# How much of your worth is in your car?



## Maj34 (Oct 7, 2011)

We probably all agree - a car is a depreciating asset and therefore isn't a star component of our net worth. But many of us count our vehicle in our net worth calculation. 

One of my goals in 2013 was to reduce my vehicle to < 10% of my net worth. Depreciation helped (unfortunately) but I did well with on my upside also.

I'm just wondering if anyone else out there is willing to share their age and "net worth tied up in vehicles". For me: 

Age: 34, Percent Net Worth in Car: 9%

Anyone else interested in sharing? Just wondering what's normal on the forum.


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## Maj34 (Oct 7, 2011)

FYI: I use a combination of VMRCanada.com and posted rates on kijijji to come up with my car worth.


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## pwm (Jan 19, 2012)

Age 64. 1% of net worth.


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## the-royal-mail (Dec 11, 2009)

I would just look at the range of similar make/model/year car on autotrader.ca and find the mid point and use that to determine "value" and deduct at least 15% from that to get a rough idea of what a dealer might offer you.


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## Maj34 (Oct 7, 2011)

the-royal-mail: That approach gives me about the same number. It's a good sanity check though. I drive a pretty common Ford model, so the second hand market value is pretty consistent.


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## OnlyMyOpinion (Sep 1, 2013)

We don't count ours (fully owned), but it may be one of those assets you stop including with time as it becomes a small %?


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## uptoolate (Oct 9, 2011)

The calculation made me laugh. May be time to upgrade the car!


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## Maj34 (Oct 7, 2011)

uptoolate: Not sure what you mean, the car is 2 years old.

Maybe it's just me that counts it in my net worth, but a few years ago I was deep in debt, so in the recent past my vehicle (a different one) was 100% of my net worth!


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## Retired Peasant (Apr 22, 2013)

I think uptoolate was referring to their car, not your's. I think as you get older and/or net worth increases, the car isn't something you'd include, unless you bought it for investment purposes. I think in your shoes, I'd include the car too!


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## Nemo2 (Mar 1, 2012)

0.3%


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## Maj34 (Oct 7, 2011)

Retired Peasant said:


> I think uptoolate was referring to their car, not your's. I think as you get older and/or net worth increases, the car isn't something you'd include, unless you bought it for investment purposes. I think in your shoes, I'd include the car too!


Ah - that makes sense.

Still I wonder what the rest of the population (non forum members) would look like.


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## Jon_Snow (May 20, 2009)

.38%

41 yrs old.


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## GoldStone (Mar 6, 2011)

I view the house and the cars as liabilities, not assets. They are hungry beasts that have to be fed, constantly. I don't count them in my NW calculations. The only number that matters to me is the size of investment portfolio.


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## Davage (Nov 14, 2012)

Mid 40's. Our car is worth 1.15% of our net worth. We aren't trying to impress anyone with our car. We are on target to have our mortgage paid off by October of 2015 and do not care what others think of our vehicle. Just the other day I had a co-worker tell my that my car is a piece of s***. I told her that I was proud to drive that PAID FOR P.O.S. She is driving around in a newer model SUV with monthly payments. Our car is 10 years old. We get it oil sprayed each winter, and do regular maintenance on it. The repairs and maintenance are much cheaper than a new car. Our rust-free, payment-free car drives just fine.


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## crazyjackcsa (Aug 8, 2010)

Any single car? Or the "fleet"? We have three cars, all told, they represent 12% of our net worth. Then again, since I'm only 33 that number will drop every year.


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## Maj34 (Oct 7, 2011)

GoldStone said:


> I view the house and the cars as liabilities, not assets. They are hungry beasts that have to be fed, constantly. I don't count them in my NW calculations. The only number that matters to me is the size of investment portfolio.


If anyone truly thinks cars and houses are liabilities I will gladly take them off your hands for free. I will not do the same for your other liabilities (credit cards, lines of credit).

A car is a depreciating asset, and those of us who are starting out on our investment path probably count them!


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## Maj34 (Oct 7, 2011)

Davage said:


> Mid 40's. Our car is worth 1.15% of our net worth. We aren't trying to impress anyone with our car. We are on target to have our mortgage paid off by October of 2015 and do not care what others think of our vehicle. Just the other day I had a co-worker tell my that my car is a piece of s***. I told her that I was proud to drive that PAID FOR P.O.S. She is driving around in a newer model SUV with monthly payments. Our car is 10 years old. We get it oil sprayed each winter, and do regular maintenance on it. The repairs and maintenance are much cheaper than a new car. Our rust-free, payment-free car drives just fine.


I hear you - I drove my last car for 8 years. I bought a more expensive car because I moved across the country and the car was my move vehicle. I plan to drive it until it is a POS.


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## GoldStone (Mar 6, 2011)

They are liabilities in the sense that they generate a ton of recurring expenses.


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## Jagas (Feb 11, 2013)

Nemo2 said:


> 0.3%


+1
I am way overdue for a new car but the damned thing won't die, gets the job done and has a lot more life left in it.


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## Maj34 (Oct 7, 2011)

GoldStone said:


> They are liabilities in the sense that they generate a ton of recurring expenses.


Ok. But they are also assets in the sense that they can be converted to liquid cash at any time. I would say that they are net assets (except in the scenario where they're worthless and you need to get them towed away).

I'm 100% with you - cars are not good assets. Was just wondering how much everyone had tied up in their vehicle.


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## Spudd (Oct 11, 2011)

0% - no car.


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## Maj34 (Oct 7, 2011)

Spudd said:


> 0% - no car.


Nice. So do you use Spud.ca to get your groceries delivered?


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## andrewf (Mar 1, 2010)

Cars are assets. They are consumer goods that provide value in terms of transportation services at a cost (fuel, maintenance, depreciation).

A car rental company would consider its cars as assets. When you own a car personally, it's like you are running a miniature car rental company, renting to yourself.


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## Spudd (Oct 11, 2011)

Maj34 said:


> Nice. So do you use Spud.ca to get your groceries delivered?


Haha! I hadn't heard of them (seems like they only serve the western part of Canada). No, I just do it on foot or by bike.


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## GoldStone (Mar 6, 2011)

Maj34 said:


> Ok. But they are also assets in the sense that they can be converted to liquid cash at any time.


Not really. House and car serve an utility. Shelter and transportation expenses won't go away just because you sold. Depending on what you own, your expenses may actually go up after you sell.


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## Maj34 (Oct 7, 2011)

GoldStone said:


> Not really. House and car serve an utility. Shelter and transportation expenses won't go away just because you sold. Depending on what you own, your expenses may actually go up after you sell.


It really isn't this complicated - at least for the original discussion in the thread. You said you consider your car and house as liabilities, I call them assets. If anyone who calls a house/car a liability, I will gladly take that liability off their hands - for free.


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## Maj34 (Oct 7, 2011)

Spudd said:


> Haha! I hadn't heard of them (seems like they only serve the western part of Canada). No, I just do it on foot or by bike.


I haven't tried them yet, but heard good things, and not too much more expensive if you already do the organic/free-range/etc type things.


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## OnlyMyOpinion (Sep 1, 2013)

*"not too much more expensive if you already do the organic/free-range/etc type things"*

Agreed, home delivery as a % of what you'll pay for those "type things" will be small. But that's because you are paying a way, way more than you need to, to feed that mortal body. The stomach and intestines don't distinguish organically marketed products... but we digress (digest?) from cars :nevreness:


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## uptoolate (Oct 9, 2011)

Maj34 said:


> uptoolate: Not sure what you mean, the car is 2 years old.
> 
> Maybe it's just me that counts it in my net worth, but a few years ago I was deep in debt, so in the recent past my vehicle (a different one) was 100% of my net worth!


Yes sorry to be unclear. As Retired Peasant suggested, I was referring to my car. I was thinking that I would try to hang on to it until I retired. No sense piling up commuting mileage on a new car. And it works just fine. Come to think of it, it looks pretty good too.


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## Plugging Along (Jan 3, 2011)

Maj34 said:


> If anyone truly thinks cars and houses are liabilities I will gladly take them off your hands for free. I will not do the same for your other liabilities (credit cards, lines of credit).
> 
> A car is a depreciating asset, and those of us who are starting out on our investment path probably count them!


I partially agree with goldstone. I don't count my vehicles as an asset, never have. My rule is if they depreciate and have a negative cash flow, it is an operating expense. Just in the case of a vehicle there MAY be a residual value. I do count my real estate because it generally doesn't appreciate in the super long term.

For your question, we have three vehicles, one we just bought a couple of months ago new, and the three base on black book is probably around 3%. Age 41

On a slightly off topic, I know a group of people that are buying them and then selling after a year for about $40k to 60k profit. In that case I would consider it an asset.


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## nathan79 (Feb 21, 2011)

1.25%

I am also 34.


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## mrPPincer (Nov 21, 2011)

Age 51
0.5% net worth in car based on the VMR tool minus 15% of wholesale, but it's a 14 yr old car that's starting to rust & blister under the paint.
Still runs fine though.


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## wendi1 (Oct 2, 2013)

I don't think anyone would actually pay me for my car. It's a 1998 Escort, 170K, no real problems. The VMR tool says less than $2K, but I'd be surprised if anyone actually paid that.

Any takers?


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## Mall Guy (Sep 14, 2011)

Zero and spoiled . . . company supplied car for the last 20 years, gas, maintenance, insurance, new model every three years, not sure I would know how to own my own car . . . ya, I know taxable benefit, but mostly business miles . . . :biggrin:


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## Nemo2 (Mar 1, 2012)

Jagas said:


> +1
> I am way overdue for a new car but the damned thing won't die, gets the job done and has a lot more life left in it.


We have a stick shift 2005 Honda Civic with less that 100,000Km on it...........we'll drive until it drops.


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## olivaw (Nov 21, 2010)

Age 55, 
1% of net worth in car.


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## Jon_Snow (May 20, 2009)

Back in 2000 I bought what will probably go down in history as one of the best pickup trucks of all time.... absolutely bulletproof, no major issues in 13 years of ownership. To 500,000km and beyond!!!!


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## brad (May 22, 2009)

Jon_Snow said:


> Back in 2000 I bought what will probably go down in history as one of the best pickup trucks of all time.... absolutely bulletproof, no major issues in 13 years of ownership. To 500,000km and beyond!!!!


Jon, I think the question for you is "how much of your net worth is in your kayak(s)?" ;-)


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## Taraz (Nov 24, 2013)

In terms of net worth, its value makes up a very small percentage; far below 5%.

In terms of expenses, the current depreciation on my cheap car (approximately $80/month) is less than the other car expenses like gas ($60 - $100/month), insurance (about $30/month), registration, oil changes, new tires, etc.


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## Jon_Snow (May 20, 2009)

brad said:


> Jon, I think the question for you is "how much of your net worth is in your kayak(s)?" ;-)


The kayaks are worth around 4k each, so yeah, together worth more than my truck. :tongue-new:

So let's say .44%


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## Cal (Jun 17, 2009)

I don't count auto as my net worth at all. IMO net worth is liquid assets, and real estate (which would be a semi liquid assets like a car). But I don't count vehicles as part of net worth, same for my wife's jewellery.

And yes, no automobile debts here.


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## Maj34 (Oct 7, 2011)

Jon_Snow said:


> The kayaks are worth around 4k each, so yeah, together worth more than my truck. :tongue-new:
> 
> So let's say .44%


Nice. 

At one point I had a 13 year old Toyota Corolla, in rough shape but that wouldn't die, that I figure was worth about $300. I had a $6000 motorcycle, and about $4000 worth of guitars. 

Now I no longer count my guitars (which have grown to about $6000), but I do count my car. I guess eventually I'll stop counting my car too - but when your young and just have dug your way out of post-secondary debt, it feels good to count the car.

Then again, the guitars depreciate way less than my car. Maybe I should count them.


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## My Own Advisor (Sep 24, 2012)

Age 40. % car as part of net worth = <1%.


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## wendi1 (Oct 2, 2013)

Way less than 1% for me. But that's assuming that anyone would buy it. 

The poor thing owes me nothing. I paid about $10K cash for it about 10 years ago, and I expect it to start appreciating any day now...

I don't include it in my net worth statements because I don't want people to laugh at me...


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## HaroldCrump (Jun 10, 2009)

wendi1 said:


> I don't think anyone would actually pay me for my car.


Add me to that list as well !
I think I'll have to pay someone to take my car.



> It's a 1998 Escort, 170K, no real problems.


2000 Focus here, with 190K on it.
Purrs like a kitten


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## Maj34 (Oct 7, 2011)

It's great to hear from people who are proud of their old, high-km, cars. I never thought it possible, but it's giving me slight nostalgia for my old car. Everyone made fun of me for driving it. My old employer (jokingly) kept telling me to buy a new car because it was embarrassing for the small company, that people would think they weren't paying me.


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## Jon_Snow (May 20, 2009)

My 2000 Tacoma is about to roll over 200,000km... it will be emotional.


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## uptoolate (Oct 9, 2011)

My 2007 Acura CSX manual isn't that old but it just passed 200k. It will probably get passed on to one of the kids as there is no way I would get what I feel it would be worth.


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## lightcycle (Mar 24, 2012)

I've never counted vehicles as part of net worth because I've always kept them until they've depreciated to almost 0, and I think it's a pointless exercise to keep track of the constant depreciation. A car is pretty much illiquid as I'm not about to sell it anytime soon, just as I'm not about to sell my furniture, appliances or sports equipment, even though the latter would count more towards my net worth than my car.


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## Four Pillars (Apr 5, 2009)

My percentage would be tiny, mainly because the car has a very low value.

Interesting question, but there are too many variables - you could have two people with identical age & finances - one bought a new car yesterday and the other has a 15-year old car. Their percentages would vary quite a bit.

As for counting cars in net worth - if you want a 100% accurate net worth, then the car has to be counted. If you choose not to include the car (and I'm in that group), accept that it's a convenience move or 'short cut' when calculating the net worth. The idea that an asset that depreciates isn't really an asset is just wrong.


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## Ihatetaxes (May 5, 2010)

0%

One leased expensive German biturbo V8 rocket that my company pays for and my wife has had a company car for 15 years.


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## alingva (Aug 17, 2013)

Maj34 said:


> We probably all agree - a car is a depreciating asset and therefore isn't a star component of our net worth. But many of us count our vehicle in our net worth calculation.


I could never understand why items that we use and spend money on monthly basis are considered to be 'assets'. Why we do not call bulbs or computers to be our assets? I do not consider 300 pens in my home to be assets even if I can sell them..Your home/car are not your assets, they are your biggest liability (after income tax). By owning these assets you spend money on taxes, insurance, maintenance, storage etc. In top of that you sell your car with a loss you cannot claim. Your investment property is an asset, your RRSP is because they pay you to hold them. Picasso picture is an asset even if you have to pay insurance. The only reason I can see why we call cars assets is because banks lend money to buy them.It is much easier to sell loans if you lend them for assets and not liabilities


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## thompsg4416 (Aug 18, 2010)

alingva said:


> I could never understand why items that we use and spend money on monthly basis are considered to be 'assets'. Why we do not call bulbs or computers to be our assets? I do not consider 300 pens in my home to be assets even if I can sell them..Your home/car are not your assets, they are your biggest liability (after income tax). By owning these assets you spend money on taxes, insurance, maintenance, storage etc. In top of that you sell your car with a loss you cannot claim. Your investment property is an asset, your RRSP is because they pay you to hold them. Picasso picture is an asset even if you have to pay insurance. The only reason I can see why we call cars assets is because banks lend money to buy them.It is much easier to sell loans if you lend them for assets and not liabilities


Semantics really but technically even the bulbs and pens would be assets(I think). I'm 34 and I still count my car as an asset albeit a small one. A 2009 Honda - About .04% of my NW. It's bought and paid for, there is a large market for used cars and theoretically it could be turned into a significant amount of cash quickly so I think its worth counting. I'm not sure if that applies to the used pens or light bulbs.

I know what it feels like to finally get out from under school debt. I remember about 12 years ago, just out of school and finally with a decent job and lots of school debt - I went to the bank and tried to get a credit card for the first time and they turned me away for having "negative net worth"... I didn't even know what it meant at the time


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## Nuke (Dec 10, 2013)

I am 62 with 2 cars and a motorcycle fully paid. Don't count these towards net worth although I suppose approx. 1%.
Home has value and no mortgage although I don't count this as well. You need to live somewhere and even should we downsize, the cost would likely be similar to current value after upgrades etc.


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## the-royal-mail (Dec 11, 2009)

My first car was an old Honda that had rusted out and rolled over to 292,000 when I finally gave up and traded in for something way newer. That was a bit extreme. The car that replaced it made it to 216,000 before it was in a serious wreck. No rust (thanks Krown/Rust Check). I bet it would still be running today.


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## Maj34 (Oct 7, 2011)

alingva said:


> I could never understand why items that we use and spend money on monthly basis are considered to be 'assets'. Why we do not call bulbs or computers to be our assets? I do not consider 300 pens in my home to be assets even if I can sell them..Your home/car are not your assets, they are your biggest liability (after income tax). By owning these assets you spend money on taxes, insurance, maintenance, storage etc. In top of that you sell your car with a loss you cannot claim. Your investment property is an asset, your RRSP is because they pay you to hold them. Picasso picture is an asset even if you have to pay insurance. The only reason I can see why we call cars assets is because banks lend money to buy them.It is much easier to sell loans if you lend them for assets and not liabilities


If it helps, think of the original question as: What is the ratio of your car's street value to your net worth? 

This thread has proved: Those with more assets, such as those close to in retirement or the young fortunates, might not count their vehicles. But the average young person might count a depreciating asset - it's all personal prerogative. I think you are free consider vehicles as part of your personal worth, if that's the way you choose to do your own personal accounting because, unlike publicly traded entities, we are free to calculate our personal worth however we choose. Yes, we all have a cut off point? You're right - I wouldn't count pens, that's just me, but if I was homeless I might consider 300 pens an asset. Unlike publicly traded corporations, none of us have to report our accounting methods to a higher power, so we get to decide individually what we count.

But the notion of including a car in your net worth is not so out of line with how a publicly traded company does their accounting. I just found my way to Avis's Q3 2013 financial statements and found they accounted for $10.8 billion in vehicles. These are depreciating assets, but they still count their value on the positive side of their balance statement, and they do so because they are significant relative to their net value. 

Sure, in the case of Avis, it creates money for the company, but that's a cash flow issue; we're talking about balance sheets here. Besides, imagine a year where Avis loses money (it happens to all publicly traded companies). They don't consider their cars liabilities that year. They're always positive, yet depreciating, assets. And they are always on the left side of the balance sheet regardless of whether they're making money at that point in time. 

I know a car is different asset than a picasso, but they belong on the same side of your personal balance sheet IMHO. They are both assets. They both cost money to own (insurance) and they both have a likely hood of increasing or decreasing in value. Sure it's more likely that a car will depreciate, but art as investment has slumps just like everything else. I know this is reductio ad absurdum, but I maintain that a Picasso and a 2011 Ford would occupy the left side of a balance statement; that is, they are a part of your worth if you chose to include them.


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## liquidfinance (Jan 28, 2011)

GoldStone said:


> I view the house and the cars as liabilities, not assets. They are hungry beasts that have to be fed, constantly. I don't count them in my NW calculations. The only number that matters to me is the size of investment portfolio.


I'm the same. They are a liability. As you say they are hungry beasts which need to be fed constantly. 
I do track what I have paid to purchase vehicles and models owned since I started driving. I ignore resale value. Too depressing :hopelessness:


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## Maj34 (Oct 7, 2011)

liquidfinance said:


> I'm the same. They are a liability. As you say they are hungry beasts which need to be fed constantly.
> I do track what I have paid to purchase vehicles and models owned since I started driving. I ignore resale value. Too depressing :hopelessness:


Now, I'd expect that from a username like *liquidfinance *, but I would have expected *Goldstone* to count physical assets.

Oh, and I'm still offering to take everyone's residential and vehicular liabilities away from them - for free! :chuncky:


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## pwm (Jan 19, 2012)

Maj34, you are quite correct in what you say. If you choose to include your ride, then by all means do so. A car can comprise a large portion of one's net worth when one is young and just starting out. The fact that it is a depreciating asset is irrelevant. 

Here is a copy of the definition of net worth from the InvestorWords Web site: _For an individual, the value of a person's assets, including cash, minus all liabilities. The amount by which the individual's assets exceed their liabilities is considered the net worth of that person._


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## brad (May 22, 2009)

I think if you're going to count it as an asset and measure it as a percentage of your net worth, it makes sense to also keep track of your vehicle's annual costs as a percentage of your total outflows. I just checked and my car's costs (registration, fuel, insurance, repairs, maintenance) come out to 0.8% of my total spending for the year. I have no idea what my car is worth, nor do I keep track of my net worth.


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## Feruk (Aug 15, 2012)

Counting a car as part of net worth makes no more sense than counting a couch or TV. If you're gonna count your car which is a "depreciating asset", why not count your TV? I completely disagree on a house being a liability as it can be rented out to generate income where as a car typicall cannot. I'm 29 and my car is worth the same as 5% of my net worth, but is not counted in my net worth.


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## lightcycle (Mar 24, 2012)

Unless you're counting collectibles, or a 2nd or 3rd pleasure vehicle, a car is a transportation expense, much like a transit pass, and for most Canadians, a necessary expense for getting to and from work, and going about life in this very large, spread-out country of ours.

I think it's wrong to count the vehicle purely as an asset, because you're incurring additional costs like insurance, maintenance, repairs, car-washes, winter tires, licensing. Items which you would not normally incur if you just had a transit pass.

So if you truly want to track the value of your vehicle, then don't just track the monthly depreciation, but also tally up the associated costs. What you'll find is that the depreciation + total cost of ownership rapidly surpasses the purchase price of the vehicle + interest.

Starts to look a bit like a liability, doesn't it?

Your offer to take this liability off our hands is a bit disingenious because you're not going to incur the total cost of ownership of this new vehicle since you already have a car. You're just going to sell the asset itself without licensing, insuring, maintaining it, etc. A more apt example would be to offer to take the present value of the vehicle minus the total depreciation and minus the total typical running costs over the serviceable lifetime of the car as a primary means of transportation - I assure you this will be a negative number.

Still sound appealing?


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## brad (May 22, 2009)

lightcycle said:


> So if you truly want to track the value of your vehicle, then don't just track the monthly depreciation, but also tally up the associated costs. What you'll find is that the depreciation + total cost of ownership rapidly surpasses the purchase price of the vehicle + interest.


I've actually been doing this over the past couple of years to evaluate the cost benefit of getting rid of my car and using a car-share service. The costs of owning a car vary wildly from year to year, mainly due to variations in repair and maintenance costs. Last year, for example, I spent $4,000 in maintenance in repairs on my 9-year-old car; this year I only spent $400. Averaging my costs for fuel, insurance, registration, maintenance, and repairs (including parts) over the past few years, while also spreading the initial purchase cost of the car over the years I've owned it, the cost of ownership for me ends up close to 60 cents per kilometer. The car-share plan that I'm joining charges 40 cents/kilometer (which includes insurance and fuel), plus a nominal hourly fee and a $40 annual membership fee. The car-share wins on pure economics, not to mention the fact that instead of spending $15K or so on my next car, I can invest that money instead. The inconvenience of not having my own car wil be balanced in part by the greater convenience of never having to go to the garage for maintenance, not having to buy new tires and other parts, not having to move my car to the other side of the street on street-cleaning days, etc.


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## HaroldCrump (Jun 10, 2009)

Feruk said:


> Counting a car as part of net worth makes no more sense than counting a couch or TV.


^ +1.
Unless someone owns a '56 Corvette, or a truly high end car like a Lamborghini Murcielago or a Bugatti Veyron, there is no point including your car in net worth.


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## hystat (Jun 18, 2010)

Age: 48, Percent Net Worth in Cars: around 1%


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## Four Pillars (Apr 5, 2009)

Clearly the best way to calculate net worth is to ignore all the assets you own, pen collection or otherwise because they can all go down in value and some will have costs associated with them.

Does that sound reasonable?


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## pwm (Jan 19, 2012)

Re-read the original post folks. Maj34 didn't ask: Should I count my car? Neither did he ask: Do you count your car? All he asked was what percentage is it?


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## brad (May 22, 2009)

pwm said:


> Re-read the original post folks. Maj34 didn't ask: Should I count my car? Neither did he ask: Do you count your car? All he asked was what percentage is it?


Yes, but this is the Canadian Money Forum. Since when has anyone stayed on topic here?


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## kcowan (Jul 1, 2010)

Under 1% for 3 cars in 2 countries. Very respectable vehicles, one recently purchased. Average mileage: 99,000 KM


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## Maj34 (Oct 7, 2011)

Four Pillars said:


> Clearly the best way to calculate net worth is to ignore all the assets you own, pen collection or otherwise because they can all go down in value and some will have costs associated with them.
> 
> Does that sound reasonable?


It sounds like no one would have a positive net worth to me. If you don't count your assets, you only have liabilities.

Net Worth = Assets - Liabilities


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## Maj34 (Oct 7, 2011)

A lot of posters are missing the concept of cash flow vs the idea of a balance sheet. Recurring costs are irrelevant. Again, see my previous post where I talk about Avis; companies count depreciating assets if they are a significant amount of their total worth. Why would personal finance be any different?

A net worth statement is a snapshot in time, similar to a public company's balance sheet. 

For the 3rd time: Liabilities are bad right? So if you think your house or car are liabilities I will take them off your hands for free. 

(Still think they're liabilities?)


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## Maj34 (Oct 7, 2011)

FYI: 

TD Bank, HowStuffWorks, and Investopedia all include vehicles in net worth articles and/or calculators.

Sure, these are not the final word on the issue. But they're probably more authoritative than individuals in the thread.


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## wendi1 (Oct 2, 2013)

Well, David Chilton, in the Wealthy Barber Returns, has an interesting (non-standard) way of thinking about net worth. 

He suggested that if your house, for instance, is going to be downsized after retirement from a $600K house to a $400K condo, you should only include $200K in your net worth, as that is all you are planning on being able to spend.

So, if you have a $300K Lambo, and you could downsize it without to much pain to a $10K beater, you should only include $290K of value in your net worth.

That accounts for the reluctance of some of us to add the value of our cars to our net worth statements. In my case, I could not replace my car's function with something cheaper.


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## HaroldCrump (Jun 10, 2009)

Maj34 said:


> Why would personal finance be any different?
> A net worth statement is a snapshot in time, similar to a public company's balance sheet.


Cars depreciate very fast.
How frequently do you want to update your net worth statement?
If you are updating it on a monthly basis, then sure go ahead and include your car.

If your car(s) form a significant portion of your net worth, that indicates an unusual situation.
You'd either have to be a car collector, or have some sort of unusual fascination with cars for them to form a significant portion of your net worth.
It is evident from most of the posters above that cars form a miniscule portion of most people's net worth.


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## Maj34 (Oct 7, 2011)

HaroldCrump said:


> Cars depreciate very fast.
> How frequently do you want to update your net worth statement?
> If you are updating it on a monthly basis, then sure go ahead and include your car.
> 
> ...


I do calculate my net worth every month! Well, Excel does it for me. 

I don't think it indicates an unusual situation (that you include your car). I think it indicates that you're young, or just starting out. No so unusual. This forum is an unusual subset of the normal population, since Canada personal debt is at an all time high, most people don't have a positive net worth. The previous posts just show evidence that forum readers are over 40, and like to argue for sport. I'm just one of those things.


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## Spudd (Oct 11, 2011)

Actually, according to this, most people do have a positive net worth.
http://www4.hrsdc.gc.ca/[email protected]?iid=84


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## KaeJS (Sep 28, 2010)

I don't count my vehicles in my net worth, but if I did, they would be 22.23% of my Net Worth.

That's a pretty staggering figure - And that's exactly why I don't count it in my net worth.

Cars are definitely assets though. I could list my car tomorrow way below market value and get more money for it than some people put on their mortgage downpayments..... Yeesh! It all depends how you look at it. 

My cars are fully paid for and I based my calculation on a 15% loss on the price I paid for the vehicles just a few months ago. I would say that's conservative.


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## Longwinston (Oct 20, 2013)

Four Pillars said:


> Clearly the best way to calculate net worth is to ignore all the assets you own, pen collection or otherwise because they can all go down in value and some will have costs associated with them.
> 
> Does that sound reasonable?


Lol exactly. People are conflating assets, with cash flow, depreciation with expenses, it's enough to give an accountant a migraine. 

Cars are, of course, assets. The loan (if any) would be a liability. Expenses are just that, expenses.
You can argue of a car is a _good_ asset all you want, but an asset it will remain.


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## steve41 (Apr 18, 2009)

Roughly 1% of my net worth. I don't know what that says, but there it is.


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## MrMatt (Dec 21, 2011)

Negligible, because I value assets at their sell for cash value.
For cars, that's nearly nothing.


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## lightcycle (Mar 24, 2012)

On definitions: I think it's quite telling that the bank will list your car as an asset when they're trying to qualify you for a loan, yet private wealth managers define "high *net-worth* individuals" as those with liquid assets (not house and car) above $1MM...


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## Longwinston (Oct 20, 2013)

lightcycle said:


> On definitions: I think it's quite telling that the bank will list your car as an asset when they're trying to qualify you for a loan, yet private wealth managers define "high *net-worth* individuals" as those with liquid assets (not house and car) above $1MM...


Yes, it tells you that Private wealth managers are only interested in assets that they can make commission on – these are investable or liquid assets. 
It tells you nothing on whether a car is an asset or not. But It is.


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## lightcycle (Mar 24, 2012)

Longwinston said:


> Private wealth managers are only interested in assets that they can make commission on


You mean they only consider it an asset if it generates income?

Fascinating.


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## Longwinston (Oct 20, 2013)

lightcycle said:


> You mean they only consider it an asset if it generates income?
> 
> Fascinating.


Are you stating, for example, that land is not an asset?
Realizing an income on an asset, has no determination on whether it is an asset or not.

Say you own 5 acres of undeveloped property. It doesn't produce any income and in fact, it produces an annual property tax expense.
You are saying that the land is not an asset?
Do you see how wrong you are yet?

This is accounting 101.


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## lightcycle (Mar 24, 2012)

I never said assets only had to produce income. I think non-dividend stocks and mutual funds are also assets despite commissions, ongoing management expenses and redemption fees. Like land, these assets are expected to appreciate in time, hopefully offsetting their associated costs. Unlike a personal car (not including collectibles), which is *ALWAYS* expected to depreciate with time.

A true depreciating asset like machinery in a factory is expected to return some value to the company. Or in an automobile-related example, a rental car agency or taxi cab driver will count the vehicles as assets because they directly produce revenue.

However, listing personal property like your car as an asset makes no sense, because not only does it not return any financial value, it also ends up costing the owner much more than the purchase price if they had never owned the car in the first place. Any company that owned assets like these would quickly go out of business.

Simply stating "Accounting 101" fails to convince me that a car should be counted as an asset. Especially when there are other definitions of "net worth" that exclude personal vehicles from such calculations.


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## houska (Feb 6, 2010)

I count in our net worth, and therefore list in our assets, a reasonable estimate for the liquidation value of all major stuff we own. I have too much of an accounting/finance veneer in my background not to. That being said, I do watch a stacked-up bar chart of different components of my net worth. My nonregistered investment portfolio (and TFSAs) is quite liquid and growing; the registered portfolio (in different countries) is more complicated since harder or at least more costly to liquidate before retirement age. Things like grand piano and car also have some value even if hard to realize (piano) or depreciating (car). Since it is quite likely that we will downside parts of our life in retirement, it doesn't seem fair to exclude a random subset of property with value from the net worth calculation. But it is also foolish to assume that those parts of our net worth are as liquid as the rest.

For the record: car, musical instruments, art together represent about 3% of net worth.


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## houska (Feb 6, 2010)

lightcycle said:


> However, listing personal property like your car as an asset makes no sense, because not only does it not return any financial value, it also ends up costing the owner much more than the purchase price if they had never owned the car in the first place. Any company that owned assets like these would quickly go out of business.
> 
> Simply stating "Accounting 101" fails to convince me that a car should be counted as an asset. Especially when there are other definitions of "net worth" that exclude personal vehicles from such calculations.


Companies routinely own and list depreciating assets on their balance sheets. These are assets that their business strategy requires them to own, just as for many people their "life strategy" means they need a car. 

A person's full financial overview, just like a company's, should include assets, liabilities, income, and expenses, all tied together. For most people, a car would be a (depreciating) asset, with associated operating expenses. For some it might also carry an associated liability, a car loan. Not that different from a house - except there it is a mixture of an appreciating asset (the land) and a depreciating asset (the house on it).


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## the_apprentice (Jan 31, 2013)

My car is approximately 30% of my Net Worth. Does that make me a bad person?


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## nobleea (Oct 11, 2013)

Our two cars (15 yr old, 1 yr old) are just under 0.5% of net worth.

Cars are assets. Houses are assets.
Cars have recurring liabilities, houses have recurring liabilities.
Cars have imputed income (cost of biking or transit or taxis), houses have imputed rent.
Without work and maintenance done to them, cars and houses depreciate (one faster than the other).


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## marina628 (Dec 14, 2010)

ABOUT 1% goes to my husband for his cars , I spend about 10k every 5 years for my wheels ,Nice lightweight titanium and $1000 for the seat cushion .


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## Davage (Nov 14, 2012)

I suppose that a car can be considered an "asset", but I certainly do NOT consider it to be an Investment - because investments are supposed to go UP in value, not down... Anybody who buys a $30,000 car and says that it is an investment should give their head a shake.


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## Longwinston (Oct 20, 2013)

lightcycle said:


> I never said assets only had to produce income. I think non-dividend stocks and mutual funds are also assets despite commissions, ongoing management expenses and redemption fees. Like land, these assets are expected to appreciate in time, hopefully offsetting their associated costs. Unlike a personal car (not including collectibles), which is *ALWAYS* expected to depreciate with time.
> 
> A true depreciating asset like machinery in a factory is expected to return some value to the company. Or in an automobile-related example, a rental car agency or taxi cab driver will count the vehicles as assets because they directly produce revenue.
> 
> ...


An asset is still an asset even if it's a "poor investment". I think this where people are getting caught up. An asset is an asset. The word, by itself does not denote a good or bad, it just is.

A car is an asset. The part of that that would effect your net worth would be the difference between the market value of the vehicle and any liabilities held on it. The net, positive or negative, is the impact on your net worth. If you don't count your vehicles when calculating your net worth you are not giving your net worth a complete accounting. 

These are the facts. You can argue against facts if you want. 
Fill your boots, as they say.

NB: not all cars depreciate. Some appreciate. For example, There are some rare camaros out there that are worth many magnitudes of their original purchase price. So you are incorrect on that point as well.


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## lightcycle (Mar 24, 2012)

Longwinston said:


> NB: not all cars depreciate. Some appreciate. For example, There are some rare camaros out there that are worth many magnitudes of their original purchase price. So you are incorrect on that point as well.


I believe I covered that:



lightcycle said:


> Unlike a personal car (not including *collectibles*), which is *ALWAYS* expected to depreciate with time.


Yours truly,
The Scarecrow.


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## Longwinston (Oct 20, 2013)

lightcycle said:


> I believe I covered that:
> 
> 
> 
> ...


Ok, fair enough. My larger point remains, a car, any car, is an asset and should be counted as such.


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## the_apprentice (Jan 31, 2013)

Either everybody on this forum has a lot of money, or they are very frugal with their car purchases. I've got the highest percentage. I feel so vain. *sad face


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## Eclectic12 (Oct 20, 2010)

alingva said:


> I could never understand why items that we use and spend money on monthly basis are considered to be 'assets'.
> Why we do not call bulbs or computers to be our assets? .


 ... because if there isn't something owing to someone else for it and it can be sold for cash then based on my high school accounting course - it's defined to be an asset.

Yes, one could also counts bulbs, computers, active transit passes, gift cards that haven't expired and a lot of other things assets but for the average person, the effort to do so is not worth the small difference it would make to the overall picture. Just as some in this thread are saying they choose to not count their car(s).




alingva said:


> ... In top of that you sell your car with a loss you cannot claim.


Being able to claim a loss is not part of the definition of an asset ... 


Cheers


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## Eclectic12 (Oct 20, 2010)

Maj34 said:


> ... Again, see my previous post where I talk about Avis; companies count depreciating assets if they are a significant amount of their total worth.
> Why would personal finance be any different? ...


Personal finance is ... well, personal. 

I don't thing Avis has a choice in terms of what they will or won't list, if they want to stay on the right side of the regulators & the required reporting standards. Individuals (as can be seen by the discussion) can choose to ignore whatever items they want in their own accounting. 

They might lose sight of something they'd prefer to have known but it's up to them, with few difficulties.


Then too, I suspect a lot here can't be bothered (just like the pens, bulbs, kitchen stove etc.) as it's such a tiny part of the picture.


In my case, I'm approaching fifty and without spending a lot of time figuring out the current value - the car is something like 0.056%.
The final number is likely a lot lower as I haven't included the house (another asset that's a bit of a gamble as to current value).


It is likely to drop quite a bit more considering that the 2nd last car was kept 11 years and the last car was kept 16 years (and had a $0 blue book value when I gave to my brother).


Cheers


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## underemployedactor (Oct 22, 2011)

Not much of my net worth, but more and more of my annual disposable income. See my post in Frugality.


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## Canadian (Sep 19, 2013)

Maj34 said:


> But the notion of including a car in your net worth is not so out of line with how a publicly traded company does their accounting. I just found my way to Avis's Q3 2013 financial statements and found they accounted for $10.8 billion in vehicles. These are depreciating assets, but they still count their value on the positive side of their balance statement, and they do so because they are significant relative to their net value.
> 
> Sure, in the case of Avis, it creates money for the company, but that's a cash flow issue; we're talking about balance sheets here. Besides, imagine a year where Avis loses money (it happens to all publicly traded companies). They don't consider their cars liabilities that year. They're always positive, yet depreciating, assets. And they are always on the left side of the balance sheet regardless of whether they're making money at that point in time.
> 
> I know a car is different asset than a picasso, but they belong on the same side of your personal balance sheet IMHO. They are both assets. They both cost money to own (insurance) and they both have a likely hood of increasing or decreasing in value. Sure it's more likely that a car will depreciate, but art as investment has slumps just like everything else. I know this is reductio ad absurdum, but I maintain that a Picasso and a 2011 Ford would occupy the left side of a balance statement; that is, they are a part of your worth if you chose to include them.


Your comparing assets in a personal net worth sense and a company's balance sheet is like comparing apples to oranges. A company like Avis reports cars as assets on its balance sheet because its rental cars meet the asset recognition criteria set out by accounting standards. Avis is in the business of renting cars, thus its cars provide economic benefits for the company. Whether the company generates a profit or loss is irrelevant to the fulfillment of recognition criteria - however, if the company/auditor thought the value of cars were impaired, the values on the balance sheet would have to be written down. Never would a car be classified as a liabilty on the balance sheet as the car itself does not result in an obligation to pay.

Individuals typically include things as assets in their net worth that have been accumulated or purchased and can be sold in a market. There are no accounting standards for individuals. No asset recognition criteria. When people say they consider their car to be a liability, they are using this term differently than how it is used for accounting purposes. A car, once purchased, does not create a legal obligation to pay. I consider my car to be a liability because *1)* I plan on using it as long as I can - there is no plan to sell it until I absolutely have to, and *2)* the costs of operating and maintaining the car over the years of ownership will likely exceed the amount I could recover when I decide to sell. Therefore I have effectively incurred a loss as [purchase price + operating/maintenance costs] > [proceeds from sale]. I do not use my car to earn revenue like a company such as Avis does. So yes, some can argue this car is an asset to my personal net worth, but if you want to get into balance sheets - if I were a company I wouldn't meet the recognition criteria to recognize my car as an asset on my balance sheet. At that same time, although I consider my car to be a liability to my personal net worth, it would never qualify to be a liability on my imaginary company's balance sheet.


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## Longwinston (Oct 20, 2013)

> So yes, some can argue this car is an asset to my personal net worth, but if you want to get into balance sheets - if I were a company I wouldn't meet the recognition criteria to recognize my car as an asset on my balance sheet. At that same time, although I consider my car to be a liability to my personal net worth, it would never qualify to be a liability on my imaginary company's balance sheet.


Incorrect. See depreciation. See financial loan. See lease obligation. All liabilities.
"Asset" is an accounting term. People can consider their vehicles a poor investment. They can consider them to be costly to run. However, if you want to be accurate, you can't claim that they are not assets. Also, All assets belong on the balance sheet, not income statement.
It's as simple as that.


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## Synergy (Mar 18, 2013)

Less than 2%. Required predominately for business so the expenses are no big deal. Would like to build / restore a "collectible" car one day - not for investment purposes, but for fun!


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## Canadian (Sep 19, 2013)

Longwinston said:


> Incorrect. See depreciation. See financial loan. See lease obligation. All liabilities.
> "Asset" is an accounting term. People can consider their vehicles a poor investment. They can consider them to be costly to run. However, if you want to be accurate, you can't claim that they are not assets. Also, All assets belong on the balance sheet, not income statement.
> It's as simple as that.


Depreciation is not a liability. Depreciation is an accounting method to spread the "cost" of the asset over several periods. Accumulated depreciation also is not a liability. It's a contra-asset used to decrease the book value as the asset is depreciated. Outside of accounting, depreciation is simply the decrease in the asset's worth. Not a liability.

I never said financial loans and lease obligations are not liabilities. I said a car itself cannot be a liability on a company's balance sheet. The loan or lease obligation are the means of financing the purchase. If a company paid cash for the car these obligations would not exist.

I never once said an asset belongs on the income statement.


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## venter (Apr 10, 2009)

Age 55, about 2.5%.


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## fraser (May 15, 2010)

Essentially zero. Not a very big fan of depreciable assets and even less so of borrowing to buy something that depreciates so quickly.


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## coptzr (Jan 18, 2013)

To start, if I had to do quick calculation, my daily driver vehicle would be 1-2% of net worth. I feel net worth is different in everyone's personal portfolio...a business is a little more defined and straight forward to me.
That said, I would consider all my vehicles an asset. I have several vehicles, so some are depreciating, some are investment, and some are an expense towards income(if that makes sense). My grocery getter weekend runner is a $40k depreciating asset, as in its new enough to be worth something substantial but loses value everyday. The classic car resto-mod is an investment which may increase or decrease in value over the long term, but is recognized by appraisals and insurance reps to have everyday value. The daily driver work vehicle essentially has little value of low original purchase price for insurance reasons (1998 4 cyl with 220k and 2004 6 cyl with 299k) but is sometimes billed out at $0.40-$0.60 per km and calculated in my hourly earnings to cost me $0.40/km when not being billed out but got me to job to make money.
They are liabilities as I am not totally dependent on them as I have several and if one were to have a huge expense I would just remove it from the fleet as they are all paid for with clear titles.
This is not explained very well in accounting terms but I have spent many years calculating depreciation, cost per mileage, and long term cost/income from vehicle ownership.


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