retire2asia

job-free at 37

Net Worth – October 2019

There’s one massive change to our net worth this month: Our house value. Traditionally I’ve always been conservative when valuing the home we live in. I’d rather increase its value slowly overtime and undervalue it on our books so that when the housing market downturn inevitably happens I don’t have to write any value off.

Obviously there’s no benefit there other than psychological. As we’re not yet close to selling, it doesn’t matter if our property’s value fluctuates. But this week our council revaluation for rating purposes came out and it’s considerably higher than what I’d been valuing the property at. And as we’ve done a lot of improvements that didn’t require consent and are therefore beyond the council’s knowledge of the property, I know their valuation will be a decent amount less than what the property would actually sell for on the open market.

Side note: If your council revaluation ever comes in less than what you think your property is worth, don't lodge an objection. I work for a council and I can't tell you the mind-boggling number of people who call in to complain about their council valuation being too low, not understanding that it has nothing to do with what their house will actually sell for and that if it were valued higher they'd have to pay more rates! Who wants to pay more tax? Not me!

Anyway. So long story short, I’ve decided to bite the bullet and change our home’s value in our net worth calculation. Because I can’t help being conservative, I’ve still kept it $10k less than the council valuation, but that’s a lot more than what I had it at previously. I know $10k doesn’t sound like much but you have to remember this isn’t Auckland so that’s actually a pretty decent buffer and minimises the chance I’d have to write down the property on our books in a market downturn.

All this adds up to a very hefty uptick in our home equity. So without further ado, here’s our net worth for this month:

KiwiSaver – Mr R2A$20,122.61
KiwiSaver – Mrs R2A$12,436.67
House Equity$151,424.42
Sharesies$2,619.75
Eat My Lunch$500
Harmoney$21.62
Bonus Bonds$20
TOTAL$187,145.07

That’s an increase of $71,710.64 over last month, or 62.12%! Our Harmoney investment is slowly winding down. Another loan was paid back and we aren’t reinvesting, for reasons I’ve outlined. However we’re very happy investing in Sharesies and will continue to invest there for the foreseeable future.

I expect that going forward, our monthly net worth increases will slow down even below what they were before this month’s windfall. And I’m saying that in dollar terms, not just proportionally, which would be inevitable after this massive revaluation of our house. But the reasons behind that I will save for next month’s story so I have something to say in that post πŸ™‚

Comment Policy: For this blog, I’ve implemented a Comment with Kindness policy. You can read more about it here, but the gist of it is: Follow what I call the “Grandma Rule”. If you wouldn’t take that tone with your grandma, your comment probably won’t make it through moderation.

4 Comments

  1. Wow- Big jump alright- when our house was re-evaluated I didn’t add it all into my net worth calculation at once- the jump looked unrealistic to me. Rather, I added the change into our calculations for the last 3 year period as an inflation rate. And for the future, I will keep inflating the price at a lower rate- correcting once I get our next evaluation.

    • Nice one! That was our approach as well. And if it weren’t for the fact that I know the council is unaware of tens of thousands of dollars of improvements, it would still be our approach πŸ™‚ Eventually the market will drop and everyone who’s been doing their bookkeeping based on market value is going to have to take a haircut.

  2. Haha that’s certainly is a massive jump. That side note I think is a very important fact. We’re not homeowners ourselves so haven’t really spent much time researching this stuff but I’ll keep this in mind when we do. Cheers!

    • You may not be missing out on much πŸ™‚ If it weren’t for the fact that we’re planning to sell up and retire in the Philippines at some point, I wouldn’t be including our home equity at all. Having equity in your home is absolutely no use if you’re aiming to be FI and stay in NZ. Until your mortgage is paid of course, then it’s quite a handy way to reduce expenses.

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