Questions concerning net worth....

[Iceman]

I have a few simple questions concerning net worth? What example is correct:
how do you calculate your net worth with a home involved?

1) Let's say you owe 200k on a home and the house is appraised for 210k. Do you add 10k to your net worth because you have 10k in equity

OR

2) you realize that after listing the home for what it is apprasied(210k) for you more than likely will not get the 210k but let's say 200k(after counter offer) and than pay your real estate broker the 6% fee you will actually be out 12k, so your net worth is MINUS 12k in the home department? ( this example is extremley realistic)

OR
3) is the home not taken into account when adding up your net worth? (can't belive this is true)


One other question what about vehicles. You owe more than a worth so that counts as a negative in your net worth column.

If this is the case, wouldn't most people have a net worth in the NEGATIVE.

Trying to figure this mess out, any help would be appreciated.

 

[Tahoekid]

how do you calculate your net worth with a home involved?

1) Let's say you owe 200k on a home and the house is appraised for 210k. Do you add 10k to your net worth because you have 10k in equity

YES

One other question what about vehicles. You owe more than a worth so that counts as a negative in your net worth column.

YES

If this is the case, wouldn't most people have a net worth in the NEGATIVE.

ONLY IF YOU ARE IN DEBT AND YOUR LIABILITES ARE GREATER THAN YOUR ASSETS

 

[Iceman]

Another question.

Do big screen TV's and pool tables, etc count as assets. where do you draw the line.

 

[LEYKIS101]

Ice,

I think B would have to be the correct answer, even though I don't see many experts figuring the cost of selling a house when discussing Net Worth. Luckily you can many times find much cheaper than 6% commission from most Real Estate agents now. I think you'd have to count Net proceeds from a home sale and not Gross.

Your TV and Pool Table I'd say would also be assets, just depreciating ones.

 

[Sportsrmylife]

My definition of an asset is anything that makes money. Which might mean that your house might not be technically an asset.

 

[LEYKIS101]

Here's a good discussion article on Home Value if it should be counted as part of your Net Worth:

http://socialize.morningstar.com/NewSocialize/asp/Fullconv.asp?forumId=F100000015&convId=155420&minReplySeq=1#replyTop

 

[Christian]

there's no perfect answer to that question because very few people could accurately estimate they're net worth...

for me, it's easy...but i live a little strange compared to most people. i own NOTHING, and i do mean NOTHING. i rent a condo, fully furnished, don't own a car (i live in downtown DC, i can rent easily from zipcar.com if i need one...but normally i use the metro), i have no CC bills, don't owe anything to anyone and ALL my assets are liquid (i.e. easily converted to cash) such as in my bank account, stocks and/or kept in offshore books)

so for me, figuring my EXACT net worth is easy as hell.

but for most people (home and/or property owners especially) it's a little more difficult.

basically, to figure out your net worth...it's going to be an estimate...

FIRST, if you had to liquidate EVERYTHING you own, and i mean EVERYTHING, how much cash could you raise (this is an estimate, of course)...

THEN, subtract everything you owe to people from that first amount (such as credit cards bills, loans, etc.)...

FINALLY, what you have left is your net worth.

again, for 99.9% of you guys (except for strange hobo-types like myself this is going to be an estimate. because you really don't know what your final sale on your house is going to bring you, or how much you can get for your cars, etc. but there's nothing wrong with estimated, just do it to the conservative side so you don't end up disappointing yourself if you ever need to liquidate something.