My quest to have £100k Net Worth by 26

rictus123

I will be using what you have mentioned. When i started this thread i wasnt planning on including pension. I am going to try and get my net worth upto £100,000 by 26 years old not including pension.
Lowest value asset included will be my car. So it will be as you say, House+Car+Cash+Investments value(Not what i have invested-there value at time of calculating net worth)+any other assets i own MINUS Mortgage+debts+any money i owe to anyone = Net worth.

I have done a quick search before in which most of the answers were American and in dollars. Alot dont include there own house in calculating there net worth. I would argue that it should be included as your main asset then eventually your investments should overtake it and investments are worth more than house.

I will keep searching about and try to find a british forum with net worth threads on it.

MoneySaverLog

A car is not really an asset, unless you have a classic car, in which case it may increase in value. Most cars though depreciate in value, require repairs, insuring, taxing and if older than three years need to get through the MOT. More of a liability than a asset.

rictus123

Well true but a car can bring income/it certainly helps bring income. You could say a house is a liabilty aswel then due to paying the upkeep of it/repairs/council tax etc. Car is not worth much just now but in 5 years id hope to have a nice x5 or something for the weekend and a van for work. Wouldnt include the van.

rockitup

rictus123 wrote: »

Well true but a car can bring income/it certainly helps bring income. You could say a house is a liabilty aswel then due to paying the upkeep of it/repairs/council tax etc. Car is not worth much just now but in 5 years id hope to have a nice x5 or something for the weekend and a van for work. Wouldnt include the van.

A car is only really an asset if it does provide an income, like if for example you buy a taxi or private hire car and rent it out on a regular basis. Wedding Limousines could be included this way too.

Normal day to day cars for going to work, school runs, supermarket hauls etc are just classed as a liability as MoneySaverLog said.

My only expensive cars were used for airport runs, as they were a tax deductible item. For private motoring anything under a Grand that got me reliably from A to B would do the job

For valuing houses on a spreadsheet or accounts software, you should enter the current value of the house as an asset, along with outstanding mortgage, any loans, repairs taxes as the liability. This would give a true picture of your net worth, if you do get a BTL treat it the same way. If you make a profit on the rental income, keep some aside for future repairs, boiler, roof etc and use some for necessary decorative upkeep to try and keep up the resale value.

MoneySaverLog

rictus123 wrote: »

You could say a house is a liabilty aswel then due to paying the upkeep of it/repairs/council tax etc.

rockitup wrote: »

A car is only really an asset if it does provide an income, like if for example you buy a taxi or private hire car and rent it out on a regular basis. Wedding Limousines could be included this way too.

Very much in the same way rockitup says, if it provides a income it is a asset, otherwise it is a liability. So if the house was to be let, to provide a income then it becomes a asset.

If the house is being lived in by you, and not providing a income, then it can be seen as a liability. If for example you're paying out on it e.g. with a mortgage then it's definitely a liability. It's however an asset to the bank who loans you the money for it as you pay them interest to do so

Robert Kiyosaki explains this quite well in his book, Rich Dad Poor Dad. http://www.youtube.com/watch?v=DNrIyQUyiLI

rictus123

I would view it as if its worth x amount you can include it as if you can sell it for that x amount your net worth is the same? While your way is saying a house,cars etc are all worthless unless you sell them to include the cash in your net worth?

That is the aim im going for, who knows, not including car/main residence, i could well still hit the £100k.

atush

Thanks for all the replies guys, exactly what i was looking for when i started the thread. Well got paid yesterday and im not £1566.65 better off for the fortnights work. Paid my holiday to Florida and my mechanic for sorting my gearbox.

I hope you take this the way i intend, and not badly. But I can't see why anyone with serious debt is taking a holiday to FL in the first place. I realise you said it will be your last for 4-5 years (and that is a good thing) but I can't see you paying off your debt this year as you will then need spending money or CC debt while there.


I think you may have to increase the timeframe of your quest.

rictus123

I may need to increase the timeframe but i will have a good go at it first. The debt was taken on so i could increase my income, which i have done. If i can pay it off by the end of June then that will show i can put commit £13,500x2=£27,000 a year to saving/investing. Obviously this will be dented when i do buy somewhere. If going by net worth then there is no advantage in terms of net worth to pay off mortgage on own house asap? I may not be buying until next summer so could well have a high deposit by then. Going away on holiday is not the best of ideas from an outside point of view but was arranged before i took on business loan. I have a massive surplus so wont be "skint"/struggling to pay debts because of it.

Even if i have to increase the timescale another year or 2 it will still be a great achievment to have done that by 30 and an experience if nothing else.

atush

Yes, a great achievement still even if delayed.

So head on over to the debt free board and get the locals to help you make your debt free day Sooner!

Good luck ;-)

rictus123

Well i maybe do need to tone down the high targets i am setting but even falling short,being debt free 2 months later than planed, September instead of by July. I will still have money saved up by the end of the year. Im looking at saving up £2570 to pay off smallest loan then i will try to save up £10,000 as quick as i can to clear the rest of the loans. Will reassess and check if it will be worth paying them off early with the repayment charges. So will be able to get debt free as soon as i have £10,000 in c/a after smallest loan is paid off. Payments will be down to under £555 after smallest loan is paid. Maybe pay it off in March even though i will be able to afford it next month, just to be on the safe side.

I cannot wait to get rid of this debts and get saving to move out. As soon as i have the minimum amount i will need to move out i will be gone. Unless i will be able to move out even though i have debts? Even though i know everyone will say its stupid and dont do it. My biggest loan ends the end of 2013. Not the longest term.