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Financial accomplishments 2018-2019

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  • Avatar wa2106 
    Participant
    Status: Physician
    Posts: 185
    Joined: 11/29/2017

    Do people include mortgages in the NW calculation?

    Click to expand…

    Mortgage is a debt.

    Home value is an asset.

    #245221 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2851
    Joined: 01/03/2017

    Do people include mortgages in the NW calculation?

    Click to expand…

    Some include mortgage/home equity and some don’t. I, personally, do not.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #245230 Reply
    Liked by Vagabond MD
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2851
    Joined: 01/03/2017
    Total liquid (First republic no fee checking + ally high interest saving no more BOA) = 150070

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    Student loan: 151545

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    Will pay off the loan by next year, just wanted the cash for a possible down payment but honestly there is a low chance we will buy before next summer (if we do it then which is also unlikely) at which point I’ll have saved enough to kill the loan and have a large down payment saved.

    Click to expand…

    I’d be getting a huge chunk of that student loan debt monkey off my back today.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #245232 Reply
    Liked by TheDangerZone, Tim
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3079
    Joined: 09/18/2018
    Earnest refinancing bonus

    @wideopenspaces,
    Kind of surprised 😲. Jinx? Any goal is simply metric for prioritizing efforts. Hey, if you make any progress that deserves at least a participation trophy. Keeps it interesting.
    Btw, good luck.

    #245243 Reply
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2509
    Joined: 05/01/2017

    Do people include mortgages in the NW calculation?

    Click to expand…

    Some include mortgage/home equity and some don’t. I, personally, do not.

    Click to expand…

    you’re an idiot.

    j/k you know i don’t think that.

    seriously though, as i’ve said on other threads you don’t get to make up your NW, it’s assets minus liabilities. not including your home equity is like stepping on the bathroom scale and deciding you’re going to not include your gut.

    as i’ve said on other threads, consider the following 2 extremes. 1: you have bought a house in Austin in 2008 which has tripled in value since you bought it. 2: the value of your home has collapsed and you are way underwater. In either case when you sell the house and go to closing you will learn that it is very much part of your net worth as you will either be bringing or leaving with a check.

    #245245 Reply
    Avatar TheDangerZone 
    Participant
    Status: Physician
    Posts: 30
    Joined: 12/23/2018

    I’ve always thought it was supposed to included in NW as well. Equity as a positive, mortgage debt as a negative. The reason I asked was because OP’s NW went up 325k in one year of practice despite buying a house at “1x salary,” maxing out retirement/529, putting money in taxable and taking care of a good chunk of student loan debt.

    It would seem that in order for the increase to make sense they were either gifted a home, or they aren’t including mortgage debt. Still great progress of course, but maybe not entirely accurate in the sense that I perceive total net worth. We also bought a home this year at 0.5x salary and our net worth dipped in to the negative for a few months, now back in the positive.

    #245250 Reply
    Liked by MPMD
    Avatar rdo 
    Participant
    Status: Physician
    Posts: 182
    Joined: 03/12/2017
    Splash Refinancing Bonus

    Op, you doing great. That’s a huge accomplishment.

    As for me, we had 6 figure house repair (not even elective renovation) that we completed.  We are glad we still have cash in our bank.  We will still increase our NW despite that huge unexpected hurdle.

    #245255 Reply
    Liked by Tim
    ACN ACN 
    Moderator
    Status: Physician
    Posts: 635
    Joined: 01/08/2016

    My NW after 1 year of practice not including my 1.5x would be $250k or so. Paid off student loans.

    But with our mortgage and only about $10k in equity payments, our true NW is – $250k 😂

    On my spreadsheet, I include our mortgage. No need to fudge numbers to make myself feel better.

    If you're ever having a bad day, just remember in 1976 Ronald Wayne sold his 10% stake in Apple for $2,300.

    #245258 Reply
    Liked by Tim
    Avatar nephron 
    Participant
    Status: Physician
    Posts: 227
    Joined: 05/09/2019

    If you are going to count your mortgage/home value, you have to take your estimated home value (can use zillow to look it up) and subtract your mortgage from your home value to determine the amount of equity you have in your home.   I know that some financial people don’t take into account mortgage/home equity, it’s not a spendable asset unless/until you decide to sell it, there are actually costs associated with holding onto it (taxes, maintenance, etc) so it becomes somewhat of a liability.  You can calculate your net worth with or without it, but if you are going to subtract your mortgage, you need to add the estimated value of your home (ie if your mortgage is 500K, but your home is worth 750K, it adds 250 K to your net worth; if your mortgage is 500K but your home is only worth 400K, it subtracts 100K from your net worth).

    #245261 Reply
    Liked by JBME, Lordosis
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 1862
    Joined: 02/11/2019
    not including your home equity is like stepping on the bathroom scale and deciding you’re going to not include your gut.

    Click to expand…

    “Uhh Dad… Towel rack”

     

    https://www.google.com/url?sa=i&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwj_7Pu-jcnkAhUq8-AKHR1PBgsQjRx6BAgBEAQ&url=https%3A%2F%2Fwww.reddit.com%2Fr%2FTheSimpsons%2Fcomments%2F7qxvfx%2Fdad_towel_rack%2F&psig=AOvVaw2aqY8Wfuh0uneYyJDnxmmC&ust=1568302805577079

    “Never let your sense of morals prevent you from doing what is right.”

    #245263 Reply
    Liked by tylerjw12
    Avatar Phantasos 
    Participant
    Status: Physician
    Posts: 86
    Joined: 01/06/2016

    It’s not enough to simply calculate your net worth.

    If you really want to remain a motivated accumulator, you have to have a net worth vs. time graph.

    "The problem with internet quotes is that you can't always depend on their accuracy" - Abraham Lincoln, 1864

    #245264 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8137
    Joined: 01/09/2016

    First LOL of the day: MPMD‘s scale comment before he edited. Every time I think of it, I start giggling again.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #245269 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3079
    Joined: 09/18/2018

    NW is the fair market value of all assets-liabilities. Strictly an accounting/legal definition. That varies depending on the purpose. Think bankruptcy, divorce, insurance claim.

    Beyond that, it’s purely personal choice. Serves no purpose to “make it look better”. Don’t sweat the small stuff. The purpose of the number is to measure growth or deterioration consistently. For example, a small car loan and a 10 yr old car. Who cares? Two 40k car loans and a zero down physician loan on a Doctors house is a different story. Same with credit card balances. If you are using zero due to finance, include it. If your paying off in full, it’s not a big deal.
    Investment assets minus loans plus EF seems to be fairly common. Quick and easy. Window dressing is pointless.
    Pointless arguing semantics, include the big stuff the easiest way possible.

    #245270 Reply
    xraygoggles xraygoggles 
    Participant
    Status: Physician
    Posts: 93
    Joined: 10/26/2018

    July 2018 NW: -300k

    +150k student debt

    +60k retirement accounts.

    +50k taxable.

    Disability/umbrella insurance

    August 2019 NW: -40k

     

    Goals for rest of 2019/2020 include paying off rest of loans and 10k/month taxable. Start down payment savings. Hopefully pay more taxes, as WCI likes to say (meaning make more income).

     

     

    “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

    #245276 Reply
    Vagabond MD Vagabond MD 
    Participant
    Status: Physician
    Posts: 3477
    Joined: 01/21/2016

    Do people include mortgages in the NW calculation?

    Click to expand…

    Mortgage is a debt.

    Home value is an asset.

    Click to expand…

    Here we go again!

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #245279 Reply

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