Friday, June 1

My Official Definition of Net Worth

I seem to be getting a lot of comments about this, so I figured that I might as well post on the topic to hopefully clear it up for everyone who is wondering...

My net worth =
What I Own (current value if sold today)
minus
What I Owe (currently)

My first target is to get my net worth to one million dollars.

I use the term "nest egg" to refer to the same calculation without my principal residence and personal property. For those who are interested, my May 31 nest egg is $413,800. After I hit my first target, I think I will probably make the second target to get my nest egg to one million dollars.

I use current values because fluctuations don't bother me and I want to know how I'm doing right now. I have no interest in using what I paid for my house or securities because that's ancient history.

BESIDES, if the markets were down since I bought then I would get majorly flamed for using the value that I bought the house or securities for... right? :)

Anyway, the most important part is that I use the exact same definitions and methodology every month, so even if you disagree with how I'm doing it, at least you can compare apples to apples each time.

Have a great weekend! I'm going out of town so I won't post on Monday.

1 comments:

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