Monday, February 9, 2009

Back to money matters: recalculating net worth

I put the net worth calculations on hold during the house hunt, because I was not clear about how to spread out the numbers with a house in the mix. I'm still not clear.

Now I've taken a stab at it through NetworthIQ, where I've been following my net worth for the past year.

The tricky part is this: we took $20k out of my RRSP through the federal Home Buyers Plan. That went from being 'my' money in my net worth to being part of 'our' house. Also, I can't in good conscience claim the whole equity value of the house for 'my' net worth, since it's 'our' house. Besides, I'm not entirely sure how to come up with that number anyway! And as of this moment, I don't have immediate access to how much is paid down on the mortgage.

So, here's what I've done.

Under 'assets' I put the price the house sold for. $200k. It may sell for more or less today (hopefully more, since we've put thousands into fixing things and improving the place), but that's the most recent reliable figure as far as market value.

Under 'liabilities' I put the mortgage value. $183.6k. The difference does not provide me with a net positive when the $20k removal from my RRSP is concerned, but it does even things out a bit more than just typing in the real numbers that are left in my accounts after the transaction.

In the end, this January's net worth number is barely above last January's. Am I disappointed? Not in the least! Considering the stock market's performance and how much money people have lost (on paper), I'm just glad it hasn't fallen precipitously. Add in the home purchase and everything else I've spent money on in the past year, and any gain is a good gain.

I think it was a brilliant (but obvious) move to keep the money I was expecting to withdraw through the RRSP HBP in something stable -- in this case, a Money Market Fund. If I had kept that money in an equity mutual fund instead, my down payment money would have shrunk, what, 40% or so by the time it came time to buy the house. That would have been disastrous. As it stood, only about $7000-9000 of my RRSP money was in mutual funds, so most of my investment was relatively safe during the free-fall.

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