Cheddarblog

Net Worth: The amount by which a company or individual’s assets exceed their liabilities.

Over at FinancialJungle.com the author makes the case that new definition for net worth does not include the primary residence. Your home. A writer of a response disagrees with the new definition and states that there is already a term for that: ““net investable assets”.

The Swiss_Mouse pretty much agrees.

Each month the Swiss_Mouse calculates his net worth and records it. How does the Swiss_Mouse do this you ask?

First the Swiss_Mouse calculates his Net Assets. These are broken down into the following categories:

• Cash Accounts
• Stocks/Closed End Funds
• Bonds
• Mutual Funds
• Educational Accounts
• Retirement Assets (Swiss_Mouse)
• Retirement Assets (Mrs. Swiss_Mouse)
• Home Value

It is simple to keep track of these. If you use the budget and tracking suggestions from the previous articles in this series, you will have your Cash Accounts already in order.

If you break down each of the others except for Home Value and just enter your statements for you investment accounts, IRAs and 401ks into your ledger, it’s just a matter of adding.

Home Value is slightly different. The Swiss_Mouse calculates his home value dynamically. In a nutshell the Swiss_Mouse has a calculation that takes into account how much the Swiss_Mouse paid for his home, the assumes 3% annual increase in value. The Swiss_Mouse has the date that he bought the house, then breaks down the 3% annual increase on a per day basis! Thus he can tell you how much his home value should go up every day.

Breaking each of the above categories down, the Swiss_Mouse gives you an example from his net worth calculator:

• Cash Accounts
  • Checking Account Balance
  • Ameritrade Money Market/Cash Balance
  • Fidelity Money Market/Cash Balance
• Stocks/Closed End Funds
  • FidelityAccount
  • Ameritrade Account
• Bonds
  • None owned Currently
• Mutual Funds
  • Ameritrade Account
• Educational Accounts
  • UTMAs at Fidelity
  • 529s at Fidelity
• Retirement Assets (Swiss_Mouse)
  • Fidelity IRA Traditional
  • Fidelity IRA Rollover
  • 401k
• Retirement Assets (Mrs. Swiss_Mouse)
  • Schwab IRA Traditional
  • Schwab IRA Rollover
  • Prudential Roth IRA
  • Thrift Plan
  • 401k

All all this up, plus home value and you have your Net Asset Value.

NOW we need liabilities.

Luckily the Swiss_Mouse has only 2 liabilities

• Home Mortgage
• Home Equity Loan (for Car purchase, because it’s deductible)

So Simply Put:

NET WORTH = (NET ASSETS) - (LIABILITIES)

The Swiss_Mouse will not share with you his personal net worth just yet. But let him put it this way, it’s six figures, and the first digit is NOT a 1 or 2.

In terms of net worth growth, starting from 2000, these are the Swiss_Mouse’s net worth annual increase/decrease :

• 2000: +8.2%
• 2001: -14.89%
• 2002: -12.39%
• 2003: +19.31%
• 2004: +16.15%
• 2005: +12.70%
• 2006: +9.47%
• 2007(YTD): +13.52%

In future posts, The Swiss_Mouse will show how you can apply some quantitative measurements against this figure to determine how your stack of cheddar measures up to others.