This has been discussed many times here, with what seems to be no definitive conclusion, moreso personal preference. Here is my question: wife and I age 30-31 just bought our first house for 346k. We put 190k down, and we currently have a loan of roughly 154k or so. We also have about 25k in emergency funds and 185k in all investments (total US stock market). In terms of calculating net worth (all assets minus all liabilities), many seem to use purchase price even if the value of their home doubled. They do not want an inflated home value making them think they are richer than they are as this may make them feel more “comfortable” than they should, which I get. Others include current market price minus taxes and fees i.e. the amount of cash they would actually have if they sold their home today. This to me is accurate. Others go with the current zillow estimate inclusive of repairs or renovation costs.
We bought the house for 346k, put about 50-60k worth of renovations into it (new roof, quartz counters, luxury vinyl floors, gutters, soffits, interior and exterior paint, interior and exterior doors, new exterior landscaping, removal of old septic tanks, the list goes on and on. Our realtor, as well as the comps, tells us just for kicks that we could turn right around and sell this house for 425k. After factoring in fees and realtor commissions etc. let’s just say it would be 400k. So 185k in equities, 25k cash, 400k house minus 154k mortgage (only debt) would put us at a net worth of 456k. However, when using conservative home purchase price of 346k in that calculation, net worth drops to 402k, a difference of over 50k. I just want to get an actual accurate depiction of our net worth. I know it is not “important” and that liquid/invested net worth is what matters. We have a liquid net worth of 210k, need to build it up. We have a milestone of hitting 500k net worth and then 1M net worth, then 500k liquid net worth (cash and retirement accounts) and then 1M liquid net worth is a big big goal of ours.
So my question becomes: I’m not gonna count our 18k wedding ring or our cars or anything, just cash, stocks and home equity. What is the “correct” way for us to calculate our true net worth? 346k purchase price, or 400k more realistic value?
We bought the house for 346k, put about 50-60k worth of renovations into it (new roof, quartz counters, luxury vinyl floors, gutters, soffits, interior and exterior paint, interior and exterior doors, new exterior landscaping, removal of old septic tanks, the list goes on and on. Our realtor, as well as the comps, tells us just for kicks that we could turn right around and sell this house for 425k. After factoring in fees and realtor commissions etc. let’s just say it would be 400k. So 185k in equities, 25k cash, 400k house minus 154k mortgage (only debt) would put us at a net worth of 456k. However, when using conservative home purchase price of 346k in that calculation, net worth drops to 402k, a difference of over 50k. I just want to get an actual accurate depiction of our net worth. I know it is not “important” and that liquid/invested net worth is what matters. We have a liquid net worth of 210k, need to build it up. We have a milestone of hitting 500k net worth and then 1M net worth, then 500k liquid net worth (cash and retirement accounts) and then 1M liquid net worth is a big big goal of ours.
So my question becomes: I’m not gonna count our 18k wedding ring or our cars or anything, just cash, stocks and home equity. What is the “correct” way for us to calculate our true net worth? 346k purchase price, or 400k more realistic value?
Statistics: Posted by BizarroJerry — Mon May 20, 2024 12:34 pm — Replies 14 — Views 384