Net Worth

iVillage Member
Registered: 04-08-2008
Net Worth
10
Fri, 03-01-2013 - 9:30pm

Do you ever sit down and calculate your net worth?

I'm not asking you to share your # here. But do you actually know what it is?

I worry about ours because I think way too much of our money is tied up in our home. A home should be a comfortable place to live, not an investment or a retirement fund. We have some other investments & a pension plan...but I still worry about it.

Anyone else?

Dee

iVillage Member
Registered: 11-14-2008
Sat, 03-02-2013 - 2:27pm

I calculate it all the time.

For me, since the baby has come I feel like we have not been able to make as much progress in the debt repayment and savings areas. Going down to one income is of course why and we can still make ends meet but we don't have the power to achieve our goals like we once did with the extra money.  However, we are still making payments on our truck loan and our mortgage. For every payment we make, we are making progress increasing our net worth and that is still realy good. It just helps me when we can't put much extra on debt or into savings. 

Pension plans are hard to put a number on. You can't see it directly when you go online or look at a monthly statement. Do you get something yearly to view? 

I'm not an investment advisor but if you want to see cold hard  numbers for retirement start putting cold hard numbers into something you can see. Even if you start at $10 a month. When I was about 18months into my debt repayment, I started to panic that I was going through all of this hardship to come out with nothing so I opened an RRSP and was so empowered to see it grow. It started at $25 a month.   It still isn't worth a whole lot and we have other irons in the fire to, but hey, its more than I had before and I can "See" it!

I have two very personal rules when it comes to net worth. 

1. Don't  count on your net worth increasing by the loss of loved ones.(I actually know people who do this and its not something that I aspire to)

2. Don't count on your net worth increasing by what the market says about your house(this can change). I just stick to mostly what was paid for it, looking at what is owed more than anything.

These are just some things I hold near and dear to me. Its not for everyone. 

Are you planning on selling and moving any time soon? That is when you really have to be concerned about the house and the market. Are you underwater? Otherwise, it is what it is and you work on it every month, and the value is just a guess anyway. In North America a family's house is usually their biggest asset. It would be hard to not include it. We don't all run around with jets and boats etc. 

Net worth is a good gage to see how you are doing year to year in your finances. As long as it increases, even just a little every year, you are doing good. What is it this year, What was it last year? This is especially helpful for people that start out with a negative net worth and it is really exciting when it becomes a positive and grows from there.

Just some things to think about.

iVillage Member
Registered: 04-08-2008
Sat, 03-02-2013 - 5:14pm

To answer some of your questions:

- no, we are not underwater. We are not selling our home though I would like to and just rent. Less stress about all this but DH thinks it is "too much work".

- I guess I worry bc what if my pension plan is gone in 25+ yrs when I need it? I have been paying 10% of income into it! I have no choice, it is mandatory and the reason it is difficult to invest in other things.

- I am not sold on RRSPs. I have some. I recently pulled $2K out for school. It is really a deferrment for income taxes and I use it as such. I won't pay tax on that $2k (and I didn't originally) bc I have some many deductions for school, childcare, etc. In the future, when I retire if I have my pension AND additional investment, I may end up paying more tax on that RRSP money as I pull it out. I would rather max out my TFSA...but I don't have one bc I wasn't financially literate back when I was single/mortgage free and investing!! Instead I put it in RRSPs.

I guess this issue comes up for me bc I am paying down debt as fast as I can. All my debt is at 4%...if I could make more than that investing, it might make more sense to do that...I just hate all this uncertainty.

Dee

iVillage Member
Registered: 05-08-2006
Sat, 03-02-2013 - 5:22pm
I do calculate my net worth, usually once a year near the beginning of the year. There are many different opinions about the value of a house for retirement, but I feel like if you are not going to move around a lot, if you buy a house that is big enough for your family and then pay it off, you have some options at retirement..live their, paying taxes and insurance, but otherwise no housing cost. Sell it, and buy something smaller or maybe in a location where housing cost less...areas where people retire often have lower taxes because the number of households sending children to school is less. This can free up some money to invest and keep housing costs lower. Sell, invest the money and rent. A reverse mortgage can be a good'last resort' option if you outlive your assets. The 'under water' situation is tough if you have to move, and of course hurts how your net worth looks, but in many areas, housing will come back...not all, but I am still in favor of home ownership as an investment for most people.
iVillage Member
Registered: 05-08-2006
Sat, 03-02-2013 - 5:24pm
Oh, and as for the boards...I can never be the first person to reply to a topic...maybe that is the problem Bex is having...
iVillage Member
Registered: 04-08-2008
Sat, 03-02-2013 - 5:34pm

Thank you everyone for your thoughts. I am panicking bc the large urban city 20 mins away has lost huge value in homes. Here, it has been 7%. I don't want to stay here, I am plotting a move to another community because I can't handle the large city anymore. Too noisy (don't forget, 6 mos ago I was deaf!), too busy and every amenity you can think of is overcrowded. Over 30% of the people here can't find a doctor bc it just growing too fast for everything. We add 18.9% of the population every year...and it RAINS constantly. We had 100mms of rain yesterday...Nov & Dec average 300mms monthly...

So as long as I own my home, my dream of leaving is anchored. If the prices are deflated, I lose if I leave.

Yet, with the city growing so rapidly there is opportunity. In 3 years, we will have a rapid transit station within 5 mins walking distance that will take you to every major centre including downtown. (of course, who wants to live through the construction of that!!)

Winter here is so grey. Very, very grey and dreary. I think I am just done with it :)

Dee

iVillage Member
Registered: 11-14-2008
Sun, 03-03-2013 - 1:26pm

The chances of  the housing market becoming deflated any time soon are slim if the area is growing.

iVillage Member
Registered: 04-08-2008
Sun, 03-03-2013 - 2:20pm

Hmmm...that might be why we are faring better than the nearby large city...but we are still down by 7%. I guess we'll just have to save as much as we can - come what may :)

Community Leader
Registered: 08-25-2006
Mon, 03-04-2013 - 6:54pm
Not much to say, I just feel like I need to post while I can! I don't calculate my net worth. I just get too caught up in details that I can drive myself nuts. But if you have found a way to crunch numbers that give you a barometer to see progress, or lack of, then I say go for it. But if something like the housing market brings down you numbers, at obviously no fault of your own, then I don't I don't see the point unless is necessary for a financial statement. Just my thoughts.... Serenity CL - Making a Second Marriage Work
Serenity
iVillage Member
Registered: 07-27-2009
Mon, 03-04-2013 - 10:33pm

I calculate every year on January 1. The first time I calculated my net worth actually led me here...It has improved over the last few years, but it is not where I want it to be. I think about it constantly :)

I agree with you that your home should be where you live and not your retirement fund. If you actually use it for funds to retire with, where will you live? How much will rent be if you sell your home?

JenAaron.jpg picture by jen2075


Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Tue, 03-05-2013 - 11:52am

My financial advisor set up something for me that calculates my net worth.  The thing is, the number really is meaningless.  A huge chunk of it is CDs for my kids' college education, which means in the next 10 years that will all go away.  I still have a mortgage on my house so until that's paid off, the net value of it makes no difference to me - I'm not going to sell it for another 25 years, and when I do, I'll just be buying a more convenient house to live out the rest of my years so it'll probably be a wash.  Everything else that is savings is only there in the short term, until I spend it on vacations, home improvements, etc.

The only number that really matters to me is what is in my retirement account. When I retire, that will be what I have to live on for the rest of my life.