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[DurangoCy]

I remember buying life insurance for the first time after college. When the agent asked my estimated net worth, my response was "is it ok if it's less than $0?" He still took my money.

When talking to my first financial adviser she wouldn't let me put less than $10k. I was trying to explain to her that I had $500 in the bank, moved to CO in my car the week before , and I was pretty sure the Federal Government was serious about me paying off my college loans.

She was having none of it, and said a 23 year starting an IRA was worth way more than $10k. It was a nice thing to say that always stuck with me.

 

[fsanford]

We had a debt poll and someone asked about net worth.

Taking all your assets: land, retirement, cash value of life insurance (save it for another thread), checking, and subtract your debt.

What's your total net worth? Poll is secret.

I just got a scam call about investing, it was moments after I posted a reply to this poll.
Hmmmmm...

I

 

[RedDog]

If I could go back to when everything I owned fit in my car I would.

 

[coolerifyoudid]

If I could go back to when everything I owned fit in my car I would.

I won't go this far, because that would mean I wouldn't have a family, but I get where you're coming from. "Stuff" has a way of making life more complicated than it needs to be.

 

[RedDog]

I won't go this far, because that would mean I wouldn't have a family, but I get where you're coming from. "Stuff" has a way of making life more complicated than it needs to be.

I was thinking my small family would barely squeeze in. Without extra clothes.

 

[crawfy54]

To the young people on here who think they'll never get there...your best ally is time. Save what you can, resist the urge to touch it, and in 20 years you'll be checking the > $1 million box.

I hope so. This thread is stressing me out lol. S*** Ton of cash to Student loans each month, plus my car loan, and trying to contribute max to my IRA. I’m firmly below 0.

 

[Cyched]

I hope so. This thread is stressing me out lol. S*** Ton of cash to Student loans each month, plus my car loan, and trying to contribute max to my IRA. I’m firmly below 0.

Keep contributing to that IRA and you won't be below 0 for too long

 

[KnappShack]

When talking to my first financial adviser she wouldn't let me put less than $10k. I was trying to explain to her that I had $500 in the bank, moved to CO in my car the week before , and I was pretty sure the Federal Government was serious about me paying off my college loans.

She was having none of it, and said a 23 year starting an IRA was worth way more than $10k. It was a nice thing to say that always stuck with me.

My wife got the worst financial advice around that time. Her manager told her that she was "too young" to worry about retirement. Said there was no reason to start saving early.

Time value of money be damned! So. We're in a little bit of a catch up mode currently

 

[Lexclone]

To the young people on here who think they'll never get there...your best ally is time. Save what you can, resist the urge to touch it, and in 20 years you'll be checking the > $1 million box.

This

Paraphrasing Einstein: Compound interest is the most powerful force in the universe...

 

[ruxCYtable]

I hope so. This thread is stressing me out lol. S*** Ton of cash to Student loans each month, plus my car loan, and trying to contribute max to my IRA. I’m firmly below 0.

Keep plugging away. In 20 years you'll be like holy ****, we're in good shape.

 

[KnappShack]

This

Paraphrasing Einstein: Compound interest is the most powerful force in the universe...

Those who understand it will earn it.

Those who don't will pay it

 

[3TrueFans]

Most of my wealth is tied up in rare Pogs, should I include their liquidated value in my net worth?

 

[DurangoCy]

My wife got the worst financial advice around that time. Her manager told her that she was "too young" to worry about retirement. Said there was no reason to start saving early.

Time value of money be damned! So. We're in a little bit of a catch up mode currently

Do you still know that person? I would go and yell at them right now, if I could. Holy crap that's terrible, especially coming from someone who should certainly know better.

 

[cyhiphopp]

No option for those of us in the 3 comma club?

For those of us in the 3 comma club, this is the only option:

 

[besserheimerphat]

Correct, buying a house should have essentially no effect at all on your net worth because your mortgage is offset by the value of your new asset, the house.

I don't understand this. Until the house is paid off, it's not your asset. Say you bought a $200k house with 20% down (so $40k cash and $160k in loans). It's a 30 year fixed, 4% interest. If my math is right, that's a $761.33 payment. After 30 years that's $274,078 total. After 10 years, you've paid $91,359 total in payments in addition to the $20k you put down. Assuming 3.5% appreciation, the house is worth $282,120 after 10 years.

So, after 10 years this house's effect on your net worth is:

-$274,078 total cost of loan
+ $91,359 total of payments made
-$182,718 remaining owed to bank

+ $40,000 down payment
+ $82,120 appreciation
+$122,120 total equity

-$182,718 owed to bank
+$122,120 total equity
- $60,598 towards net worth

$61k against your net worth is not insignificant. And that's after 10 years, and assuming you paid exactly market value for the house at the start. It takes about 12 years to hit the break even point. Is there something I'm missing? You can be in much better shape with a 15 year loan but I don't know how common they are.

 

[BoxsterCy]

My wife got the worst financial advice around that time. Her manager told her that she was "too young" to worry about retirement. Said there was no reason to start saving early.

Time value of money be damned! So. We're in a little bit of a catch up mode currently

Depends on how old you are. People in their 20s and 30s are all going to get blown up in the big one before they get to retirement age. Me, I am old enough to maybe die of natural causes. Even growing in the Cuban missile crisis and ongoing Cold War stuff I never really thought they would blow it all up. I do believe now that they will.

 

[ca4cy]

I don't understand this. Until the house is paid off, it's not your asset. Say you bought a $200k house with 20% down (so $40k cash and $160k in loans). It's a 30 year fixed, 4% interest. If my math is right, that's a $761.33 payment. After 30 years that's $274,078 total. After 10 years, you've paid $91,359 total in payments in addition to the $20k you put down. Assuming 3.5% appreciation, the house is worth $282,120 after 10 years.

So, after 10 years this house's effect on your net worth is:

-$274,078 total cost of loan
+ $91,359 total of payments made
-$182,718 remaining owed to bank

+ $40,000 down payment
+ $82,120 appreciation
+$122,120 total equity

-$182,718 owed to bank
+$122,120 total equity
- $60,598 towards net worth

$61k against your net worth is not insignificant. And that's after 10 years, and assuming you paid exactly market value for the house at the start. It takes about 12 years to hit the break even point. Is there something I'm missing? You can be in much better shape with a 15 year loan but I don't know how common they are.

Your net worth is a picture in time that shows what you would have leftover if you sold everything that day. It's not perfect, but even the day after you buy your house whatever down stroke you put toward it should be equity in the property. In 10 years it should be that amount plus the principal you've reduced and the appreciation of the property. You are purchasing something and you're really beating yourself up if you show the total amount of P&I payments for the life of loan as the liability and not the full value of the offsetting asset.

However, what you're saying is the reason I don't look at a mortgage as an investment...it's typically not a great one. Between, taxes, insurance, upkeep, and interest, you need one helluva lot of property appreciation to see any return on your money.

 

[DurangoCy]

I don't understand this. Until the house is paid off, it's not your asset. Say you bought a $200k house with 20% down (so $40k cash and $160k in loans). It's a 30 year fixed, 4% interest. If my math is right, that's a $761.33 payment. After 30 years that's $274,078 total. After 10 years, you've paid $91,359 total in payments in addition to the $20k you put down. Assuming 3.5% appreciation, the house is worth $282,120 after 10 years.

So, after 10 years this house's effect on your net worth is:

-$274,078 total cost of loan
+ $91,359 total of payments made
-$182,718 remaining owed to bank

+ $40,000 down payment
+ $82,120 appreciation
+$122,120 total equity

-$182,718 owed to bank
+$122,120 total equity
- $60,598 towards net worth

$61k against your net worth is not insignificant. And that's after 10 years, and assuming you paid exactly market value for the house at the start. It takes about 12 years to hit the break even point. Is there something I'm missing? You can be in much better shape with a 15 year loan but I don't know how common they are.

At Day Zero, You'd only lose the closing costs/realtor fees. In theory you could sell the house for $200k, which would pay off the loan and get you most of your $40k back. Once the loan is paid off, you don't owe the interest for the entire loan.

After 10 years, you've only paid $91,560 in payments (don't forget if you rent you'd probably be paying almost as much for housing), the house would probably be worth $325,000 and the loan would be paid down to $125,000. If you sold then, you'd have almost $200k.

 

[Sigmapolis]

Your net worth is a picture in time that shows what you would have leftover if you sold everything that day. It's not perfect, but even the day after you buy your house whatever down stroke you put toward it should be equity in the property. In 10 years it should be that amount plus the principal you've reduced and the appreciation of the property. You are purchasing something and you're really beating yourself up if you show the total amount of P&I payments for the life of loan as the liability and not the full value of the offsetting asset.

However, what you're saying is the reason I don't look at a mortgage as an investment...it's typically not a great one. Between, taxes, insurance, upkeep, and interest, you need one helluva lot of property appreciation to see any return on your money.

The real, after interest, after tax, after expenses return on property is close to 0%.

 

[ca4cy]

The real, after interest, after tax, after expenses return on property is close to 0%.

And that's probably optimistic.