So in my last post I mentioned a new and improved way I was planning on calculating my net worth. The general consensus says that the mortgage is the liability and the house is the asset. People seem to be getting hung up on the fact that you’re not comparing apples to apples. You’re comparing apples to oranges. Yes, they’re both FRUIT, but they’re not both apples.
Some people choose to just not include their house at all in their net worth – MyMoneyBlog seems to think that’s a fair assesment – How about cars? I include it, because it IS something I tangibly own and could tangibly sell for a profit. That number will go down over time, but for now, it is still worth something until I run it over a cliff. Then my net worth drops a bit.
Ultimately I think it is really about how you feel best displaying it. There is no “universal net worth calculator” – each person sees it their own way. I, for instance, didn’t like having to look at my net worth progress bar in the red and it would have been there for quite a while had I not converted it to reflect my new method of adding my house value as an asset to the + column and subtracting the mortgage liability from the – column.
Chose your own path – as long as the investments are turning good profits, there really is no “bad” net worth calculation –