3 posts tagged “net worth”
Do you have any money? Can you make your bills this month or are things a little tight? Are you wealthy or poor? Does a bank think you are a good risk? Do you have good credit? What is your net worth? What are you worth? (Ok, so that one isn't a money question) The strange thing is that though these questions seem to all aim at the same thing, they are actually vastly different questions.
Net Worth is what you’d have left over if you sold everything you own. I don’t think anyone has asked for this information on a credit application and it’s not considered in coming up with my credit score. And it has little to do with how much money is in my purse (a buck two eighty) and really has little to do with anything… although it’s important information if you want Colombia to let you adopt their (poor, hungry, orphan) kids.
So here’s the process. On a spread sheet make a list of everything you own that is worth something. The house is usually at the top of the list unless you rent. The autos, the furniture, the other assets. The bead collection and the piano. All of it. Estimate the values of each item. How much is your house worth? (Easy if you are a renter.) And fill in figures for the autos - www.kbb.com is a good resource for that. You’ll have to know the year, make, model, miles and features of your ride. Add it all up. Add in the balance on each bank account you have, add in your investments (what’s left of them after the stock market quits tap dancin on the total today at 5 pm) Add that list up. Yeah, just remember this isn’t YOUR worth we’re looking at… this is about the junk you own. All that stuff that would be gone if Katrina visited in the night.
Start a new column and start listing the liabilities. How much do you owe to the bank who lets you live in their house? How much on the autos? Any credit card debt? Any revolving credit? Add it all up. Yeah, we are not makin any judgments here, just doin the math. If you are young and just bought your first house, ouch! Old and nearly paid off that sucker? Score!
So, which is bigger? The plus pile or the minus pile? Well, shuck my corn! My PLUS side is BIGGER! *Does a happy dance!* I CAN HAZ ADOPTION! Whooo Hoooo!
Here’s the irony… owning two houses would seem like a liability since I owe an astronomical amount of money to Janet the Banker. On the other hand, since I owe less than the appraised value on either house, it puts me in the black. (We got house B for considerably less than its appraised value!) And when I took house A off the spreadsheet, my net worth went DOWN. Ok, that seems really counter intuitive, right? Well to me at least. Owning two houses means it’s harder to make my commitments, but it makes my net worth higher. Is that some twisted mojo or what?!
And this is why this economic situation has been such a bitch to so many folks. My net worth hinges mostly on the estimated value of my home (which in recent years has departed to some degree from an appraised value since most of those lovely folk had a few years of collective insanity that we are all paying for now.) Now I’m not going to say this VERY loudly, for the purposes of my math, I’m using appraisal values from sometime this year, not today. (Markets have had a downward trend lately so the longer ago my appraisal - the better my math will look) So where this gets really tricky is when someone just buys a house and is just starting to pay the loan, unless they made a hefty down payment, there is little wiggle room in the net worth department. If the market shifts and that individual owes more than the house is actually worth, that creates a negative net worth… but it doesn’t mean they don’t have money in their pockets and it doesn’t necessarily mean they can’t pay their bills. It can mean that, but then again it might not.
Here’s where I think this gets really funny. Let’s say Joe the Plumber lives in the house he grew up in, so what if he shares the place with a six bear hunting dogs. His pappy paid $9,452 for that place back in the day and ol Joe inherited that baby when he turned 48 (along with the ancester to all these dogs running around here.) It needs a coat of paint and “Extreme Home Makeover” would certainly rip that crap to the landfill, but it’s a house with a warm fireplace and it’s paid for. And it’s got a few acres out back with some nice views of the valley where he played as a child. He’s paid off his five year old Ford F150 duely and doesn’t have much else but doesn’t care. He thinks the “Stock Market” is the place you’d go to buy a coupla cows for the pasture out back. And he pays his bar tab at the end of each month, so that’s not much of a liability depending on which day you do the math. And as long as he doesn’t hit the credit cards and doesn’t have a girl friend, well, his net worth looks pretty darn good.
On the other hand, Sarah the Soccer Mom may live in a big house in the ‘burbs. Let’s say she bought her McMansion a year or so ago at the height of the market, but now two homes in her neighborhood have been foreclosed on and so the value of all the houses in her neighborhood have gone through the floor. Even though Sarah and handsome husband make plenty of money and have a little left over at the end of the month to go to Neiman Marcus and shop for clothing… she could have a negative net worth. And if they experienced a medical meltdown, or one of them lost their job, or they wanted to borrow some money to buy matching snowmobiles, well… then it might start to matter. Appearances mean nothing, ability to earn money or borrow money is not the issue. Net worth is simply a way to estimate what would happen if Joe’s and Sarah’s assets sold at auction tomorrow, all the bills were paid up… what would the figure be on the check the auctioneer handed them or would have have his hand out? That’s net worth. And though Joe and Sarah may lead very different lives, you can't tell by looking which one has the higher net worth.
And I have come to the conclusion that net worth means very little to me. It says nothing of my character, or kindness or my relationship to the world I live in. And it has nothing to do with our ability to be parents. It has nothing to do with staring down two home mortgages when you only want one house. It’s deceptive because the numbers can change considerably based on many things beyond my control. And it really doesn’t have that much to do with whether or not I pay my bills on time. And yet it is the difference between being able to adopt, or not.
I’m happy! I can haz offspring! SCORE!
Well, it appears to be official. Our adoption agency has confirmed that yes, we do need a positive net worth in order to adopt from Colombia. And apparently when we filled out the first paperwork we had a positive net worth. That was more than a year ago before the economy tanked and things got tighter. A show of hands please, who has the same net worth that you did a year ago today? What? No hands? Why, I just don’t know how that could be! I am just so SHOCKED!
That was back when we lived in a tiny house that was worth considerably more than we paid for it because of all our renovation work. We had a truck that was paid for and a Civic that only had a few payments left. I don’t remember how I valued the worth of my business assets, I’ll just have to go back and look at that and see how those numbers even came together! LOL! To my knowledge there has been nothing in the material that said that a positive net worth would be a requirement. I haven’t taken the time to look through all the adoption material again and make sure, but I’m fairly confident of that.
So… in preparation for the adoption we bought a minivan knowing that our truck was terminal and we wanted to get as many of those van payments behind us as possible before we brought home/purchased our children.
And then there is the bigger house we purchased because of what our Social Worker said about our eligibility based on the space we didn’t have. Now we own TWO houses, though hopefully that won’t last forever. But seriously, there is no way around the math of THAT! (Though I'm guessing that in a wierd twisted way that could help? Must do math!)
Apparently everything we’ve done to prepare for this adoption is now the same stuff that currently makes it impossible. So I need to sit down with the numbers and figure out exactly what the damage is. If we had known, we could have waited on the van and not purchased the house… but then we would only qualify for adopting one or maybe two children of the same gender and not the three that we want and still be stuck in that tiny house. (Well, we are still stuck WITH that house, but not IN that house.) And adopting them separately is seriously more expensive than getting them all at once. It’s the difference between paying $30 for something or buying it for 3 payments of $25 each.
There is a way around this, we just need to figure it out. I’m thinking that we may need to find someone who will purchase our van from us and then sell it back to us soon. As far as I can tell the paper needs to be legally true the day we sign it, after that? Shaa! I don’t know where the adoption file is now, in a box somewhere. I need to (find it!) get it out and see those early numbers. And I need to run today’s numbers, I don’t even know how close we are but I don’t see it working from here. I don’t exactly know all the miracles are going to be required to make this work but I’m living in a house that is nothing short of a miracle anyway. What’s one (or a KaZillion) more?
It's for the kids... for the kids... (grumble grumble blasted adoption agency grumble grumble) it's for the kids... for the kids...
No seriously, this IS GOING to work! It's just a little demand of mine. That I'm deadly serious about! This adoption IS GOING to work!!!
Ok, I’ve been struggling with this over a week now and we haven’t gotten any answers so I’m losing my battle over trying not to get really depressed. Hubby was told in a phone conversation with our adoption agency that if we don’t have a positive net worth, that our application to adopt will not be accepted by Colombia. We don’t have a positive net worth, and the years it would take us to get one would pretty much royally piss me off make me too old to raise a kid. Secondly, they knew our financial situation and that we did not have a positive net worth going in, so how could they turn around now (after we’ve paid THOUSANDS of dollars – ALL non-refundable) and turn us away? (Heads would ROLL!) And who has a positive net worth in this country right now anyway?!
I’m trying really hard, but honestly, if we don’t get this sorted out, life is going to get really unpleasant around here.
Our Social Worker (who is separate from our adoption agency) would not approve us for the number of kids we wanted until we bought a bigger house. And the old one has not sold yet. Ok, no kidding – we didn’t have a positive net worth before that but right now it looks even worse while we own two houses. And selling one won’t take that number into positive territory.
We need a miracle. We’ve seen so many along the way. The purchase of this house was a whole string of miracles. We just need a few more. I’m committed to trust God that something is going to break here. And between now and then I’m caught on the edge of a rather large cliff, trying desperately not to lose my footing. Prayers welcome! (Please God Please God Please God...)
