That’s probably pretty shocking. “WHAT DID TRENT DO?” I can already sense the regular batch of critics in the comments cracking their knuckles over this one.
Actually, the change is pretty simple. I made the decision to stop counting the value of my home as an asset in my net worth calculations. I also did the same with our automobiles.
Let’s back up a bit. I’m a big believer that calculating your net worth – which is your total assets minus your total debts – is the best way to keep track of your overall financial progress. If you’re making good progress, your net worth will go up each time you calculate it (or at least have a strong general positive trend, since you can’t control the short term fluctuations of the stock market).
It’s pretty easy to calculate it. You can either use a personal finance tool like Quicken or, better yet, build your own net worth calculator in a spreadsheet. I calculate mine every month using a spreadsheet (though I’m considering giving Quicken a serious try when the new Mac version is released later this year).
As I mentioned in the past, I was using the assessed value of my home and property as an asset for calculating my net worth, and that pushed me well into positive territory overall. By including the value of my home as an asset, it was a big fat net positive – $175,000 worth.
But every time I calculated my net worth, I asked myself about the home and the automobiles. Could they actually be …