Do you count vehicle equity in net worth?

neophyte1 · Post by **neophyte1** » Wed Jul 12, 2017 9:38 pm

As the subject says and just curious what the majority is. If you do, where do you draw the line? Count jewelry and other objects? Seems excessive and unnecessary.

I've always thought of net worth as most reference it as no more than cash, investments, and home equity.

Hawaiishrimp · Post by **Hawaiishrimp** » Wed Jul 12, 2017 9:45 pm

I don't

Post by **oldcomputerguy** » Wed Jul 12, 2017 9:46 pm

To me, net worth is the sum total of my estate after all final expenses. So yes, whatever my vehicles would bring on the used-car market is part of that. (I currently have no outstanding auto loans.)

Traveller · Post by **Traveller** » Wed Jul 12, 2017 9:50 pm

I do not although I have a fair amount wrapped up in vehicles...

CyclingDuo · Post by **CyclingDuo** » Wed Jul 12, 2017 9:50 pm

neophyte1 wrote:As the subject says and just curious what the majority is. If you do, where do you draw the line? Count jewelry and other objects? Seems excessive and unnecessary.

I've always thought of net worth as most reference it as no more than cash, investments, and home equity.

http://time.com/money/collection-post/2 ... net-worth/

neophyte1 · Post by **neophyte1** » Wed Jul 12, 2017 9:52 pm

oldcomputerguy wrote:To me, net worth is the sum total of my estate after all final expenses. So yes, whatever my vehicles would bring on the used-car market is part of that. (I currently have no outstanding auto loans.)

So do you count things like furniture too? Just curious. I get your point and that's the technical definition of net worth, just wondering where the consensus draws the line when someone asks them what their net worth is.

tuningfork · Post by **tuningfork** » Wed Jul 12, 2017 9:55 pm

Nope. The daily fluctuation in my portfolio is often larger than the equity in my car. Not worth the effort.

alex_686 · Post by **alex_686** » Wed Jul 12, 2017 9:56 pm

Traveller wrote:I do not although I have a fair amount wrapped up in vehicles...

I would second that. I am all for counting things that other people don't. Social Security, home value, pensions, etc. While these are hard to estimate they have a big impact on what your Asset Allocation should be. Why would you want to count a car? To 10k that I have tied up in my car is a rounding error in my long term forecasting. There is no value in the information.

My Brother-in-Law does but he works construction and does custom work on the side. So think a real work truck, real world IRS considerations, and real world deprecation. Plus he counts his tractors. Whole different ball of wax.

reriodan · Post by **reriodan** » Wed Jul 12, 2017 9:57 pm

If you need to count a vehicle in your net worth, you don't need to be counting your net worth.

Will do good · Post by **Will do good** » Wed Jul 12, 2017 9:59 pm

Maybe for a younger investor you can count vehicles or anything else that's worth something if you sell them. But for most of the older BHs with higher net worth, cars worth is only a rounding error, specially for those of us that drives cars to 100+k miles.

badbreath · Post by **badbreath** » Wed Jul 12, 2017 10:00 pm

No I dont

Teague · Post by **Teague** » Wed Jul 12, 2017 10:00 pm

This would be a great question for Jay Leno's accountant.

warner25 · Post by **warner25** » Wed Jul 12, 2017 10:02 pm

I count it because there's a fairly liquid and transparent market for used cars, and they've always been worth a lot more than any other goods we own. I've sold three cars, all quite easily, and was not terribly surprised at how much money they fetched. Mint will automatically pull the latest value of your cars from KBB or wherever. Selling furniture, appliances, or other goods seems to be a total crap shoot in comparison.

TravelGeek · Post by **TravelGeek** » Wed Jul 12, 2017 10:04 pm

neophyte1 wrote:
oldcomputerguy wrote:To me, net worth is the sum total of my estate after all final expenses. So yes, whatever my vehicles would bring on the used-car market is part of that. (I currently have no outstanding auto loans.)
So do you count things like furniture too? Just curious. I get your point and that's the technical definition of net worth, just wondering where the consensus draws the line when someone asks them what their net worth is.

I don't count furniture or other property, but I do count our vehicles (and our home) because they are easily liquidated if the need arises and I also figure future replacement cost in my budget planning.

The house is a significant percentage, the vehicles aren't really material (but I also have financial accounts that aren't material and I still track them).

bottlecap · Post by **bottlecap** » Wed Jul 12, 2017 10:05 pm

If I have to sell my vehicle to keep afloat, all is lost anyway. Where else would I live?

It is not considered in my net worth. Even if it was, it's worth about what I can make in 2 or 3 days.

JT

Dottie57 · Post by **Dottie57** » Wed Jul 12, 2017 10:06 pm

I don't count depreciating items.

tigermilk · Post by **tigermilk** » Wed Jul 12, 2017 10:09 pm

reriodan wrote:If you need to count a vehicle in your net worth, you don't need to be counting your net worth.

It depends. I have a classic which has been appreciating over the years. I have no problem considering that in my NW, though I would never consider my low end daily driver. But NW is secondary to me.

whodidntante · Post by **whodidntante** » Wed Jul 12, 2017 10:13 pm

I would if I needed to have a precise figure for some reason. But just for keeping score, no.

VictoriaF · Post by **VictoriaF** » Wed Jul 12, 2017 10:14 pm

The net worth of my hiking gear is higher than the net worth of my car. And in the past few years, I have covered more miles in my hiking gear than in my car.

Victoria

acanthurus · Post by **acanthurus** » Wed Jul 12, 2017 10:24 pm

Removed

Watty · Post by **Watty** » Wed Jul 12, 2017 10:32 pm

oldcomputerguy wrote:To me, net worth is the sum total of my estate after all final expenses. So yes, whatever my vehicles would bring on the used-car market is part of that. (I currently have no outstanding auto loans.)

+1

Car loans are an example of just why you need to include the value of the car in your networth statement. For example if you have a car that is worth $20,000 but you have a car loan for $12,000 they would both be on your net worth stament and ad $8,000 to your net worth. If you did not have the car listed then what would you do about the car loan? If you leave the car loan off your net worth statement that would be very misleading.

In the spreadsheet that I track my networth in I do have a seperate subtotal for investments which is for all my financial accounts.

JGoneRiding · Post by **JGoneRiding** » Wed Jul 12, 2017 10:37 pm

Teague wrote:This would be a great question for Jay Leno's accountant.

Lol that collection has its own curator and represents some serious money! Hope someone counts it

rocket354 · Post by **rocket354** » Wed Jul 12, 2017 10:40 pm

neophyte1 wrote:
oldcomputerguy wrote:To me, net worth is the sum total of my estate after all final expenses. So yes, whatever my vehicles would bring on the used-car market is part of that. (I currently have no outstanding auto loans.)
So do you count things like furniture too? Just curious. I get your point and that's the technical definition of net worth, just wondering where the consensus draws the line when someone asks them what their net worth is.

I agree with oldcomputerguy and definitely count my vehicle in my net worth since that is part of it. If I have a $10k car, I could sell it and buy a $5k car and have $5k in the bank, just like I could if I had $10k in the bank instead of the $10k car. I don't see the difference. Assets - liabilities.

I can't answer for him, but yes, I also count my furniture and other belongings in my net worth. However, unlike my vehicle, it's much harder to estimate the street value of those items, and in total they're worth very little. Therefore, if I don't simply forget to include them, I just come up with some random small amount that I think I could get on craigslist if I were to liquidate everything and use that (like, say, $2k). It's not really worth my time to catalog everything and find out that, gasp, I could really get $2.5k, or, oh no, only $1.5k.

madbrain · Post by **madbrain** » Wed Jul 12, 2017 10:41 pm

Yes. I have asset accounts for each car and corresponding loan accounts. The equity is negative and likely to be for a long time. It wouldn't make sense to only list the loan assets and not the car values, since they are not worthless.

My piano is worth more than both cars and and has no loan associated with it . It's not listed in Quicken meaning i don't count it in my net worth. It would clearly be worth something, but a 9ft grand is not as easily liquidated as a car. More like a house.

whomever · Post by **whomever** » Wed Jul 12, 2017 11:09 pm

I don't. Like Victoria, I have categories of hobby stuff that is worth more than the cars (admittedly, we drive cheap cars).

I don't count the house either. We don't have car loans or a mortgage, so there aren't liabilities to account for. We're in our 'what we hope will be forever' house; it's not like we're in a $1M 2000 sq foot rambler in a HCOL and our retirement plan is to move to a LCOL and buy a similar house for $200k.

I add up our investments so I can answer the question 'how are we doing according to the 4% rule', or more detailed modeling. None of those scenarios involve selling the house (or cars) so there isn't much advantage to tracking them.

The answer is very different if you have a $400k collector car in the garage or plan to radically downsize your house.

sunny_socal · Post by **sunny_socal** » Wed Jul 12, 2017 11:24 pm

Yes, especially because I have a couple extra vehicles.

Nate79 · Post by **Nate79** » Wed Jul 12, 2017 11:31 pm

Yes absolutely. It represents a value I could tap if need be (sell and downgrade to a beater in emergency for example).

denovo · Post by **denovo** » Wed Jul 12, 2017 11:32 pm

JGoneRiding wrote:
Teague wrote:This would be a great question for Jay Leno's accountant.
Lol that collection has its own curator and represents some serious money! Hope someone counts it

Jay Leno was the second thing that popped in my head when I saw the thread. I'd answer no, but exception would be if I was some kind of car collector and/or someone who held cars that accelerate or keep their value.

Sidney · Post by **Sidney** » Wed Jul 12, 2017 11:59 pm

On my asset list that I give to estate lawyer every year. Not part of financial holdings for retirement.

HornedToad · Post by **HornedToad** » Thu Jul 13, 2017 12:03 am

Yes, mainly so I can see what the increase in my networth is year over year accurately by counting it and then depreciating it each year.

If I didn't count cars in networth then there'd be a ~40k cash outflow the year you buy a car with no asset and it makes it look like the net worth didn't increase by as much that year vs. instead showing a $40k outflow and maybe $35k asset that then depreciates each year until eventually buying a new car.

But you'll never get people to agree on this since everyone has different purposes/uses for networth.

Pajamas · Post by **Pajamas** » Thu Jul 13, 2017 12:14 am

Officially yes, but as a practical matter, what you include would depend on the purpose of calculating your net worth.

I only count highly liquid assets that are reported to me on account statements and that meets my needs, mostly for managing my finances. I don't include the value of my apartment. If I had a mortgage or vehicle loan, I might include the value of my apartment or car. For the purposes of settling an estate, vehicle equity would count, for the purposes of determining whether or not you meet standards for an accredited investor, your net worth excludes the value of your primary residence, etc.

Ron Ronnerson · Post by **Ron Ronnerson** » Thu Jul 13, 2017 12:18 am

Even though it should technically be included, I ignore it. We don't buy expensive cars and, over a few years, they depreciate fairly rapidly anyhow. Also, if we sold our cars and got something cheaper due to an emergency, the cash we'd end up with wouldn't be very much after all is said and done. If I did include our cars, they'd probably make up around 2% of our net worth. I also don't include our technology (TVs, computers, phones, etc.), furniture, and other household items. All I include are home equity and value of accounts.

badger42 · Post by **badger42** » Thu Jul 13, 2017 12:23 am

I don't bother. We buy relatively inexpensive cars quite infrequently, and it would only change the total number by something like 1.3%.

I also don't bother with bicycles, furniture, electronics, etc - not worth the trouble.

123 · Post by **123** » Thu Jul 13, 2017 12:42 am

If I had a Rolls or Bentley I might count it. But my Kia, I don't think so.

The Wizard · Post by **The Wizard** » Thu Jul 13, 2017 12:59 am

bottlecap wrote:If I have to sell my vehicle to keep afloat, all is lost anyway. Where else would I live?

It is not considered in my net worth. Even if it was, it's worth about what I can make in 2 or 3 days.

JT

When you are dead, you don't need a place to live, in the usual sense.
They will auction off your estate, including all funishings, though some stuff may be given away. Vehicles and real estate may be sold in the usual manner. The total is your Net Worth.

Better question: do you bother to compute your Net Worth?
I don't...

The Wizard · Post by **The Wizard** » Thu Jul 13, 2017 1:05 am

123 wrote:If I had a Rolls or Bentley I might count it. But my Kia, I don't think so.

It's definitely possible for some people to be "Upside Down" or "Under Water" on both real estate and vehicles if they have a large loan on the item.
In that case, the contribution of the vehicle + loan could be NEGATIVE $2000 toward that person's Net Worth, for example...

grettman · Post by **grettman** » Thu Jul 13, 2017 4:27 am

The value of the vehicles that I own outright are considered "decimal dust" from a net worth perspective. It isn't a matter of me having so much $$ it is a matter of how cheap my cars are I guess. Like others said...tracking it to keep score ? No. Would I track it if I had to give a real net worth number to someone that is precise? Yes.

stickman731 · Post by **stickman731** » Thu Jul 13, 2017 5:07 am

whomever wrote:
I don't count the house either. We don't have car loans or a mortgage, so there aren't liabilities to account for. We're in our 'what we hope will be forever' house; it's not like we're in a $1M 2000 sq foot rambler in a HCOL and our retirement plan is to move to a LCOL and buy a similar house for $200k.

I add up our investments so I can answer the question 'how are we doing according to the 4% rule', or more detailed modeling. None of those scenarios involve selling the house (or cars) so there isn't much advantage to tracking them.

The answer is very different if you have a $400k collector car in the garage or plan to radically downsize your house.

+1

Post by **oldcomputerguy** » Thu Jul 13, 2017 5:12 am

neophyte1 wrote:
oldcomputerguy wrote:To me, net worth is the sum total of my estate after all final expenses. So yes, whatever my vehicles would bring on the used-car market is part of that. (I currently have no outstanding auto loans.)
So do you count things like furniture too? Just curious. I get your point and that's the technical definition of net worth, just wondering where the consensus draws the line when someone asks them what their net worth is.

Well, the OP's original question was regarding automobiles, so I didn't mention that in my answer, but yes, I would. My thinking is that my net worth only becomes relevant when my executor has to dispose of my estate, and such disposal will include selling of personal property, including autos, furniture, televisions, computers, clothing, the whole smash. Outside that context, I figure I have enough in investments, Social Security, and our pensions to meet expenses and allow a bit of travelling, so I don't see that I even need to consider what my "net worth" is.

LiveSimple · Post by **LiveSimple** » Thu Jul 13, 2017 5:29 am

It depends on the percentage of your vehicle value to the other asset value.

And to what level of detail, you want to go.

Better to leave it and progress.... less the net worth, you spend less and have a motivation to increase your net worth.
No need to have a false sense of higher net worth.

Jack FFR1846 · Post by **Jack FFR1846** » Thu Jul 13, 2017 5:34 am

No.

The value of my cars in total (4 cars) is mouse nuts compared to my investments. I would argue that aside from truly big dollar collector cars, the value shouldn't be considered. When I owned my Lotus Elise, its value increased every year (which I can say because I did sell it for more than I bought it for) but the expenses to keep the car were more than the increase in value. Chances are, if you own big dollar collector cars, your net worth outside of the cars is very high. Probably high enough that a $100k car isn't all that big of a chunk of net worth. I doubt that an owner of one of the 6 Daytona Coupes has only $1M in net worth outside of the car's value.

TomatoTomahto · Post by **TomatoTomahto** » Thu Jul 13, 2017 5:37 am

Boy, lots of people compute NW. I wonder why. It's a side effect of my using Quicken, but the only things I use NW for is to see if we're up or down versus last year, and occasionally when I make my half-hearted pitch to my wife to retire. And, since I don't track cars in Quicken, the short answer to the question is: No.

bottlecap · Post by **bottlecap** » Thu Jul 13, 2017 6:13 am

The Wizard wrote:
bottlecap wrote:If I have to sell my vehicle to keep afloat, all is lost anyway. Where else would I live?

It is not considered in my net worth. Even if it was, it's worth about what I can make in 2 or 3 days.

JT
When you are dead, you don't need a place to live, in the usual sense.
They will auction off your estate, including all funishings, though some stuff may be given away. Vehicles and real estate may be sold in the usual manner. The total is your Net Worth.

Better question: do you bother to compute your Net Worth?
I don't...

I will have no need to count my net worth upon my death.

JT

jharkin · Post by **jharkin** » Thu Jul 13, 2017 6:15 am

Yes I do count cars in my net worth... I am not so well off as others here (or drive cars so old) as to have the cars be a minuscule percentage of the total. In my case the cars are late model with a market value combined of 5-10% of total net worth and we still have a loan on one so it goes into the calculation.

I do not count any other personal possessions such as furniture, electronics, housewares, hobby gear, etc. In a liquidation sale those would bring pennies on the dollar so there is no way to figure it.

Having said all that I dont use total net worth for retirement planning purposes. For that I just use the sum of my investment accounts.

CyclingDuo · Post by **CyclingDuo** » Thu Jul 13, 2017 6:32 am

TomatoTomahto wrote:Boy, lots of people compute NW. I wonder why. It's a side effect of my using Quicken, but the only things I use NW for is to see if we're up or down versus last year, and occasionally when I make my half-hearted pitch to my wife to retire. And, since I don't track cars in Quicken, the short answer to the question is: No.

We track almost everything, but perhaps for a different reason.

Why? We were struck by a tornado 7 years ago and lost quite a bit of physical belongings. When the insurance company wanted a detailed list of absolutely everything we owned and lost in the storm, or got damaged - you want that data written down somewhere or stored "in the cloud" somewhere (pun intended). Big items are easy to track, but all that "stuff" we lost unfortunately really never got accounted for and simply "blew miles away" with the twister. We were able to file a subsequent claim on some of things that were not on the initial list, and we "remembered" months later as things came up and you suddenly realized the snow blower is missing, or a luggage set is gone, or the leaf blower is missing, or the tent and camping chairs are nowhere to be found, or the blender to make smoothies blew away in the storm. In the aftermath of such a storm, emotions absolutely prevent you from remembering what the heck you even had in the shed, or garage, or basement.

Not that you have to have it included in net worth as this post is a bit off subject, but an itemized list stored safely somewhere will come in handy some day if you are ever unfortunate enough to experience an event like a tornado, hurricane, flood, fire, etc... . We live in tornado alley, so keeping lists and tracking things will continue.

harvestbook · Post by **harvestbook** » Thu Jul 13, 2017 6:43 am

Cars and houses are liabilities, not assets.

Even if you sell them, you have to buy or lease replacements. I guess they might be assets after you're dead.

TomatoTomahto · Post by **TomatoTomahto** » Thu Jul 13, 2017 6:56 am

CyclingDuo wrote:Not that you have to have it included in net worth as this post is a bit off subject, but an itemized list stored safely somewhere will come in handy some day if you are ever unfortunate enough to experience an event like a tornado, hurricane, flood, fire, etc... . We live in tornado alley, so keeping lists and tracking things will continue.

That's a good point. I've had a "photo inventory" on my to-do list for a while, to give the insurance company as substantiation of a claim should our house burn down. I take it they didn't just cut a check for some percentage of the house's declared value, or that the amount didn't really reflect the value.

nisiprius · Post by **nisiprius** » Thu Jul 13, 2017 7:04 am

I never have and I think it's silly. I've always included debts as negative entries on net worth, especially big debts that are being systematically paid down over long periods of time.

The only reason I can think for doing it is psychological--if you are just starting a savings program, and the value of your car is a large percentage of the value of "all you own," and you want to have some way of keeping score that gives you a sense of progress. But even here, I think it is much more appropriate to count amount owing as negative net worth, because it's a precise number. You know the exact number of dollars you owe. Any estimate of what your vehicle is really worth is just a guess. It also reflects the reality of the situation--the loan is a loan, you have to pay it no matter what, while the "value of the car" can fluctuate.

NYC_Guy · Post by **NYC_Guy** » Thu Jul 13, 2017 7:07 am

neophyte1 wrote:As the subject says and just curious what the majority is. If you do, where do you draw the line? Count jewelry and other objects? Seems excessive and unnecessary.

I've always thought of net worth as most reference it as no more than cash, investments, and home equity.

I do. When I buy a car (which I do with cash), I set up an automatic depreciation schedule in Quicken. I do this mostly to track expenses more evenly. My expense is the depreciation, not the car purchase. The impact on net worth is somewhat de minimis. But the automatic amortization helps track expenses better. I also have a major wine collection that I track. But that gets amortized a bit differently.

NYC_Guy · Post by **NYC_Guy** » Thu Jul 13, 2017 7:11 am

harvestbook wrote:Cars and houses are liabilities, not assets.

Even if you sell them, you have to buy or lease replacements. I guess they might be assets after you're dead.

I completely disagree with this. I could easily downsize (sell my weekend/vacation house, sell my main house and move to a very nice condo) and have another $2 million of cash. Indeed, my wife and I are quite likely to downsize in the next few years. I should ignore this value?