January Update: The Problem With Tracking Net Worth

I guess I don´t know how to do it.

I got right to it with my resolutions this year.  I set up my direct deposit to put 1% of my pay into the savings accounts of two needy children I know.  Feeling good about that.

Then I sat down to calculate my net worth for the first time ever.  Well, I updated my debts, and that was pretty easy, except I factored in Michael´s student loans which we haven´t started paying yet, and two 401k loans, whose repayment comes straight out of my paycheck each month.  I don´t normally factor these in because I never see the money I would have had if I didn´t have to pay them.  Also, the interest I´m paying on those goes back into my own account, so… yeah.  They don´t trouble me like everything else does.

And so, because this was one of my resolutions, here I am naked transparent:

BALANCE	DEBT	APR
ugg	tia	54.46%
$1,142.97	gas card	24.99%
$297.54	CC1	21.99%
$185.49	mom´s CC	19.99%
$2,912.80	CC2	18.90%
$439.88	checking overages	18.00%
$5,192.34	CC3	16.99%
$7,483.73	CC4	9.25%
$8,633.17	car	5.89%
$5,250.00	unsub2	4.66%
$10,157.59	401k 1	4.43%
$7,159.77	401k 2	4.42%
$3,500.00	sub	3.86%
$6,000.00	unsub1	3.86%
$2,456.03	IRS	3.00%
$60,811.31	TOTAL

But then I set about to calculating my assets.

I know how much I have in my 401k and my savings, but then what?  For our cars, do we use what we paid for them or how much we could sell them for now?  Well, we looked up the Kelley Blue Book values for our cars.  Kind of depressing considering how much we paid for them.

Then I listed the things I know we own that are expensive.  Computers, gaming consoles and video games, jewelry, piano, books.  But again we were faced with, how do you put a price tag on these?  By instinct we started adding up what we paid for them.  It´s easy to remember what we paid for our computers, all our gaming, jewelry, etc.

I added it all up and our assets were around $41,000.  Sadly almost $20,000 negative Net Worth.

But then I realized, we should do either purchase value or resale value for all categories across the board, right?  And when we changed our cars to what we purchased them for (as opposed to what they could sell for) so that it would match everything else we had categorized, and we had a huge Net Worth upswing to the positive side.

VALUE
$33,705.26	401k
$25,000.00	ch car
$13,000.00	m car
$10,000.00	video games
$10,000.00	jewelry
$2,600.00	computers
$2,200.00	gaming consoles
$2,000.00	household stuff
$2,000.00	books
$1,000.35	tuition savings
$1,000.00	piano
$493.18	emergency savings
$67,800.35	TOTAL

This way our net worth is positive.  $5,481 to be exact.  We debated if we should be calculating using the figures we´d insure (purchase values) or the value “of our estate” were we to die (also purchase values) or if we´d use the numbers as if we had to sell it all right now, how much would we get (resale value).  We´re definitely still thinking about how to do this in a way that the Net Worth number will mean something to us.  And considering that, I think for the sake of thinking about my money, it´s easier to say “this is how much I spent on things that I now own on one side, and this is how much I owe on the other side.”

But I want to know from you, fellow friends, how do you do it, specifically?  Am I all wrong here?  Maybe I should stick to just debt tracking.  And then I got to thinking… What about including inheritance?  Like all my mom´s assets–when she passes–will be mine–house, jewelry, car, etc.  But presumably so will her debt… Obviously I can´t pick and choose what looks best on the Net Worth report, so what do you recommend?  How do you do it, and why?

Edit: I’m inspired by all y’all tracking your net worth, and I want to be smart like you. I’m looking at you Alicia, Natalie, Bridget, Jordann, Michelle, Robin, Ciel Belle, and anyone else who cares to comment. I like Mel’s spreadsheet, too. Thanks everybody.