabilities. Your home is an asset. End of story.
Anonymous
Post 01/07/2024 13:10     Subject: Re:Do you include your home equity in net worth ?
Anonymous wrote:Of course. Our fully paid off 2 homes (in the 2-3M range each) are about 25% of our net worth.
They are not liquid assets but certainly part of our net worth. When we die, the kids/estate can choose to sell them and distribute the cash.



L O L OK. I’m sure you’re getting off sharing this information, right?