Updated on 08.07.07

Rebooting My Net Worth Calculator: Food For Thought On Starting – Or Restarting – Your Own

Trent Hamm

As I mentioned before, I kept my own net worth calculator in a spreadsheet; I even wrote up how exactly to make your own. I also used to post monthly status reports in order to help keep myself (and the readers) motivated to stay on a good course. However, with the recent purchase of a house, I had several major decisions to make about my net worth calculations.

First, I elected to stop the updates for two months. This gave me time to readjust my finances with the purchase of the house. I knew that there were going to be a lot of expenses during the months of June and July that were far outside the ordinary – and there certainly were. Only now are things getting back to “normal.”

The reason for this pause is that my finances before and after the home purchase are basically incomparable. So many numbers used in the total changed so significantly that it’s almost worthless to compare the pre-house numbers to the post-house numbers. If a similar major financial shift occurs for you, it’s okay to pause things for a bit until things get straight again – a net worth calculator is primarily useful as a motivational tool.

After some debate, I decided to include the assessed value of the home in my net worth calculation. Why the assessed value? In this area, the assessors are quite active in making sure that the value of the house and land are pretty close to the market value – my purchase price was over, but less than 20% over the assessed value – and it included all appliances. If I removed all appliances and left, I believe I would be able to sell the home for somewhere close to (likely slightly more than) the assessed value. Being conservative, I decided to stick with the assessed value.

I considered not including the value of the home at all, but I felt that would be terribly inaccurate. I generally feel that an estimate of the value of the home with all removable items stripped out of it is an appropriate number to use, and in this area, the assessed value is pretty close to that.

I basically started over with the calculator on August 5. As I mentioned before, I calculate my net worth weekly, so I started over on the first Sunday in August. Calculating my new net worth was painful – comparing that raw number to the last time I ran the numbers (the final Sunday in May), I almost gasped at the incredible drop. However, I look at it as though I bought a pile of appliances, furniture, and many, many other expenses (closing costs, etc.) in the interim, so it isn’t as bad as my gut was telling me. I still have a higher net worth than I had at the start of the year, which does make me feel quite good, but if I draw a graph of it, the cliff-like drop in the middle is startling.

I do take solace in a few things. First, many household tasks will now be cheaper. We have our own washer and dryer now, so no more pumping coins into the machine. It used to cost $1.75 just to run the load – now the electrical cost for a full load is way under a dollar. We also have a very nice, large garden that my wife and I are very excited about – we already have a compost bin being filled with yard waste and vegetable kitchen scraps. Plus, actually having a large and usable kitchen means cooking at home just became easier and more worthwhile, and we now have a deep freeze to store our food. Even though our monthly housing bill went way up, some areas are actually cheaper now than before.

What’s the real lesson here? A net worth calculator, if kept up and used, is a great tool for keeping yourself on task for positive financial growth. Each Sunday when I fill in the numbers, I can see right off whether or not we’re making good financial choices and whether there are any areas that need to be focused on. Keeping a weekly or monthly net worth calculator is a wonderful psychological and financial tool.

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  1. Eric says:

    I’ve had the same problem. We are selling our house soon and market values it at a price higher than I think I can get. The comps vary but about $20/sq ft. so I found I could either take the conservative or the median. I try and stay with the conservative.

  2. Pinyo says:

    Trent – first, congratulation on your new home..that’s a big deal. Second, have you tried using the average of online estimators? This is a link to another blog that has links to 10 sites to get house value. I have a spreadsheet where I enter all the estimate, drop the highest/lowest, and take an average. I know it’s exact, but should be close enough.

  3. brent says:

    My Dad told me that when he first bought his house he stopped feeling like he’d SPENT his money rather than USED it.

    His example was that, when he was renting, if he had to fix the fly-wire on a window it was spent money. Gone. Another example of the fruits of his labour slipping out of his hands forever.

    BUT, when he bought his own house and had to fix a fly-wire suddenly it was ok. The fruits of his labour hadn’t slipped out of his hands – they were still there, in the form of a brand spanking new flywire that was ALL HIS (and my Mum’s obviously).

    He hadn’t lost that money, it had merely changed forms.

    Your net worth hasn’t dropped – or rather, owning your own home, with your own appliances, carpet, curtains and, yes, flywire is what your net worth is FOR. It’s these physical expressions of your net worth, the fact that the ownership is YOURS, that will carry you forward into the next phase of your life – mre so than the abstract number of dollars you have in the bank.

  4. Ha'apai says:

    I run into a version of this question every time that I make an IRA contribution. I know that the money is effectively gone from my life for the next 30 years, but I can’t get myself to record a precipitous drop in equity. To keep the drop from occuring, I debit cash and credit another asset “retirement contributions”. I then cease to record changes in the value of the retirement asset (although I do make quarterly notekeeping entries of the new value.) It’s not the greatest accounting, but it keeps me from feeling like I have lost ground when I’ve actually made the right move. I’m not pure.

    On the other hand, had you actually used historical cost instead of assessed value and dutifully recorded moving expenses you might have captured some truly valuable information. All of the small drops (moving expenses) and the big drop (the out-the-nose costs of buying a house) would have been recorded. That information might be valuable the next time that you move, at least if you record it in some form. Odds are, you might remember the difference between assessed value and what you paid for the house, but your memory will probably fail you when it comes to remembering how much work you ditched, what you paid for movers, and how much you paid for ready-made food during the move.

    Of course, it’s pretty hypocritical for me to chastise you when I can bear recording those cliff-like drops either.

    Yes, the rate at which your net income increases from now on will be quite interesting to watch taking shape.

  5. Tord says:

    When you net worth is starting to be significant, then the weekly change in net worth is going to be boring and irrelevant. For me, I have been lucky/unlucky in that I have inherited some money. So my monthly income is below 3% of net worth, now tracking movements of +/-0,5% is boring. So I try to leave the house out of the net worth calculations.

    Imagine that the house was an investment like stock or that you where not the owner of our own house, but it was rather a fictitious company that owned the house. Now each month you pay that company rent, and that company in turn pays the mortgage and other house related expenses. The house like any other asset a company has, also has to be written off as time goes by. Any money left over is set to a home improvement fund (as part of my emergency fund), loaned back to you to invest or used to write down the mortgage.

    As for me, my fictitious company is charging a quite high rent. To make things simple I am charging myself a fixed amount in addition to the mortgage payments. This is creating a constant drag on my net worth, but I think it will be a great investment once the house is sold.

    This also removes the incentive to use your house as an ATM. The house is a fictitious company and you as a business owner have to act responsibly. Trying to extract as much money out of your tenant as possible (bleed them dry), and use that money to best effect. But you also have to be a kind business man, that wants to improve the tenants quality of life, sometimes at the expense of profit.

  6. Kenny says:


    Do you count the entire assessed value of your home in your calculations, or just the “equity part” that you’d be able to have in cash if you were forced to sell it amd get out? I missed the part where you may have written that you took out a mortgage or were able to pay cash for the house.

    I am using my estimated equity only, because until my mortgage is paid off, I still have that debt to pay off.

    THanks for your continued openness about money. It’s refreshing.

  7. Scott says:


    Thanks for this guide. I’ve inputted my numbers into the spreadsheet and am quite pleased with what I’m seeing.

    However, if I include the newly purchased home in the numbers things look grim. I’ve included the equity we have in the house (a few hundred dollars after only one payment) as an asset and the principal on the loan as a debt. This turns my net worth into a very large negative number. Should I or should I not include this?

    I’d also like to echo what Kenny said above, thanks for the transparency!

  8. Andy says:


    Seems to me (I have no accounting experience) that you should count your entire value of your house is an asset, and your entire principle of your mortgage as a debt. Subract the later from the former, and you should wind up with a number close to your equity. Am I right about this?

  9. WIll says:


    I would love to start my own Net Worth Calculator, but in your previous article where you explain how to build one therr are no pictures. Can you tell me where I can get the pictures?


  10. David Hunter says:

    Scott, if you are going to include the principal of the loan then you need to include the full value of the house, not just the equity. Otherwise you are counting the principal twice.


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