Wednesday, November 01, 2006

Net Worth Update

October's close brings my net worth to about $305,000. This is the last month where I'm reporting a net worth with no home equity factored in. Actually, that is slightly not true, as I include the 10% deposit already paid on my condo. But next month (knock on wood that nothing goes wrong now!) I will have a mortgage and home equity to account for, and some closing costs will have taken a bite out of my cash on hand.
I was pretty close to my budget for food, which was a nice change. I spent about $225 on clothes, but other than that, I didn't spend much money and my retirement and investment portfolios are up a bit after several months of stagnation. The delay in my closing has actually been sort of a good thing, as I've saved a little money by living in relatively cheap sublets for the last few months... of course it would have been even cheaper if I'd been able to stay in my old studio, but at least it's been less than I'll be paying out each month for my mortgage and condo charges. Those will kick in for November and December but I'll still hoping I can keep my net worth above $300,000 for the end of the year and beat the goal I set for myself! Onwards and upwards!


Anonymous said...

I remember when we bought our house. I was terrified, but now that we've been in here for 15 years and it's paid for, I look back and wonder why I was so worried.

It's very comforting feeling to know that as long as we can afford to pay the property taxes, we'll at least have a place to live no matter what (barring any catastrophic event, of course).

Anonymous said...

Are you going to count your mortgage as "debt," and your equity, of course, an an asset, as you build it? Won't your mortgage then severely affect your net worth?

Madame X said...

I will definitely count my mortgage debt as a liability, but when you do that, you also have to count the entire value of your home as an asset, not just the amount of equity. The value minus the debt equals your equity. You can sell off your house to pay off your mortgage, so the liability and asset more or less balance each other out, unless the market value changes drastically.

Anonymous said...

open question...

how do you apply house purchase to net worth?

net worth
(-) purchase price of house
(-) interest pd to date
(+) equity which has been built up.
(+) appreciation of house

the fact that the interest is amortized throws me for a loop...for the first few years you end up paying much more for the use of the money than you do towards the property.

Madame X said...

Anon 3:01, I think you are overcomplicating things-- the amount of interest paid doesn't have any bearing on your net worth, it's just an ongoing variable expense.
Your net worth is a snapshot of your assets and liabilities at any given point, so it's:
assets (cash, stock, today's resale value of home) minus liabilities (debt, credit card balances, today's balance owed on mortgage) equals net worth.

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