thyme4change
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Post by thyme4change on Jul 26, 2017 17:43:41 GMT -5
I kinda count it - kinda not. All my retirement goals are based on investments and exclude my home. However, I know if I just eek in at my lowest retirement amount I know in the back of my head that I could downsize (and rid myself of a yard and a SFH) and have some cushion, or I could sell and rent for many years, or I could sell and use that money to pay for adult care living (most likely memory care.) Or, maybe I won't need it and someone will find my decomposed body when my 80 cats become totally unruly. Whatever. It gives me some options.
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kittensaver
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We cannot do great things. We can only do small things with great love. - Mother Teresa
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Post by kittensaver on Jul 26, 2017 17:50:42 GMT -5
I kinda count it - kinda not. All my retirement goals are based on investments and exclude my home. However, I know if I just eek in at my lowest retirement amount I know in the back of my head that I could downsize (and rid myself of a yard and a SFH) and have some cushion, or I could sell and rent for many years, or I could sell and use that money to pay for adult care living (most likely memory care.) Or, maybe I won't need it and someone will find my decomposed body when my 80 cats become totally unruly. Whatever. It gives me some options.
(the bolded part)
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thyme4change
Community Leader
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Post by thyme4change on Jul 26, 2017 17:54:08 GMT -5
I don't get bold on my phone, so I can't see what you really liked. ![:(](//storage.proboards.com/forum/images/smiley/sad.png)
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Deleted
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Post by Deleted on Jul 26, 2017 17:56:41 GMT -5
I don't get bold on my phone, so I can't see what you really liked. The 80 cats eating you.
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thyme4change
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Post by thyme4change on Jul 26, 2017 17:58:36 GMT -5
Lol.
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quince
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Post by quince on Jul 26, 2017 18:27:08 GMT -5
0%, we don't own a house. ![](http://storage.proboards.com/forum/images/smiley/sad.png) When we did, equity in it was...maybe 15% of net worth? Maybe. If we ever own out here, I do expect home equity to be a chunky percentage of our net worth/ PITI to be way more than retirement savings. Crap is expensive out here. It's one of the reasons we're on the fence about buying. Yes, we build no equity renting, but having the bulk of net worth tied up in super inflated real estate that could crash with changes in zoning/policy/industry? Blah. If we win the start-up lottery, we will probably buy, just because spouse doesn't want to invest heavily in the market until well into the next recession, and sitting on that much cash... (It would be nice to give the kids each a bedroom by the time they reach adolescence, though.)
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kittensaver
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We cannot do great things. We can only do small things with great love. - Mother Teresa
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Post by kittensaver on Jul 26, 2017 18:44:10 GMT -5
I don't get bold on my phone, so I can't see what you really liked. The 80 cats eating you. The "yeah that" is that I'll end up the same way (old and alone with 80 cats)
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thyme4change
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Post by thyme4change on Jul 26, 2017 18:57:01 GMT -5
The "yeah that" is that I'll end up the same way (old and alone with 80 cats) With a name like kitten saver, I suspect you will!
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tallguy
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Post by tallguy on Jul 26, 2017 22:03:58 GMT -5
I just do not understand some of you people! Net worth has an actual definition. It includes your house. If you don't want to include your house, then call it financial assets (like I do) or investable assets. It's real easy, and it makes sense. Otherwise, you're just messing things up!
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msventoux
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Post by msventoux on Jul 26, 2017 22:54:27 GMT -5
Mine is about 13%. I do count my home equity in my net worth. I use the assessed value of my home. Generally assessed values here are quite a bit less than market values.
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Gardening Grandma
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Post by Gardening Grandma on Jul 26, 2017 23:03:52 GMT -5
Our home is approx 38% of our NW. Largest expense is federal income taxes followed by food and health insurance
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whoisjohngalt
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Post by whoisjohngalt on Jul 26, 2017 23:23:30 GMT -5
I just do not understand some of you people! Net worth has an actual definition. It includes your house. If you don't want to include your house, then call it financial assets (like I do) or investable assets. It's real easy, and it makes sense. Otherwise, you're just messing things up! LOL. Sorry!!! I can't help it. I am super super super conservative in my NW calculations. Theoretically, I guess, we have equity, based on the appraisal and assessments. But unless we sell it and I actually see that check - that's just not real money to me. I count cash and investments. That's it. And even that is flaky bc of the whole stock market up and down crap.
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schildi
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3718 and no text
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Post by schildi on Jul 26, 2017 23:28:03 GMT -5
I just do not understand some of you people! Net worth has an actual definition. It includes your house. If you don't want to include your house, then call it financial assets (like I do) or investable assets. It's real easy, and it makes sense. Otherwise, you're just messing things up! LOL. Sorry!!! I can't help it. I am super super super conservative in my NW calculations. Theoretically, I guess, we have equity, based on the appraisal and assessments. But unless we sell it and I actually see that check - that's just not real money to me. I count cash and investments. That's it. And even that is flaky bc of the whole stock market up and down crap. The stock market is as volatile as housing, if not more. It makes only sense to include the house. Massive inflation could even eat away cash, and I am sure you would count that, right?
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tallguy
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Post by tallguy on Jul 26, 2017 23:33:08 GMT -5
I just do not understand some of you people! Net worth has an actual definition. It includes your house. If you don't want to include your house, then call it financial assets (like I do) or investable assets. It's real easy, and it makes sense. Otherwise, you're just messing things up! LOL. Sorry!!! I can't help it. I am super super super conservative in my NW calculations. Theoretically, I guess, we have equity, based on the appraisal and assessments. But unless we sell it and I actually see that check - that's just not real money to me. I count cash and investments. That's it. And even that is flaky bc of the whole stock market up and down crap. Well, yeah. That's what I do. I just call it Financial Assets instead of Net Worth.
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Deleted
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Post by Deleted on Jul 26, 2017 23:55:28 GMT -5
Zero
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hoops902
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Post by hoops902 on Jul 27, 2017 7:13:37 GMT -5
I just do not understand some of you people! Net worth has an actual definition. It includes your house. If you don't want to include your house, then call it financial assets (like I do) or investable assets. It's real easy, and it makes sense. Otherwise, you're just messing things up! I don't think anyone has posted this yet, but just wait until you hear how some of the folks on this board count the mortgage, car note, etc against their liabilities, but don't count the corresponding asset at all.
I think it's somewhat silly not to count the equity in any way, there's such an enormous financial difference between owning a home outright worth $500K, and owing $500K on a house worth $500K. At any moment, an individual could turn a huge chunk of that equity into investable cash by leveraging the equity. You don't have to count it towards figuring out when you can retire, but to ignore it completely paints the same picture for 2 individuals who are not remotely in the same financial situation.
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Lizard Queen
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103/2024
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Post by Lizard Queen on Jul 27, 2017 7:27:24 GMT -5
10-15%. The house was pretty cheap to begin with.
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countrygirl2
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Post by countrygirl2 on Jul 27, 2017 7:40:42 GMT -5
About a 1/5 of net worth, I don't generally add it in. Of course its part of net worth but not something easily converted. It's paid for and is just a place to live and hope we continue having enough money to keep it.
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steph08
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Post by steph08 on Jul 27, 2017 8:16:19 GMT -5
Our house is probably 20% of our net worth, but I don't really count it.
Daycare is our largest expense - $20k/year. PITI is about $14k/year on a 20-year loan.
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hoops902
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Post by hoops902 on Jul 27, 2017 8:18:33 GMT -5
LOL. Sorry!!! I can't help it. I am super super super conservative in my NW calculations. Theoretically, I guess, we have equity, based on the appraisal and assessments. But unless we sell it and I actually see that check - that's just not real money to me. I count cash and investments. That's it. And even that is flaky bc of the whole stock market up and down crap. The stock market is as volatile as housing, if not more. It makes only sense to include the house. Massive inflation could even eat away cash, and I am sure you would count that, right? The stock market may be as volatile...but the main difference for the population as a whole is that when someone says "I have $200K in stocks", that typically actually means "I have $200K in stocks" as opposed to "My optimistic and unrealistic expectation is that my stocks are worth $200K" like they do with their homes.
I think what a lot of people are saying is that they ignore their housing equity because it's not going to help them in any way (even though at minimum it means they don't have to pay off that debt). The larger point that people aren't saying but maybe indirectly indicating is really "true net worth isn't all that relevant to me, because some of those assets are things I'll be using up and aren't very liquid". The practical implications of owning a $30K car vs a $20K car aren't really much for example if you're not likely to NEED to sell it for some reason. If your plan is just to drive it until the wheels fall off, then practically speaking that extra $10K of "equity" doesn't help. The reason it might be important is if you need it in an emergency (and if you're that close to needing to sell a car off, then you could probably do with being a bit more conservative in what you consider to be an asset and start saving a bit more).
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tallguy
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Post by tallguy on Jul 27, 2017 9:09:13 GMT -5
I just do not understand some of you people! Net worth has an actual definition. It includes your house. If you don't want to include your house, then call it financial assets (like I do) or investable assets. It's real easy, and it makes sense. Otherwise, you're just messing things up! I don't think anyone has posted this yet, but just wait until you hear how some of the folks on this board count the mortgage, car note, etc against their liabilities, but don't count the corresponding asset at all.
I think it's somewhat silly not to count the equity in any way, there's such an enormous financial difference between owning a home outright worth $500K, and owing $500K on a house worth $500K. At any moment, an individual could turn a huge chunk of that equity into investable cash by leveraging the equity. You don't have to count it towards figuring out when you can retire, but to ignore it completely paints the same picture for 2 individuals who are not remotely in the same financial situation.
Yeah, I've seen that. Makes NO sense. I don't really use net worth at all, unless someone asks or the discussion is specifically about net worth. I'm never selling my house, so the value is irrelevant. The only important figure to me is financial assets. But I still would never call that number "net worth."
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Tiny
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Post by Tiny on Jul 27, 2017 10:13:44 GMT -5
I use to not count an estimate of the value of my house in my "net worth" because my equity was so little... but then I realized that no matter what my house would never be worth 0$ (well, if a zombie apocalypse or if North Korea drops a nuke on my nearby big city or if the nuclear power plant 70 miles away explodes and the wind is blowing in the right direction).
I have insurance which theoretically will reimburse me some $$ if my house burns down or if there's a natural gas leak and it explodes... I could also sell it and I would get something for it. Even when I had more mortgage debt than equity - selling it (or insurance) would have made it a wash maybe with a little left over.
Even now, if I needed to access the money "in" my house I could sell it, I could use a HELOC, I could take a new mortgage. OK, either way I do have to pay some out of pocket $$ to access the money... but still the house has value. And I include that value in my Net Worth calculations - just like I include all my liabilities (mortgages, loans, monthly CC debt).
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resolution
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Post by resolution on Jul 27, 2017 10:16:31 GMT -5
My net worth is nothing like what I would have available to me in retirement. Right now my available funds in the stock market are only about 40% of my net worth, which is something that I would like to improve.
My net worth is how much I would be able to scrape together for a ransom if a family member gets hijacked sailing through the Gulf of Aden. But in normal circumstances, I plan to keep things like the pension and my rental property for the income rather than sell. And I plan to continue to live in my house, unless something happens to DH, in which case I might sell and move into an assisted living place for the prepared meals and housekeeping.
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pooks
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Post by pooks on Jul 27, 2017 10:59:21 GMT -5
Our home equity is about 12% of our net worth. And yes I always count it (minus the projected selling expenses). If the market goes down, I adjust the value down (I am in a development so it is easy to guess the value) . Net worth doesn't have anything to do with how much I will have available at retirement for me. It is just a snapshot of where we are financially at that moment.
The only way the house is part of the retirement plan is we want to be mortgage free in retirement. So the equity we have in the house at retirement is the amount we will have available to purchase our retirement home, if we aren't living in a paid off forever house at retirement.
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kittensaver
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We cannot do great things. We can only do small things with great love. - Mother Teresa
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Post by kittensaver on Jul 27, 2017 11:46:04 GMT -5
Our home equity is about 12% of our net worth. And yes I always count it (minus the projected selling expenses). If the market goes down, I adjust the value down (I am in a development so it is easy to guess the value) . Net worth doesn't have anything to do with how much I will have available at retirement for me. It is just a snapshot of where we are financially at that moment. The only way the house is part of the retirement plan is we want to be mortgage free in retirement. So the equity we have in the house at retirement is the amount we will have available to purchase our retirement home, if we aren't living in a paid off forever house at retirement. ![](http://syonidv.hodginsmedia.com/vsmileys/yeahthat.gif) times 1,000. I bought in 2001 for 495k. By 2006, it had climbed to 1.1mil. In the crash of 2008, it went down to 625k. Now in 2017, it's back up to 1.6 mil [this is La La Land; crazy real estate pricing is the norm]. How the *heck* is anyone supposed to calculate such fluctuations into net worth? Unless, as pooks so accurately points out, it's just a point-in-time number to make you feel better/sleep at night but realistically has nothing to do with how much you have for a sustainable retirement.
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justme
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Post by justme on Jul 27, 2017 12:00:56 GMT -5
My mortgage is my biggest expense (including hoa). If you don't include any tax break from my mortgage, I'm putting in a bit over half of my mortgage to retirement.
Depending on how you calculate what my house is worth it's anywhere from 10k to upwards of 40k of equity. I currently have a bit over 60k in retirement and a bit over 10k in regular savings. So my condo is between 12-36% of my net worth.
I'm not discounting the effect of a paid for place on my net worth...but I'm not prepaying my mortgage over investing either.
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hoops902
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Post by hoops902 on Jul 27, 2017 13:08:04 GMT -5
I think I'd be more inclined to kind of not worry about my home equity in terms of net worth if I thought I was going to stay in this home forever. As it sits now though, I've bought another house, I'm working on selling this house which is totally paid off, and I think counting a mortgage as liability without counting the underlying asset is kind of silly (leave the house alone altogether, or count it altogether, makes no sense to count on the asset part or only the liability part of anything).
So as it stands (I'll use fake numbers), if I didn't count my house at all today (totally paid off):
-I'd have a NW of let's say $300K from retirement and other investment accounts. -When I sell this house, I'm leveraging good mortgage rates. So if my house sells for $200K, I put $50K down on the next house, and have $150K to invest. If I don't count the house at ALL, then I have $450K. It seems improper to say my net worth jumped by $150K by selling my house and buying a more expensive house. -If I DO count the house, then I'd have a $500K NW now. If I sell for $200K, put $50K down, I now have $450K invested, and $50K equity...still the same $500K I had before (minus closing costs, etc...I'm not forgetting those little things, just simplifying). -If I counted just the mortgage but not the equity, then I'd start at $300K. Add $150K for a total of $450K, subtract out $200K in mortgage (let's say $250k-50kdownpayment)...and my net worth goes down to $250K from $300K even though my actual assets haven't changed a bit.
My net worth (or net assets) haven't changed simply by exchanging one asset (house) for another (cash).
So while I'm not planning on downsizing in retirement and retiring off the equity in my home, I do CARE about the equity in my home because it's a useful tool either in changing homes, or in leveraging that equity for investment.
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Apple
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Post by Apple on Jul 27, 2017 16:03:43 GMT -5
My house is about 12% of my NW. If I include my property, it's closer to 20%, give or take.
My largest expense is not my mortgage, but my income taxes.
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dee27
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Post by dee27 on Jul 27, 2017 17:39:54 GMT -5
15% of NW
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spartan7886
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Post by spartan7886 on Jul 28, 2017 2:01:29 GMT -5
My home equity is about 10% of my net worth. I never bother to calculate net worth, only investable assets, since that's a more useful number.
After savings and income taxes, which I don't really count as expenses since I generally do my budget from net pay, my next two biggest expenses are mortgage and daycare. I pay more to the mortgage each month, but if I wasn't contributing extra, daycare would be bigger.
Houston has pretty low home prices. That, combined with consistent raises, means our house value is less than 1x our annual income. Including my average bonus, it's less than my income alone.
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