May 2008 update
May brings a huge decrease in net worth for me, due to a paper adjustment of the likely value of our home. It’s gotten harder and harder to determine what our home might be worth. I know what the mortgage company accepted as the value of our home just a couple of months back, but I also know the prices of various homes that are for sale in the neighborhood. And they’re all over the place. In fact, there’s a $110,000 difference between the highest-price home and the lowest-price home — and they are the same models! I don’t think either of those are representative. But since I don’t have access to actual comps on recent sales, I decided to just drop the paper value of our home dramatically and play it safe.
Also, my liabilities have actually gone up. Our first house payment with the new mortgage company doesn’t happen until today, so that liability has stayed stagnant. And I bought a few plane tickets using my American Express that will be paid for on this coming billing cycle. Even though I know the reasons behind the increase, AND that it’ll only be that way for a couple of weeks, I still dislike seeing the liability portion go up.
Here are the stats for May:
Assets: Down $16,441.47
Liabilities: Up $464.34
Change in net worth over previous month: Down $16,905.81
On the plus side, my overall spending has decreased and the amount I’ve put toward investments and savings increased. With luck they will continue to trend in those directions. Finally, even with this recent drop, my net worth has increased by $10,038.86 over a 12-month period.
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June 1st, 2008 at 8:01 am
Our house price is dropping like a rock too. stinks. I hope it stops soon! It’s gone down over $100,000. Insane!
June 1st, 2008 at 8:53 am
Having the value of your home really sucks but for me this is a perfect example of why I’m not fond of a net worth statement. Its nothing more than a snapshot of where you’re at financially and doesn’t really paint the whole picture. If you plan to live in your house for many years then the month over month value of your home isn’t as crucial as being able to maintain a positive cashflow. The markets will bounce back (eventually), here’s hoping that you’re not planning to move prior to that.
June 1st, 2008 at 9:33 am
Oh I like having the snapshot. I don’t adjust home or car values anyway unless there is a major change in either direction. I include them though because they ARE worth something. We’ll probably live here at least 3 more years, maybe a little longer.
June 2nd, 2008 at 11:51 am
I would tend to leave the home value at the last appraised value since shifting it around is guesswork unless you happen to be an appraiser or real estate professional.
Adjusting big ticket item values in your net worth statement tends to swamp out the little factors. In general you have more control over the little factors than the market prices of big ticket items, so that information is more important.