@Anonymous wrote:
@SouthJamaica wrote:If you don't have a pot to p*** in, the only substantial asset you have is your own home in which you live, even that asset is mortgaged, and the only way you can survive is to continue working for a living, and you notice that when other people are talking about how to value their investment properties you don't have anything to say.... that's how you know how you're doing... you're doing lousy just like all the other 99%.
In this country, where the social safety net has been shrinking steadily since the early 1980's, if you don't have some major dough, you're not doing well, no matter how you'd like to paint it.
That underlined part of your quote is so so accurate. My tax attorney is a great friend of mine and we get coffee once a week or so. One thing he likes to tell me is that I could easily just disappear to the islands any time I want to, leave my homes behind completely, and probably be OK with just the cash I could withdraw from the banks.
Hearing that from a guy who is known as one of the best tax attorneys in the area is the best reminder that I am doing great, and I don't need to stick around if I don't want to.
Downside is that I do like working and I do like my neighborhood, but if the IRS or other tax agencies ever want to try to screw me again, maybe I'll take the ex-pat route and fly the big middle finger proudly in a country without extradition.
I know 3 guys who were high 6+ figure earners in the US who left for Belize in the past 10 years. Left everything behind other than the hard money (bullion) they took with by boat and they're never, ever coming back. Having colleagues like that reminds you that working from 13 to 68 may not be the life I want to live in entirety.
Well I have no interest in doing any of that exotic stuff, but it would be nice to have some peace of mind like ordinary people have in Scandinavia and some of the other western European countries.
@SouthJamaica wrote:
@Anonymous wrote:
@iced wrote:The problem with material assets, including property, is it's only worth what someone will pay. I used to hear my friends all the time say one of their trading cards was "worth" $1000, but until someone actually handed them $1000 it wasn't. Couldn't put it in a vending machine and buy a soda. Couldn't pay rent with it, either.
Agreed 100%. Since I started putting my homes on AirBNB it's really helped see valuation better -- instead of being depreciating assets that are just cash hogs, they're now depreciating assets that are actually making me a profit (I travel a lot so putting my house on AirBNB is just a click of a button or two and a call to the housekeeping company).
Most of my other assets I own have also become profit points versus just depreciating assets I have to store and maintain. It's a lot easier to realize an asset's value when someone is paying something for it on a regular basis.
OK Revelate, I can now answer the question "How do y'all figure out how you're doing?"
If you don't have a pot to p*** in, the only substantial asset you have is your own home in which you live, even that asset is mortgaged, and the only way you can survive is to continue working for a living, and you notice that when other people are talking about how to value their investment properties you don't have anything to say.... that's how you know how you're doing... you're doing lousy just like all the other 99%.
In this country, where the social safety net has been shrinking steadily since the early 1980's, if you don't have some major dough, you're not doing well, no matter how you'd like to paint it.
SJ,
We just don't think alike, though to be fair I disagree with my Dad on an analogous point too and he and I do mostly think alike. Just because I'm not in the 1%, doesn't mean I shouldn't have an idea of where I am: throwing up one's hands and saying "it sucks" or my father's "It's OK" and burying one's head in the sand is not smart. Just because the people replying to this thread are likely higher net worth on average than this forum than others doesn't mean it's not relevant. My problems may be individual to me, but this forum is applicable to (almost) everyone, certainly the 99%.
I may have mistitled the thread or drove the wrong impression from my original post; my apologies if so, but just because I'm not part of the discussion of how to value the properties doesn't mean I don't have a need to figure out where I am. We all have different skills and knowledge, and my own knowledge doesn't run towards accounting besides very general principals and what I've picked up from my corporate life, why would I insert myself into that conversation when I'm learning from it and I don't have anything meaningful to contribute?
This whole exercise is not in comparison to others (which I care about not at all, that's worth literally zero in my life), but just for figuring out my financial capabilities. Knowing where you're at is what determines your available options, and as much as I don't chase material things, doesn't mean I think money isn't important. Just talking me though it means nothing to anyone else: it's not a bunch of rental properties, it's one of a dozen business plans with a buddy where we have the skills and that's going to take some amount of cash; if we took the shot right now how long given the required capital investment would I be able to live without needing to chicken entrepreneur or similar?
Or another side, if I sell the darned condo and move to Seattle or North Carolina or back to Texas or other places which are probably better for me (half a dozen Asian cities too) what options do I have? Do I need to do job tourism? Dipstick 6 month contract somewhere, no problem, or can I just go live in a place for a couple weeks and not worry about the gig and just talk to people to get a sense of what's up?
Or pure fantasy land, I find a woman who wants to raise kids and is apparently dumb enough to do that with me, and we pick a place to live based on school district: can we make it work financially at all, or do we need to evaluate lesser options?
We have to deal with reality, and I'm of the opinion that understanding 1) what your assets are, and 2) what your cash flow is, and 3) where your money is going, is fundamentally important for people in all walks of life. I do not see this as intellectual masturbation... unlike most of the things I post on this forum. 
@Revelate wrote:
@SouthJamaica wrote:
@Anonymous wrote:
@iced wrote:The problem with material assets, including property, is it's only worth what someone will pay. I used to hear my friends all the time say one of their trading cards was "worth" $1000, but until someone actually handed them $1000 it wasn't. Couldn't put it in a vending machine and buy a soda. Couldn't pay rent with it, either.
Agreed 100%. Since I started putting my homes on AirBNB it's really helped see valuation better -- instead of being depreciating assets that are just cash hogs, they're now depreciating assets that are actually making me a profit (I travel a lot so putting my house on AirBNB is just a click of a button or two and a call to the housekeeping company).
Most of my other assets I own have also become profit points versus just depreciating assets I have to store and maintain. It's a lot easier to realize an asset's value when someone is paying something for it on a regular basis.
OK Revelate, I can now answer the question "How do y'all figure out how you're doing?"
If you don't have a pot to p*** in, the only substantial asset you have is your own home in which you live, even that asset is mortgaged, and the only way you can survive is to continue working for a living, and you notice that when other people are talking about how to value their investment properties you don't have anything to say.... that's how you know how you're doing... you're doing lousy just like all the other 99%.
In this country, where the social safety net has been shrinking steadily since the early 1980's, if you don't have some major dough, you're not doing well, no matter how you'd like to paint it.
SJ,
We just don't think alike, though to be fair I disagree with my Dad on an analogous point too and he and I do mostly think alike. Just because I'm not in the 1%, doesn't mean I shouldn't have an idea of where I am: throwing up one's hands and saying "it sucks" or my father's "It's OK" and burying one's head in the sand is not smart. Just because the people replying to this thread are likely higher net worth on average than this forum than others doesn't mean it's not relevant. My problems may be individual to me, but this forum is applicable to (almost) everyone, certainly the 99%.
I may have mistitled the thread or drove the wrong impression from my original post; my apologies if so, but just because I'm not part of the discussion of how to value the properties doesn't mean I don't have a need to figure out where I am. We all have different skills and knowledge, and my own knowledge doesn't run towards accounting besides very general principals and what I've picked up from my corporate life, why would I insert myself into that conversation when I'm learning from it and I don't have anything meaningful to contribute?
This whole exercise is not in comparison to others (which I care about not at all, that's worth literally zero in my life), but just for figuring out my financial capabilities. Knowing where you're at is what determines your available options, and as much as I don't chase material things, doesn't mean I think money isn't important. Just talking me though it means nothing to anyone else: it's not a bunch of rental properties, it's one of a dozen business plans with a buddy where we have the skills and that's going to take some amount of cash; if we took the shot right now how long given the required capital investment would I be able to live without needing to chicken entrepreneur or similar?
Or another side, if I sell the darned condo and move to Seattle or North Carolina or back to Texas or other places which are probably better for me (half a dozen Asian cities too) what options do I have? Do I need to do job tourism? Dipstick 6 month contract somewhere, no problem, or can I just go live in a place for a couple weeks and not worry about the gig and just talk to people to get a sense of what's up?
Or pure fantasy land, I find a woman who wants to raise kids and is apparently dumb enough to do that with me, and we pick a place to live based on school district: can we make it work financially at all, or do we need to evaluate lesser options?
We have to deal with reality, and I'm of the opinion that understanding 1) what your assets are, and 2) what your cash flow is, and 3) where your money is going, is fundamentally important for people in all walks of life. I do not see this as intellectual masturbation... unlike most of the things I post on this forum.
Sorry for needling you Revelate, but it's in my nature.
I know I'm overstating my case, and understating yours.
I'm just trying to make the point that if the only thing separating you from ruin is your ability to get a job, stay healthy, and make a living working... you're not in good financial shape.
In this country people on that tightrope.... i.e. the vast majority of us.... will get slaughtered if we're a day late on a mortgage payment or a credit card payment or a medical bill. That's not security; it's nothing.
@tacpoly wrote:
@iced wrote:If I were in his shoes and was needing to calculate my net worth on the spot, I would use the following rules against each property:
1. If the property is generating a revenue stream (rent), count the revenue generated rather than the property equity. This assumes a signed lease or contract is in place.
2. Once the property is under contract to sell, I will again consider the sale price minus fees and taxes and such as part of my net worth.
3. If the property is generating no income, I would count it as $0 (see below though). It may appraise and be insured at at 5m, and I may have a ton of money tied up in it, but it's sitting idle with no guarantee it will sell for 5m, so I can't assume it's wealth available to me until I find another human being willing to pay me for it.
In your friends case, unless it's generating revenue, that 15 million isn't available to him. He can't just pull it out and use it tomorrow. That said, you could reasonably assume a fraction of the equity is available as cash, either in the form of an equity loan or setting a price sufficiently low that the property is guaranteed to sell almost immediately. In order words, at what price could you liquidate that property? THAT amount I would say is reasonable to include. This is really the underlying point with real estate - were too quick to assume we know what we'll get for it. Often times we will, but it may take a while. Sometimes we won't. My parents got about 75% of what they thought they would when they retired and sold their home.
The problem with material assets, including property, is it's only worth what someone will pay. I used to hear my friends all the time say one of their trading cards was "worth" $1000, but until someone actually handed them $1000 it wasn't. Couldn't put it in a vending machine and buy a soda. Couldn't pay rent with it, either.
This exactly. We have a lot of investment properties we rent out -- some completely owned outright, some we are still paying a mortgage on (or rather the renters are) -- and we count only the positive cash flow. We keep track of rough property values, but they are not counted with liquid assets.
OP, if you really want to "figure out how you're doing", see a financial planner. Discuss your medium and long-term goals, figure out how you can get there, and set milestones on your way to your goals. Then you can measure how you're doing against those milestones. Check in periodically and when your circumstances or your goals change.
There's nothing a financial planner can do that I can't; end of the day I have to be responsible for my own actions.
Anyway the money shot was the cash flow statement, I can see the pattern of my stupidity and therefore can fix it. Appreciate the advice and information that you and others provided!
I look at the graphs on mint, here is one for my net worth:
The last few years I am in the black but living hand to mouth, not the best way. My expenses are minimal but so is my income.
Going back to school in the fall going to try and get a degree and change that.
32 years old with high school diploma and "some college" = barely employable and not earning much
I used to tell myself just stay in the black and you're doing fine but that is short term thinking. Going to try and save and plan ahead and invest in myself as well as my car.
In the past three years I have spent $17k in fuel, maintenance, and insurance. Transportation is 50% of my expenses. The price of gas is making my situation bad but being unskilled makes it untenable for the future.
TLDR; I use mint.com