I recently was a good little consumer and picked up a relatively expensive set of new home furnishings, some furniture, a TV, some other electronics ... items of that nature (don't worry, been budgeting for many years).
My question is: I keep a running tally of a rough "net worth" and items of this nature, while not enormous contributors, are contributors none the less.
Assuming there is a significant differential between what something costs new and what I could sell it to another individual for, how do I consider property for the purposes of estimating a net worth?
Options as I see them:
- use the dollar amount it would require to replace the item new
- use the dollar amount I could reasonably expect to receive from a sale of the item
- including the value of property one owns in a net worth calculation is silly
I feel I could make arguments for any of them. My personal inclination is that if I want to maintain a certain lifestyle, then I am purchasing the item either new or used depending on that lifestyle. If the lifestyle demands new, I value at new, if the lifestyle accommodates used, I value at used. Essentially, value the asset at the expected mode of replacement if it was lost.
To be clear: I do not mean the value of real estate. I also do not mean the value of an item as it pertains to say, insurance. That is to be worked out by the contract with the insurance company, i.e. "do I insure based on replacement costs, or price I could sell at?" That is not my question.