When do you think it's NORMAL to have positive net worth?

[mo_money2supe]

Originally posted by killramos


No you are not.

Then what other assets do most well-doing 30-somethings have that is worth more than the equity in their homes? Something doesn't add up here.

[ercchry]

Value of assets - debts = net worth


This shouldn't be so difficult

ie. $500k house, $400k outstanding mortgage, $20k vehicle, $25k outstanding loan equals a positive $95k net worth

[realazy]

I think people here are misunderstanding what OP meant by positive net worth.

If you have a $400k house with a $380k mortgage, it is still considered positive net worth assuming your house is still worth $400k.

The only time you'll have a negative net worth is through unsecured debt, a potentially a bad vehicle purchase or a larger housing market correction.

Most vehicle loans will be positive net worth after a year or so if it isn't a super long term or really high interest rate.

[Buster]

Positive net worth means your assets are worth more than your liabilities. I think people are getting confused with some definitions here.

If you take 100k in savings, and put that into a 500k house, you have an asset of 500k, and a liability of 400k. Your net worth is still 100k.

If you are lucky, and the market rises, and you pay down some mortgage, maybe in the next year your house is worth 550k, and your mortgage 380k.

Your net worth is now 170k (in the positive).

For you to have a negative net worth, you would need to have your liabilities exceed your assets. But this requires debt, and someone willing to lend it to you.

Types of debt that might get you negative:

- car loans on long amortizations
- student debt
- credit cards.
- other un-secured debt.

[killramos]

Originally posted by mo_money2supe

Something doesn't add up here.

Yea, your Marth

See what I and the others posted here, I'm not really sure what your definition of positive net worth is lol. You seem to be treating it like assets being a multiple of debt greater than 2 or something which is plain wrong.

[ercchry]

Originally posted by killramos


Yea, your Marth

See what I and the others posted here, I'm not really sure what your definition of positive net worth is lol. You seem to be treating it like assets being a multiple of debt greater than 2 or something which is plain wrong.

Equity - debt

Which still makes no sense

[mo_money2supe]

Originally posted by killramos
Yea, your Marth

See what I and the others posted here, I'm not really sure what your definition of positive net worth is lol. You seem to be treating it like assets being a multiple of debt greater than 2 or something which is plain wrong.

Hahaha...now I understand. Wow, I totally misread and misunderstood the OP's post then. I actually did treat the question as a multiple of debt >2x. Sorry for my financial incompetence! It's not like I use marth everyday or something...

In that case, to answer the OP's question, I would say most educated (even high school grads only) individuals should be net positive before age 30. I was only about 25 when I was net positive after paying off my student loans 6-months post-graduation, with a paid off, albeit older, vehicle.

[Aleks]

Originally posted by mo_money2supe


Then what other assets do most well-doing 30-somethings have that is worth more than the equity in their homes? Something doesn't add up here.

If you've had a decade of RRSP contributions from you and your company, that alone should now be worth quite a bit.

[mo_money2supe]

Originally posted by Aleks
If you've had a decade of RRSP contributions from you and your company, that alone should now be worth quite a bit.

It's decent, but it's definitely not enough to pay off my mortgage debt. At least that's how I understood it prior to my amazing 'financial literacy' posts... Excuse my ignorance.

[Sugarphreak]

...

[jonsey737]

I agree 25-30 would be a good age.

[max_boost]

Originally posted by Tik-Tok


I think you're severely over-estimate the average/normal persons monetary competency.

First of all the average first time home owner in Canada is like 30 years old, so that means they just dumped pretty much all their net worth into a house, leaving them in the negative by a large margin.

Then you see what the average household debt is in Canada, and the average retirement savings is (almost nothing).

I would say the number for the AVERAGE person, is more like 50-55 years old.

Mortgage is forced savings and I think a lot of people would be in the positive because of that unless you bought at the wrong time.

I agree a lot of people are really bad with money. Spending is just so easy and feels so good.

[Kloubek]

Originally posted by mo_money2supe
Am I correctly reading that most of you guys by your early/mid-30s you have over 50% equity in your houses already?

I have about 60% equity in my house right now. (Though I'm 41 so I guess that works out about right). The reason though is more due to appreciation of the properties I've owned rather than the amount I've paid down.

Combined with RRSPs, savings, stocks and tangible goods I figure I'm at about 500g. Which sounds like a lot to those who might have a zero or negative net worth, but I'd say is the minimum at my age to ensure you have a decent retirement.

[max_boost]

I think for the average Canadian, your house is going to be your biggest asset for retirement. It's also the one thing I call my base and won't touch no matter what.

[sputnik]

I have always had a positive net worth.

[ExtraSlow]

Yeah, the question of having 50% equity in your home is another fascinating sub-question.

Personally, I'd like to have zero Gross debt, but I have some distance to go before that's a reality. Unless Mario can win me that fucking lottery, lol.

[Thaco]

Originally posted by ExtraSlow
Yeah, the question of having 50% equity in your home is another fascinating sub-question.

Personally, I'd like to have zero Gross debt, but I have some distance to go before that's a reality. Unless Mario can win me that fucking lottery, lol.

+1 go Mario

[Xtrema]

Originally posted by Buster
Types of debt that might get you negative:

- car loans on long amortizations
- student debt
- credit cards.
- other un-secured debt.

Kids also belong to the negative column.

I would say add another $100K/child to that list.

Originally posted by ExtraSlow
Yeah, the question of having 50% equity in your home is another fascinating sub-question.

That's a good mine set to have. But if you include paying off the mortgage, majority won't get out of that until 40s and 50s.

[pheoxs]

Post secondary students: Late 20's
Trades students: Early 20's

Unless you take on a bunch of student loans there's no reason you shouldn't start off with positive equity unless you go max out credit cards and buy a shiny new car as soon as you can.

The average family that is struggling to make ends meet and has a pair of car loans and a mortgage likely still have positive net worth if they sold every thing they had though they'd never realistically do that.

[riander5]

Assuming your house is a wash as a new homebuyer, most would probably have savings outweighing debts by 25-35

25-35 is my vote. Wait wheres the poll