Do you track your NET WORTH?

74 Replies

After reading the book of the millionaire real estate investor by Gary Keller, where it says to track your net worth frequently, I started few months ago to track my net worth and see it how it performs during time. I must say that I got really obsessed with this, and try to improve constantly the rate of increase with a combination of control my personal spending and getting the most out of my real estate endeavors and investments. I created a excel sheet where I insert data and it shows also a graph. I'm sure I can make it a lot more complex, but its not something I need right now. Because I moved to the states beginning of 2013 and know exactly how much capital I brought with me and with combination of the monthly bank statements I was able to use approximate numbers to have a historical view. It fascinated to see the history...   

I use Mint where I have logged in all my assets and liabilities and it calculates most of this automatically. Market value of my real estate and personal notes I calculate my self, everything else it gets the data automatically. For budget watch I prefer using my banks online system (wells fargo)

Currently I see an average increase of approximately 1.1% monthly and so far it looks that it increases as time goes by and I leverage my capital more. After I file my taxes next year I should have a better view of things. 

Anyone else has this habit and how much increase have you seen with your REI?

Originally posted by @Account Closed :

@Pavlos Kasselouris I look and think about it maybe quarterly but not often.. In my opinion, it is a kind of worthless figure.. I care about how much I make, my expenses, my debt etc...

 Nick my reasoning is firstly that you cannot correct what you dont measure. So I guess besides the calculation of the performance of an individual investment, net worth gives the bigger picture. Its not how much you make, its how much you have on your asset column. That's what will give you ultimately your financial freedom, right?

Second it gives me motivation and helps me be patient. Buy and hold investing is soooo slow, to the point its boring, so with this way I try giving some sort of interest.

@Pavlos Kasselouris , my husband checks it every day. He thinks of it as a game - how much can I make it go up by tomorrow?

We use Personal Capital, which is better for keeping track of investments. Mint is great for keeping track of spending.

I do but informally; when you are talking real estate, it is hard to get too precise because you cannot pin down the worth of land or buildings on any given day. What you can get from selling the property depends on many factors, some in your control and others not. It is not like looking at a stock chart, which is essentially today's price minus fees.

Originally posted by @JD Martin :

I do but informally; when you are talking real estate, it is hard to get too precise because you cannot pin down the worth of land or buildings on any given day. What you can get from selling the property depends on many factors, some in your control and others not. It is not like looking at a stock chart, which is essentially today's price minus fees.

I plan doing a quarterly CMA and subtract closing costs to calculate real estate. I dont want to sell anyway so thats just typical and to be able to judge whether to refi or not at the future. Maybe i will need to have a second mortgage on them, or I want to calculate my return in equity. Useful number either case.

I'd also recommend PersonalCapital because it gives you a great overall picture of your cash, investments, property values & monthly expenses...

It uses these figures to track your overall 'Net Worth'...

...It's always fun to see that net worth trend line pointing up!

Originally posted by @Mindy Jensen :

@Pavlos Kasselouris, my husband checks it every day. He thinks of it as a game - how much can I make it go up by tomorrow?

We use Personal Capital, which is better for keeping track of investments. Mint is great for keeping track of spending.

 Yes, it is like game, but daily i find it to extreme, since it would fluctuate a lot with some big expenses, unless you make daily a lot of money. I do it montly since thats when i get rent payments pay loans etc. If i had a business i would probably do it weekly. Ill have a look at Personal Capital.

Originally posted by @David Robertson :

I'd also recommend PersonalCapital because it gives you a great overall picture of your cash, investments, property values & monthly expenses...

It uses these figures to track your overall 'Net Worth'...

...It's always fun to see that net worth trend line pointing up!

 Thats exactly what Mint does. I can also enter private loans. But as i stated above I will look personal capital.

It is nice when it points up, its very addictive. I was the same way with my poker bankroll when i was playing poker.

I use a spreadsheet & mint. I havent created graphs or calculated my ROI but i love looking at the big picture of my finances. It motivates me & like you said, buy & hold investing is about slow & steady growth so seeing a nice net worth, equity growing as mortgages get paid down & increased cash flow as you raise rents is sooo cool!!!!

Thanks to everyone who mentioned personalCapital- i'll check that out next.

I usually do on my left hand, but when I get paid I use my right also.. maybe some toes if I'm lucky.  :-)

But then the bills come in and I'm back to just the left..

j/k

Yes my wife does ... ever since she tried to convince me to sell a property back in 1999 that we were offered $189,000 for, (I paid $62,000 back in the mid '80's when I bought so many).

I convinced her to let me keep it & rented it for a nominal caretaker fee of $1200/month to a series of divorced/separated friends needing temporary accommodation.

3 years ago it needed a lot of rehab so she just wanted to sell it 'as is'. We were offered $420,000. I convinced her to spend $30k upgrading it & we still have it rented.

Other properties (I fought to hold) have had similar increases in value for a number of reasons & all are free & clear. Our equity has increased significantly over 30+ years but you need to address the losers quickly & hold tight on the winners.

I use Mint and a spreadsheet as well.  I primarily use Mint to track my expenses by category; however, I record everything to a spreadsheet.  On my spreadsheet, my net worth is calculating automatically on a monthly basis.  I like to be able to compare my expenses by category to my total income (percentage of income) for the month to make sure my spending habits don't change (although I don't mind when my savings percentage increases).  In addition to net worth, I like tracking my expense as a percentage on income.

I'll have to check up on PersonalCapital, but is it pretty similar to Mint, with the only difference being the investment analysis functions?  I like Mint primarily for tracking expenses; however, I'm not sure what else it is really good for, unless I don't use it to it's full potential.

I'll be the first to mention it seems but I really like YODLEE, been using it for years, I check it 2-3 times a week. Is it useful? not really, but it's fun and having a good grasp of finances can only help.

I haven't tried personal capital, but I have used mint and I HATE MINT. it's slow to update (slower than yodlee at least). and its slammed full of ads.

I see no practical purpose in tracking your net worth on a daily basis.  Some have mentioned they do it because they enjoy it or because it motivates them.  That's great, and they should continue doing so.  But as a practical endeavor, it serves no purpose.  

The tracking of net worth is always an estimation. It is always offset by things like taxes, fees, commissions, etc., especially if the valuation is on an unrealized asset. There is always a difference between what one believes is the FMV vs what would actually be obtained at a sale. Given it's an estimation, doing so on a daily basis (unless it's enjoyable) serves no purpose. Just because on paper you may have gone up 5% doesn't mean you are actually 5% wealthier.

With that said, I review my net worth about twice a year.  Once as I'm filing my taxes, and once as end of the year planning.  It's not so much I'm purposely checking it then, but rather, I'm looking into my "books" already so it's an easy exercise to do so.  It does serve as a scorekeeper that let's me know I'm heading in the right direction.  But as a day to day function, it serves no purpose.

I've been updating my personal financial statement annually for a  long time as part of some of my commercial lending requirements. They required me to show that. Of course your net worth is at the bottom of pg 2 on those. It was a good thing to have as I was interviewing lenders and loan programs (borrowing money).  The bankers seemed to be impressed and acted like they didn't see one every day.  It's also much easier to put 'see attached' on the mortgage apps regarding your real estate owned as you acquire a property or 2.

I think it's important to know where you are, but not to get to caught up in it.  When you reach a milestone and it's there in black and white, it is awesome. No lightning bolts from the sky, but knowing is enough.  Good discussion @Pavlos Kasselouris .  I suspect with time, the novelty of it will wear off a bit.

Yes,

I do a financial statement every quarter....  It shows me both my cash flow and net worth.

Both are crucial information that helps me get to where I am going, where I have been, and where I am at now.

I also think Personal Capital is awesome for tracking your net worth. I have had a spreadsheet since I graduated from college and tracked my net worth on a weekly basis every Monday at 7pm. I would have to login into 12+ accounts. With Personal Capital, there is just one login for all your mortgage, bank accounts, brokerage accounts etc.

Today, I use both the traditional spreadsheet method paralleled with Personal Captial.

These are the three things I try to track on regular basis in my life.

1) Networth

2) Life Goals : Business, Family, Personal etc.

3) Weight / Fat % content 

I have used a spreadsheet since I graduated college too.  We lost some data in the early years after our property was robbed, but we still have data since mid 2004.  Right now we average a .53% increase each week.  We track things weekly.  

For those that claim net worth is irrelevant I don't agree.  For sustainable financial independence you need roughly 4% of your total net worth to exceed your annual spending.  I think most people on this site would agree that financial independence is a pretty decent goal worthy of pursuing.  

The oft-cited $10k/month goal requires a $3M net worth using publicly-traded securities in a modest balance.  I am sure most on this site could generate the same with less equity to play with.  

Reducing your spending decreases your net worth requirements 25:1.  So every dollar you reduce your annual spending saves you from accumulating 25 extra dollars for financial independence.  That's something worth thinking about for those trying to get there sooner. 

In general I have found that all of the canned solutions fail to give me all of the data I need.  They're generally not built for real estate and when you own private companies it gets very hard to assign precise values.  I track my stuff religiously now because we seek spec loans pretty frequently.  The spreadsheet spits out a PFS in real time and generally gives the bank a warm-fuzzy that we are on top of our finances.  

@Pavlos Kasselouris   I update quarterly as per my loan covenants with my commercial banks... and I have to keep a certain metric's lest they choose to call my loans.

@Bryan Hancock   hard for us RE folks to hit those cash metrics we are always buying something  or borrowing something..

IN spring of 07 I got as liquid as I could get ( not that I predicted the magnitude of the GFC) it was just rolling out of some large deals... But in hind sight it helped me get through the 08 to 2011 nuclear winter us HML went through.

As I age gracefully though liquidity and cash is foremost on my mind... along with limiting my self to long term contingent liabilities.  But If I get a smoking deal on a jet I will go for that   LOL and throw the previous comments right out the window

I use both Mint and Personal Capital, finding them very useful in different ways. As others have touched on before me, Personal Capital is a bit better at tracking investments. They have excellent graphs that help to visually display where you're at financially. 

On the other hand, I prefer Mint when it comes to tracking my monthly budgets and individual expenditures. Several times per week, I go in and manage the spend categories, so they fall in line with the correct budget. After a while, the program learns which purchases go where, helping to minimize manual corrections. 

It's really a lot of fun trying to make that Net Worth number climb as high as possible. 

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