Violet Sky

I considered opening this entry with, “What a way to start a blog!” But, absent the context of April’s net worth, I suppose this gets to stand on its own without the shadow of the n% drop in our invested assets looming behind it.

Net worth is one of those funny things to me, where I find the definition to be fairly simple but consistently see people arguing about it online. Reddit’s r/financialindependence is the best place to find those sorts of arguments, though it bleeds over into other subreddits at times. The argument usually goes like this:

Person A: Do you count your home in your net worth?
Person B: No, you need somewhere to live, so it doesn’t make sense to count your home.
Person C: Net worth has a definition. If you’re not counting your owned home, you’re not counting net worth.
Person B: Then where do you draw the line? Do you count clothes? Collectibles? Dishware?
Person C: Of course not, but it’s stupid to discount a major asset in your calculation of assets minus liabilities, which is what net worth is.
Person B: But your house isn’t liquid, so it shouldn’t count towards FIRE.
Person C: It doesn’t count towards FIRE, you’re talking about something different.

Usually at this point, I imagine Person A regrets asking, as they’ve now spawned off a series of extremely similar arguments under their original question. 

So, to perform a preemptive strike on that discourse, I’ll share that I count our cars and house in our net worth. The inclusion of the house seems logical enough to me – I carry a mortgage, I have an asset tied to that mortgage, thus the asset must be included against the liability when calculating net worth. Even if I didn’t have a mortgage on the house, it’s a significant asset with relative liquidity (given enough runway and the right price!) so I still plan on counting it when the mortgage is eventually paid off.

The cars follow a similar trend, though none of them have a loan attached presently. At one point, all of them had a loan, and it’s even easier to sell a car than it is a house, so it made sense to include them. We don’t have an enormous amount of expensive items at home, so I also consider our cars some of our only real non-monetary assets outside of the house. Finally, since we’re a three car household and only one of them is arguably a beater car, they’re worth enough money that it just felt silly to exclude something I could probably sell on Craigslist in a week or less for close to Blue Book value. 

All of that preamble out of the way… let’s get to the numbers.

A few explanations that might be of interest:

• We don’t carry credit card balances month to month, but took out 12 months financing at 0% from Home Depot for a vanity we bought for a bathroom remodel
• To calculate home value, I keep it simple and average together Zillow’s Zestimate and Redfin’s Estimate (one of the two is really winning the branding war, by the way)
• Invested assets can obviously be derived from adding together Investments plus Retirement, but I like to do it for myself so I can easily reference it

This month, every single asset we have declined in value compared to the previous month. Womp womp. The retirement balance, as usual when this happens, was particularly annoying, as we contributed almost $7600 to retirement per usual and the overall value still dropped by $2000. Buy the dip, as they say.