December 3, 2014

NOT Included In Our Net Worth...Darn It!

We have been blessed with good incomes for the past 8 years, breaking the $100K mark in household income in 2008 and working our way up to ~$250K in 2014. Our net worth has grown considerably as well. From $23K at the end of 2008 to nearly $300K at the end of 2014.

With that being said, I feel like we should have made better progress on our net worth, considering our incomes. I looked back at the last couple of years and determined that a considerable amount of money has been “invested” into our new home, but are not accounted for it in our net worth calculation. Some of the larger ticket items are:

$7,000 new HVAC
$1,200 new pool pump
$1,700 pool fence
$1,600 white picket fence in front yard
$1,800 security camera system
$1,500 refrigerator
$2,500 wash and dryer
$600 dishwasher

I use the purchase price of our home ($489K) for its value when calculating our net worth. If I included home appreciation, that would add another ~$150K based on comps in the area.  

I have no plans to begin accounting for improvements to the property or home appreciation but it does make me feel good to know that we bought at a great time and have invested in our home to make it safer, nicer, and if we sell one day, maybe more valuable.

How do you account for your home as an asset?

1 comment:

Kurt @ Money Counselor said...

My wife EXcludes home value when thinking about our net worth; I INclude it. To me it should count because we will one day down size, sell & rent, or get a reverse mortgage. Excluding it totally therefore underestimates our potential retirement savings / income.

But my wife has her own logic. :-)