House is an asset?

[reptile411]

Ok so I am told my home is an asset but according to my financial software its a huge liability dragging my net worth into the gutter. Am I missing something here? Is the house an asset or Liability? If it is an asset how do I enter the numbers to reflect said asset? BTW I am using Money Plus.

[am_vanquish]

Originally Posted by reptile411

Ok so I am told my home is an asset but according to my financial software its a huge liability dragging my net worth into the gutter. Am I missing something here? Is the house an asset or Liability? If it is an asset how do I enter the numbers to reflect said asset? BTW I am using Money Plus.

Your mortgage is a liability and your house is an asset. I have no idea how to use Money Plus.

[kork13]

You own the home. It's a huge asset. However, you likely also have a large liability, in the form of the mortgage.

I don't know the program specifically, but if it's one at all worth its salt, you should be able to add in material, property assets. Add an item stating your home's total value (ignoring the mortgage, any HELOC, etc.). Separately add in the mortgage, HELOC, etc. as liabilities (the total balance of the loan).

You can do the same thing with your car, and anything else that has value (furniture, jewelry, electronics, etc.). Just remember that "VALUE" means the amount of cash you could realistically get if you were to sell it right now.

[reptile411]

I think I figured it out. The program had my net worth at -120 some odd thousand which I hate because I have worked so hard at my net worth. I had to add 2 accounts, 1 was the liability for the loan which gets smaller and smaller every month when the payment is recorded in the program. I had to establish another account in the program as an asset for the appraised value of the house when we got it and what do ya know my net worth went from way way down in the red and shot strait up in the black.

[Shane Watson]

Are you trying to do personal accounting? Well no matter what you use your house is always a asset. So, you are calculating your installments, what about depreciation?

[disneysteve]

Originally Posted by Shane Watson

your house is always a asset.

Yes, your house is a physical item that has value, thus it is an asset.

However, if you owe more than it is worth, it would show up on a financial statement as a liability. Lots of people find themselves in that situation today.

[reptile411]

But I don't owe more than it is worth. We appraised at 70K more than we paid for it and after speaking with professionals I am told there is no way we have lost value sence we got it. Granted things are not better yet but our area is doing very well, especially the housing market.

[disneysteve]

Originally Posted by disneysteve

Yes, your house is a physical item that has value, thus it is an asset.

However, if you owe more than it is worth, it would show up on a financial statement as a liability. Lots of people find themselves in that situation today.

Originally Posted by reptile411

But I don't owe more than it is worth.

Sorry. I didn't mean that to be directed to you. I was just stating that as a general comment.

[creditcardfree]

If you are calculating your net worth, the market value of the home is an asset, the mortgage value is a liability and the net result is the equity which would increase your net worth.

Both sides of the equation may need to be put into your software. At least I think that is what you are looking for.

[Broken Arrow]

Originally Posted by creditcardfree

If you are calculating your net worth, the market value of the home is an asset, the mortgage value is a liability and the net result is the equity which would increase your net worth.

Beat to me it.

Just stick the current market value in the assets column, and the mortgage in the liabilities column, and let the numbers fall where they may....

[reptile411]

Thats what I did and went from a -$120,000 on my net worth to about a positive $80,000. I am happy now. I am not realizing that my tens of thousands of dollars in computer equipment and other toys are assets as well. I am slowly working on my home inventory and realizing each day I add more to the program my net worth goes up another few grand. This is exciting.

[maat55]

Reminder: Even though a house is an asset, does not make it a good investment. Many people put too much of their income into an below par investment thinking it is their biggest investment.

You have to add the mortgage interest, finance charges(closing cost on all homes you buy as you move up or down), insurance costs, upkeep and property taxes.

At the end of 30 years, you may find your biggest investment was a flop. Remember to be carefull how much house you buy. This is not aimed at OP.

Excuse me for being a little off topic.

[Broken Arrow]

Whatever happened to all the people, who were all talking about how they were into the real estate flipping business, how it's a great way to make money, and you too should join their dream team and make gobs of mulla?

Some were even very nice about it, but others didn't seem to want to hear anything... dissenting.

[disneysteve]

Originally Posted by maat55

Reminder: Even though a house is an asset, does not make it a good investment.

As I've posted many times, you should not consider your house to be an investment at all. It is a purchase, not an investment. An investment is something you buy with the intent of making a profit. That doesn't describe your home. You bought your home in order to have a place to live. I don't care if the value of my home goes up, down or sideways. As long as I can continue to live here, I'm happy. Yes, I hope that someday when I sell it, I at least get back what I paid, but that wasn't my purpose for buying it.

[reptile411]

I agree completely Steve. Everyone keeps telling me about selling in 5 years. I tell them no. I didn't buy the house just to sell it and buy another. We have put tens of thousands of dollars into this house to make it our home. Now the rentals on the other hand, those are investments.

[simpleyme]

Originally Posted by reptile411

I am happy now. I am not realizing that my tens of thousands of dollars in computer equipment and other toys are assets as well. I am slowly working on my home inventory and realizing each day I add more to the program my net worth goes up another few grand. This is exciting.

its not a popular idea but if I was to put a value on my things I would pretend I was having a yardsale and think what I could sell this stuff for

I track my networth but I do not include my houshold stuff

[reptile411]

Should it not be included to determine your entire net worth? The financial software thinks its important. I never gave it any thought until I saw this option in the software.

[simpleyme]

I do not ,but i am sure a lot do It is stuff you own so I think technicaly you should
I think it inflates the look of networth which is not what I am after I do a low value on everything to get my worst case scenerio networth (taxed assessed values on properties,low bluebook on cars that type of thing)
I think everyone tracks their own way ;-)

[disneysteve]

When I do my net worth, I include only financial assets. I don't include stuff - cars, furniture, collectibles, clothing, jewelry, etc. It is far too difficult to value those items accurately and the values are constantly changing. I stick with things with clearly identifiable value - stocks, bonds, mutual funds.

[reptile411]

That brings up a good point on net worth. Do we include any businesses we own in our personal net worth? If so how do we do such a thing? using sales forecasts or???????????????? I mean as everyone knows the sales forecast for any business is not near what it was a few years ago. Its always changing so how do we value a business we own?