Do you count vehicle equity in net worth?

midareff · Post by **midareff** » Thu Jul 13, 2017 7:17 am

I don't although I could have taken cabs everywhere the last 5 years and it would have cost far less than the car + insurance + maintenance.

cherijoh · Post by **cherijoh** » Thu Jul 13, 2017 7:27 am

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

+1

That was my thought too. Or else that they are buying vehicles that they can't really afford.

Although if you have a car loan on the debit side of the equation, it would make sense to include the value on the credit side.

tennisplyr · Post by **tennisplyr** » Thu Jul 13, 2017 7:29 am

No I dont

Blues · Post by **Blues** » Thu Jul 13, 2017 7:33 am

I don't but I don't even count my home's estimated value.

I simply total up the value of my investments in equities, bonds, CDs etc.

The value of home and vehicles are gravy. Not the technically correct way of doing things but it is the method I prefer.

pangea33 · Post by **pangea33** » Thu Jul 13, 2017 7:37 am

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

Most underrated comment.

I can't make money without my car. Instead of calculating the value into my net worth, I consider the money I'm saving as free money for investing.

Trade-in value on my super reliable Toyota Camry is only about $2000, but I bank $500 a month as lieu of a car payment. Whenever this trusty steed dies, I'll use that money for a replacement in order to continue avoiding an actual car payment.

Ron · Post by **Ron** » Thu Jul 13, 2017 7:46 am

No. I consider all personal property as $0.00 for estate value net worth calculations.

- Ron

awval999 · Post by **awval999** » Thu Jul 13, 2017 7:50 am

I do.

However I do see the point when it becomes such a small part of your overall net worth what's the point, for example, home furnishings. No one really puts that stuff into their net worth.

But, even for someone with $1MM net worth, an average $20,000 value new Camry/Accord/SUV etc is still 2% of that family's net worth. So I think that's still reasonable to include.

retire57 · Post by **retire57** » Thu Jul 13, 2017 7:50 am

HornedToad wrote: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.

+1

rkhusky · Post by **rkhusky** » Thu Jul 13, 2017 7:54 am

I do because I needed a category in Quicken (now GnuCash) to record the purchase and it wasn't an expense. That led me to inputting the depreciation by checking the blue book value every year.

coupleofcents · Post by **coupleofcents** » Thu Jul 13, 2017 8:06 am

I count my house because over time it is likely to appreciate in value. Not my car. Most cars depreciate over time, and in reality I'm always going to have a car so I will never really capture the value of that car because if I sell it is will go into buying my next vehicle which is usually more than I'm selling it for.

bloom2708 · Post by **bloom2708** » Thu Jul 13, 2017 8:06 am

I list each car in Personal Capital as an asset. Every 3 months I run the KBB "Private Party Sale" value and keep the car on the books for a bit less than that number. Between Trade In and Private Party.

I do not list things like guns, snowblowers, lawn mowers, furniture, watches, TVs. I do have an "everything else" category/asset in PC with a liquidation value for all the stuff previously mentioned. If I had a giant garage sale, the stuff would sell for some price. Just not very much compared to retail.

BogleMelon · Post by **BogleMelon** » Thu Jul 13, 2017 8:08 am

One definition of an asset is that they could increase in value. Cars can never go up in value, so they are consumables. That said I don't count them in my net worth.

djpeteski · Post by **djpeteski** » Thu Jul 13, 2017 8:22 am

HornedToad wrote: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.

I am along these lines. I just purchased a nice vehicle for cash. I could easily sell that car today, buy two less expensive cars, and pocket at least 10K. Therefore it is an asset.

A few years back, I did a poor job of tax planning and got the news from the accountant: You owe the irs 12K, on the evening of March 22nd. Earlier that day I had just shipped a large payment to a loan. We had only one pay check between then and April 15th. We were able to pay the bill about 33% from our paychecks, about 33% from savings, and 33% from selling off random crap that we weren't using anyway.

Unless you diligently purge, you would be surprised at the market value of items contained in our homes. For insurance purposes 25k would be far too little for all but a very modest home.

CyclingDuo · Post by **CyclingDuo** » Thu Jul 13, 2017 8:28 am

TomatoTomahto wrote:
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.

Luckily, our house was saved due to some quick calls to a roofing/construction company who was at it by 8 am the next morning with a crew of 10 to rebuild the roof and damaged portions of the house. Two 12 hour days with that many man hours shored everything up. Many of my neighbors were not so fortunate to get a crew in to work ASAP, and we received several storms and much more rain (a 5" rain and a 6" rain - which was in addition to the 9 1/2" we got during the tornado) for the entire week which meant total losses for some due to the flooding and having no or partial roofs to protect what was in the homes. Turns out my call to the roofing/construction company was improper protocol as I did not go through the insurance company first before making the call. In spite of that, I'm glad I did that. I had to float the cost myself for the work until the insurance money came through much, much later. New roof, siding, some framing, windows, AC, carpet, paint interior/exterior, exterior fence/shed, damaged vehicles, bikes, sporting goods equipment, etc... was all covered with no problem. Yes, they used some formulas to estimate our belongings and the value since we did not have an actual list of everything. We won't make that mistake again when it comes to all the stuff including tools, art work, furniture, appliances, everything in the kitchen, garage, shed, basement, closet. We did have paper receipts for many things spread around the house, but for whatever reason I kept a lot of that stuff in a drawer in the garage which was sucked out in the storm never to be seen again.

Lesson learned. List it all, photograph receipts and store it all in electronic form off site (in the cloud). Easily done with some of the online sites available today. No worries about depreciation and replacement costs for what one owns as the insurance companies use their formulas to determine all of that when the time comes. The main thing is to have a complete list of everything.

Pajamas · Post by **Pajamas** » Thu Jul 13, 2017 8:30 am

TomatoTomahto wrote:Boy, lots of people compute NW. I wonder why. It's a side effect of my using Quicken,

My primary bank does it automatically using Yodlee account aggregation software. All I had to do was link other accounts by providing log-in and password information.

wolf359 · Post by **wolf359** » Thu Jul 13, 2017 8:32 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.

Why are you tracking net worth? The answer to that question will help provide the answer to yours.

If you're tracking it to find out where you stand in terms of financial independence, then I would track it only if you are also tracking a car loan. The car loan is debt; the car value itself offsets that debt. If you don't have a car loan, then I wouldn't track it unless you actually would consider selling the car to raise money (and not replacing it.)

I usually only count investable net worth (cash and investments, minus non-mortgage debt.) My house and mortgage would be counted if I wanted to know total net worth, but I can't live off the value of my home or car, so I don't include it to measure progress. I consider the house value (minus mortgage) as a reserve that I'd tap only if I had no job and my investments went really sour. So, car value is much lower than that, and is not even on my radar.

When I was really young and just getting started, I'd do penny accounting (net worth calculations down to the pennies in my wallet.) Back then, I did include the value of my car, since it was my most valuable asset. Now, it's not worth the bother.

SGM · Post by **SGM** » Thu Jul 13, 2017 8:36 am

I don't calculate net worth. If I did calculate net worth it would include portfolio and real estate. I would not add in an estimate of the net present value of income streams or add in personal items.

fishmonger · Post by **fishmonger** » Thu Jul 13, 2017 8:41 am

Personally, I do, but I understand why folks do not. I have two cars fully paid off. Conservatively they're worth $35k combined.

I don't count any other personal assets, even though I have a nice lawn tractor, small boat, etc.

bertilak · Post by **bertilak** » Thu Jul 13, 2017 8:53 am

I don't because whatever value the vehicle has (asset) is offset by the need for a vehicle (liability).

I very rarely have a NEED to express my net worth. I think the last time was 10 years ago when applying for a mortgage.

student · Post by **student** » Thu Jul 13, 2017 9:01 am

Like many others, I do not. In fact, I also do not include my house. The reason is I want to use net worth to gauge when I will be financially independent with respect to annual expense. When I retire, I still need a car and a place to stay. The house (well, condo) is paid off and it is an el cheapo place. So it does not make sense for me to include it in the calculation.

The Wizard · Post by **The Wizard** » Thu Jul 13, 2017 9:12 am

bertilak wrote: ...I very rarely have a NEED to express my net worth. I think the last time was 10 years ago when applying for a mortgage.

Me neither, but we mustn't neglect the ultimate need, the Graveyard Entrance Competition...

LRDave · Post by **LRDave** » Thu Jul 13, 2017 9:19 am

bertilak wrote:I don't because whatever value the vehicle has (asset) is offset by the need for a vehicle (liability).

I very rarely have a NEED to express my net worth. I think the last time was 10 years ago when applying for a mortgage.

+1 on the bolded above.

I can't even come up with a NEED situation. If you are applying for a mortgage, then your lender will calculate this for you and they have their own ways of thinking about things...

michaeljc70 · Post by **michaeljc70** » Thu Jul 13, 2017 9:22 am

Yes. Only because I use Quicken and it is already in there. It is not significant enough to make any difference though.

watchnerd · Post by **watchnerd** » Thu Jul 13, 2017 9:25 am

Mint counts it.

But from my POV, it moves the net worth needle much:

a) You're young or
b) A classic car collector (Jay Leno) or
c) You have too much car

Lastrun · Post by **Lastrun** » Thu Jul 13, 2017 9:27 am

Wolf349 wrote:
Why are you tracking net worth? The answer to that question will help provide the answer to yours.

I do--include cars on my personal financial statement (PFS).

Interesting, that it appears many of you do not file financial statements on a regular basis. My rationale is not to increase my net worth (my cars don't) but to be as accurate as possible in the filing.

I always figure if they pull my credit and see a car loan, and then don't see a car on my PFS, they might start to wonder what else I left off. I don't want them to wonder.

But to answer the OPs question, I do not include cars, etc. in my net worth for financial planning and other purposes.

LiterallyIronic · Post by **LiterallyIronic** » Thu Jul 13, 2017 9:55 am

No. Car is worth less than my computer. Or TV. And I don't count them in net worth. I just count checking, savings, 401k, IRA, and HSA. If I had a house, I would include the value of the house minus the amount outstanding on the mortgage.

letsgobobby · Post by **letsgobobby** » Thu Jul 13, 2017 10:05 am

Deleted

Kenkat · Post by **Kenkat** » Thu Jul 13, 2017 10:08 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.

If this is true, please transfer your liabilities to me. I will expect a cash payment from you as well as compensation for taking on the liabilities.

Frank Grimes · Post by **Frank Grimes** » Thu Jul 13, 2017 10:08 am

I generally wouldn't, but may do it if I'm getting close to a milestone and want to see that number flip!

TXGator · Post by **TXGator** » Thu Jul 13, 2017 10:10 am

I only count the loan so at least I see some net worth progress from the funds going out monthly. Thought is including the car value only sets up for future disappointment when the trade-in value is lower than I hope for

jharkin · Post by **jharkin** » Thu Jul 13, 2017 10:11 am

letsgobobby wrote:There really isn't anything to debate. Net worth has a definition, total assets minus total liabilities. To the extent you are calculating net worth, to exclude a vehicle would be an error. The only reason I calculate NW is to have a sense of my estate tax liability (if any) when I die. I am sure both my state and the feds will want an inventory of all my assets including my vehicles when they calculate any tax due.

If your vehicle is very low cost you may not include it in the calculation but that is no different than your Ikea dining room table, your five year old desktop computer, or anything else of negligible value. Otherwise a vehicle (and expensive artwork or furniture or a coin collection) must be included in the calculation.

But people love to exclude it as part of the usual Bogleheads humble bragging. AKA "I'm worth 10 million dollars but I still force my self to suffer in traffic in a $500 beater. Look at me!"

I follow this philosophy so I dont have to suffer in a crappy car, tiny house, eating ramen noodles etc. So my car is more than .00001% of my worth and I am 1000% OK with that

Thesaints · Post by **Thesaints** » Thu Jul 13, 2017 10:14 am

As usual, the correct answer is "it depends". In this case, "it depends on the vehicle(s)"

Kenkat · Post by **Kenkat** » Thu Jul 13, 2017 10:15 am

I count mine, mostly because I use Quicken which makes it very easy. I depreciate them as they age (usually adjust every year or two as a depreciation expense).

For those who track net worth but not the value of assets like cars, if you spend $50,000 cash on a car, do you consider your net worth as having dropped by $50,000? I guess if it is a small total of net worth, it falls into not worth it category which I get but cars seems substantial enough (usually five figures) that I count them.

MrNewEngland · Post by **MrNewEngland** » Thu Jul 13, 2017 10:22 am

I track my NW on Mint and I do have my Jeep on there. However I don't use KBB value, I put a value in there that is well under blue book that I know I could sell it quickly if I had to. I drop it a little every few months.

LiterallyIronic · Post by **LiterallyIronic** » Thu Jul 13, 2017 10:25 am

Kenkat wrote:For those who track net worth but not the value of assets like cars, if you spend $50,000 cash on a car, do you consider your net worth as having dropped by $50,000?

I would consider my net worth to have dropped by $50,000, yes. And then it would go back up if/when I sold the car. Because I can't accurately and easily track the current value of the car, it gets excluded until it converts back to cash. Then, and only then, do I know the value of the car. Until then, I can't bank on it being worth $50,000, $25,000, or $1,000.

letsgobobby · Post by **letsgobobby** » Thu Jul 13, 2017 10:31 am

Deleted

WildBill · Post by **WildBill** » Thu Jul 13, 2017 10:32 am

The Wizard wrote:
bertilak wrote: ...I very rarely have a NEED to express my net worth. I think the last time was 10 years ago when applying for a mortgage.
Me neither, but we mustn't neglect the ultimate need, the Graveyard Entrance Competition...

Nice

jhfenton · Post by **jhfenton** » Thu Jul 13, 2017 10:33 am

1. I don't calculate net worth.
2. If I did calculate net worth, I would include our two fully paid-off cars and our house, because they are assets.
3. But I don't have any reason to calculate net worth.
(4. I do have a spreadsheet with our liquid investments.)

alfaspider · Post by **alfaspider** » Thu Jul 13, 2017 10:34 am

Mint and Personal Capital have the option to automatically track vehicle value based on blue book value. It's not precise, but it's a good estimate. One reason to include vehicles but not other personal property is that they are readily valued and relatively easily liquidated compared to things like furniture.

michaeljc70 · Post by **michaeljc70** » Thu Jul 13, 2017 10:35 am

Kenkat wrote:I count mine, mostly because I use Quicken which makes it very easy. I depreciate them as they age (usually adjust every year or two as a depreciation expense).

This is basically what I do. I have an automatic (scheduled) transaction record the depreciation each month. This way when I run a report on expenses, there is an even expense for the vehicle rather than one big lump sum one year and nothing other years.

The Wizard · Post by **The Wizard** » Thu Jul 13, 2017 10:42 am

Lastrun wrote:
Wolf349 wrote:
Why are you tracking net worth? The answer to that question will help provide the answer to yours.
I do--include cars on my personal financial statement (PFS).

Interesting, that it appears many of you do not file financial statements on a regular basis. My rationale is not to increase my net worth (my cars don't) but to be as accurate as possible in the filing.

I always figure if they pull my credit and see a car loan, and then don't see a car on my PFS, they might start to wonder what else I left off. I don't want them to wonder...

Who are "they"?
Are we being monitored??

TomatoTomahto · Post by **TomatoTomahto** » Thu Jul 13, 2017 10:50 am

Lastrun wrote:Interesting, that it appears many of you do not file financial statements on a regular basis.

I'm honestly not trying to be a jerk in asking this. We haven't applied for a mortgage in more than 20 years, but I assume that NW might be of Interest to a mortgage company. And, I hear that some high end coops want a full accounting. And, the courts might want one if you're getting a divorce or determining child support obligations.

Who else gets you to file financial statements?

watchnerd · Post by **watchnerd** » Thu Jul 13, 2017 10:51 am

Does it really matter?

Unless you're collecting cars as an investment, I wouldn't expect vehicles to be a big portion of net worth.

According to Mint, our vehicles are 1.7% of our net worth. I can easily get that much gyration in my net worth based on stock market movements on any given day, week, month. It's just noise / rounding error.

michaeljc70 · Post by **michaeljc70** » Thu Jul 13, 2017 10:53 am

TomatoTomahto wrote:
Lastrun wrote:Interesting, that it appears many of you do not file financial statements on a regular basis.
I'm honestly not trying to be a jerk in asking this. We haven't applied for a mortgage in more than 20 years, but I assume that NW might be of Interest to a mortgage company. And, I hear that some high end coops want a full accounting. And, the courts might want one if you're getting a divorce or determining child support obligations.

Who else gets you to file financial statements?

Exactly. File them with who? In a file cabinet or are we talking with some company or agency?

chisey · Post by **chisey** » Thu Jul 13, 2017 10:56 am

HornedToad wrote: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.

Agree with all of this. I simply want to account for (most) everything, including the major reasons NW changes month to month. I use a couple of other measures (liquid assets, investable assets) that exclude things like cars but Net Worth is, to me, all of it.

It becomes less and less of a factor over time, of course. It's about 4% of our NW now and I never expect it to be above 5% again. We drive economical cars and replace them infrequently enough that the total depreciated value will never be that big.

rkhusky · Post by **rkhusky** » Thu Jul 13, 2017 10:58 am

Do colleges look at net worth when assessing financial aid or are cars and houses and such excluded? How about Medicaid and food stamps?

Valuethinker · Post by **Valuethinker** » Thu Jul 13, 2017 11:00 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.

Liquidity is your Big constraint. These things can take months or years to sell.

That and the fact that the bid ask spread can be 50 per cent. What you'd buy it for and what you could turn around and sell it at. 25 to 50 per cent common in collectibles. This is definitely true of much jewelry, some coins, diamonds except rarer ones.

Sothebys or Christies for example charges at least 25 per cent I believe. Victorian furniture (in the UK) turns out to be totally out of fashion (unless perhaps immaculate condition). We lost 100 per cent of value over 15 years on a quite expensive dresser bought at auction.

As the Baby Boomers age out and downsize, many collectibles turn out to have no value at all. We have had threads 're baseball cards etc here.

Over to cars. As per others Quicken makes it easy. So fine.

A warning w cars. Depreciation is probably not straight line. Typically you lose 30 per cent of value in first year and then much less (my guess, varies by brand). If you have good estimates of residual value then fine.

Valuethinker · Post by **Valuethinker** » Thu Jul 13, 2017 11:02 am

rkhusky wrote:Do colleges look at net worth when assessing financial aid or are cars and houses and such excluded? How about Medicaid and food stamps?

Afaik the latter two are income tested.

Colleges do look at net worth but I don't know whether they go beyond financial assets plus home equity?

rkhusky · Post by **rkhusky** » Thu Jul 13, 2017 11:08 am

Valuethinker wrote:
rkhusky wrote:Do colleges look at net worth when assessing financial aid or are cars and houses and such excluded? How about Medicaid and food stamps?
Afaik the latter two are income tested.

Colleges do look at net worth but I don't know whether they go beyond financial assets plus home equity?

I think food stamps are also asset tested, especially after a story about a couple with millions, but little income, applied for and received food stamps.

edit: a little Googling reveals that some states do and some states don't and some states go back and forth depending on who is governor. Other detail: https://www.cbpp.org/research/a-quick-g ... d-benefits

Ice-9 · Post by **Ice-9** » Thu Jul 13, 2017 11:08 am

Most of my use of a net worth figure is only for the purpose of my own tracking and curiosity. I keep this simple, using the number Personal Capital spits out after adding in the balances of all accounts, which does include home equity but not vehicle equity. If vehicle equity really interested me, I might add a manual entry in Personal Capital for the estimated value of my car, but it doesn't, so I won't. I want this personal net worth calculation to be quickly and easily maintained and consistent over the years, and I'm not worried about what amount I might be able to get if I sell a consumption item at any particular moment.

Only on very rare occasion have I been asked my net worth for some official reason beyond my own tracking and curiosity. This most recently happened with our application to adopt a child. The adoption agency provided a specific net worth formula for applicants to use, which included both home equity and vehicle equity, as well as the values of expensive jewelry and other items. We filled this out according to their prescribed formula to produce a net worth figure that was used one time for that application. Then I simply continued calculating my own net worth for my own purposes on Personal Capital without vehicle equity going forward.