The car you drive

[Eagle]

What % of your net worth is in your cars?
I think this depends on your age too, give a range, e.g. 25-35, 35-45, 45-55. 55+ ?

I predict the following:
25-35 20%
35-45 10%
45-55 5%
55+ 3% (possibly even down to just 1 car)

Note: If you are under 25, then it's hard to guess because you aren't established, but feel free to list.

I've made a mistake in calculating the prediction. Now, it should be correct.

Does my prediction match your situation?

We're in the 25-35 category. Both our vehicles represent about 7% of our net worth. Our vehicles are 2004 (155,000 miles) and 2007 (78,000 miles) respectively.

[MonkeyMama]

P.S. I don't think SA is very representative of the average American. I wouldn't be surprised if most my peers/friends have 100% of their net worth tied up in their cars.

{I looked up the median net worth and it is $50k for my age. So my 100% guess is not unreasonable. I was thinking most people I know have far less than $50k, but they sure spend a lot on cars}.

Maybe OP accounted for that in their guess, but it is kind of astounding how below average the SA answers are.

[corn18]

Age 50, 3 cars are 10% of net worth. I'm catching up to your predicted value pretty fast as my denominator is getting a lot bigger each year and I finally stopped increasing the numerator. And I am keeping my cars a lot longer so that shrinks the numerator over time. All headed in the right direction.

[disneysteve]

I wouldn't be surprised if most my peers/friends have 100% of their net worth tied up in their cars.

Keep in mind that about 25% of new cars are leased, so those folks don't have any equity in their vehicles.

Of the remaining 75% who actually purchased their cars, about 85% took out loans to do so, so they have a relatively small amount of equity at least early on.

So overall, regardless of what people are driving, a lot of the value of those vehicles isn't actually part of their net worth because it is either leased or heavily financed so not part of their personal assets.

[MonkeyMama]

I was presuming FMV of vehicles divided by net worth. Which is often a scary result. (I don't know anybody with any equity in their cars).

Reading the OP's question over again, fair enough. Most people wouldn't have any of their "net worth" tied up in cars then.

{I've never had a car loan, so my answers remain the same}.

[TexasHusker]

I suspect that there are exceedingly few people who, when reporting their net worth, actually count the value of absolutely everything they own. Most likely include only the big ticket items - house, car, financial assets, and maybe high end artwork or other valuable items.

I only count investments as part of my net worth.

Personal stuff - houses, cars, and ice cream scoops, are the "cost of doing business" of life on planet earth, regardless of whether I have a lien against them.

Much of this stuff will be auctioned off to the highest bidder, or rummaged through at a garage sale, when I pass from this life.

I consider myself pretty much a renter and a tenderer of everything in my possession - the Land Rover I make a $1000 a month lease payment on is no more or less mine than real estate or businesses that I own outright. The day I drop dead they will all go to someone ELSE to fiddle with and dispense of.

Life isn't about IRAs, wealth, or possessions. In the end, it's only about relationships.

[bjl584]

P.S. I don't think SA is very representative of the average American. I wouldn't be surprised if most my peers/friends have 100% of their net worth tied up in their cars.

{I looked up the median net worth and it is $50k for my age. So my 100% guess is not unreasonable. I was thinking most people I know have far less than $50k, but they sure spend a lot on cars}.

Maybe OP accounted for that in their guess, but it is kind of astounding how below average the SA answers are.

I would guess that some of my friends and coworkers have no net worth at all. They are bleeding red, and an auto loan is just another part of their total debt picture.

[phantom]

I suspect that there are exceedingly few people who, when reporting their net worth, actually count the value of absolutely everything they own. Most likely include only the big ticket items - house, car, financial assets, and maybe high end artwork or other valuable items.

Personally, I count purchases that make a noticeable dent in my liquid assets, that I can obtain a somewhat objective value for, and that might give my liquid assets a noticeable bump when I get rid of them. In practice, that means I count my house, cars, and mutual funds. I don't have anything like expensive artwork to count.

[Fishindude77]

You can manipulate your calculation any way you want, however the text book definition of net worth is "the value of everything you own, minus all your debts."

Think of it like this. You made a bad bet with a a mean ass bookie and it's either cough up cash or you and your family are taking a dirt nap . Every darned thing you have and own that has any kind of value makes up part of your net worth and is up for grabs. If it really came down to it, you could indeed sell your watch, your rings, grandmas inherited china, your cars, motorcycle, boat, house, clothing, etc. to generate some cash and prevent the dirt nap.


Sadly, as mentioned below, a large portion of America has little or no net worth. Many have a negative net worth due to being heavily leveraged with home, auto and credit card debt.

[TexasHusker]

You can manipulate your calculation any way you want, however the text book definition of net worth is "the value of everything you own, minus all your debts."

Think of it like this. You made a bad bet with a a mean ass bookie and it's either cough up cash or you and your family are taking a dirt nap . Every darned thing you have and own that has any kind of value makes up part of your net worth and is up for grabs. If it really came down to it, you could indeed sell your watch, your rings, grandmas inherited china, your cars, motorcycle, boat, house, clothing, etc. to generate some cash and prevent the dirt nap.


Sadly, as mentioned below, a large portion of America has little or no net worth. Many have a negative net worth due to being heavily leveraged with home, auto and credit card debt.

When I submit my net worth statement to my banker each year, he doesn't include my personal home and personal possessions as part of the equation.

[sv2007]

Which assets do you include?
It sounds like you're including the house and cars.

What about other assets? Do you count my watch? My wife's engagement ring? Furniture? Collectibles? Artwork? Electronics gear? Silverware? Appliances?

Where do you draw the line for what counts toward net worth and what doesn't?

I mean the normal net worth definition; which is technically everything.
People usually include annuities too, just use their cash value.

Some stuff don't have easy price tag (e.g. art) so a lot is based on estimation.

I personally don't count the small stuff like electronics, silverware, appliances, but in reality, they count too; it you sell a house with new cooktop, dishwashers, ovens, etc. it's worth something. All depends on the individual and how much (relatively) those things figure into net worth.

I'm in the 35-45 age group, our 2 cars are around 0.5% of our net worth.

[parafly]

A car should absolutely be included in a net worth calculation.

Consider this example. You have a net worth of $100K today. You purchase a $20K car tomorrow with cash. Did your net worth suddenly drop to $80K? Sorry, but I don't buy into that line of thinking.

A portion of your net worth may not be as liquid as it was yesterday, but you didn't suddenly lose that value completely. Any asset that has value in a market should be included in net worth calculations.

[sv2007]

I would guess that some of my friends and coworkers have no net worth at all. They are bleeding red, and an auto loan is just another part of their total debt picture.

I helped a person with negative net worth by buying his short sell house a few years back.

My predictions are for this forum based on my interactions.

[sv2007]

When I submit my net worth statement to my banker each year, he doesn't include my personal home and personal possessions as part of the equation.

Bankers don't care about your illiquid $; they aren't THAT greedy, they only want a small slice of your liquid/investable assets.

[sv2007]

So overall, regardless of what people are driving, a lot of the value of those vehicles isn't actually part of their net worth because it is either leased or heavily financed so not part of their personal assets.

In these cases, they may have a negative net worth component from their cars. I.e. their car's market value - outstanding loan amount. Basically if you break the lease or sell that financed car right now, what's it going to net you?