As were are not publicly traded companies nor have we sold bonds with
covenants, we don't have to follow GAAP. Therefore it is, as you say, quite
subjective.
--
Chris Cowles
Gainesville, FL


"Richard Forester" <richard_forester[at]msn.com> wrote in message
news:426b3046$1_2[at]127.0.0.1...
- quote -

Thanks for everyone's help on this. I have always wondered how others were
dealing with their autos. It seems that most of this is subjective. For
instance I would never think of excluding my car from my net worth
particularly when I'm making payments on it. However, I can see where it
might not matter to someone who is wealthy or if the auto was fully
depreciated.

I think I tend to agree with Dwayne's 20% rule more now that I understand
it's 20% year over year as opposed to the car being worth $0 after 5 years.
:-)

Again, thanks to everyone.

Richard

"das" <das[at]discussions.microsoft.com> wrote in message
news110E4E2-2455-4BC5-BC69-122BDA919E71[at]microsoft.com...
- quote -

Hey Richard,

Category: Transportation-Automobile, same as Chris.

Note that the 20% if for the value of the current year, not initial purchase
price. Also I only use the 20% per year curve for new cars that will
eventually be sold. For example, I don't depreciate my second car, a
thirty-five year old Porsche.

If you run the numbers through Excel and compare to market value, many cars
would fit the 20% per year curve. For example, a new car that cost $10k, the
day I drive it off the lot I would depreceiate it at 20% ($2k). One year
later, another 20% ($1.6k) depreciation. After owning the car for just 13
months, my asset value for the car is $6.4k. After owning the car for 5
years, the value for the car would be ~$3300 which should be within +/- $500
of what I could sell it for.

Chris is right that it does depend on the car. A Rolls Royce would retain or
appreciate in value. A Kia would be disposable after a few years. Just
kidding Kia! For that reason, using a third party's (NADA or Kelly) set of
values would give you a better number. I personally believe the numbers run
on the high side and would only use them when dealing with insurance
companies.

I would also like to point out that tracking the car in net worth is
subjective in the sense that a car would account for most of a teenager's net
worth, where as for a (successfull) retiree, it might only account for 1% or
2% of total net worth.

Dwayne

"Richard Forester" wrote:

- quote -

The payee is whatever is meaningful to you. It's essentially a memo. The
category is also whatever you choose. I simply charge it to 'transportation:
automobile". Depreciation is simply an expense related to owning a car. For
my purposes, I really don't need to distinguish farther than that.

20% depreciation is conservative in the first year of ownership. If you're
using Kelly, % isn't relevant. Just mark it down to market according to how
you would dispose of it, if you ever would. If you plan to trade it in, use
trade-in; if you'd sell it to an individual, use private sale.

Actually, Dick's idea that a car payment is an expense is totally valid. If
you plan to keep the car until it's dead, there's no reason to consider it
among your assets. If I were driving a Rolls, it might matter; I don't think
my '99 P.O.S. Astro does.
--
Chris Cowles
Gainesville, FL

"Richard Forester" <richard_forester[at]msn.com> wrote in message
news:42685fe0$1_1[at]127.0.0.1...
- quote -

Depends on the trailer park: location, location, location...

"Chris Cowles" <NoSpam[at]For.me> wrote in message
news:u%23y9ettRFHA.4068[at]TK2MSFTNGP10.phx.gbl...
- quote -

Actually, the change of value in the trailer would more resemble the
depreciation of the car. I don't think they appreciate, do they?

"Dick Watson" <littlegreengecko[at]mind-enufalready-spring.com> wrote in
message news:uuFd6FTRFHA.2972[at]TK2MSFTNGP14.phx.gbl...

<snip
- quote -

I decided to basically follow what you and Chris have outlined. But I guess
I will have to use Kelly Blue Book value instead of NADA because they
couldn't value my car for some reason. Everything was marked "n/a".

At any rate, what category do you use for this? The payee can be anybody I
suppose.

Also, do you use the Private Sale value or the Dealer Trade-in value?
Actually, I think you said you use a standard 20% depreciation which seems a
little extreme to me but then again I am the one asking the questions so
what do I know? LOL.

Richard

"das" <das[at]discussions.microsoft.com> wrote in message
news:004C625E-94C5-408C-BCED-A5521D7FE41E[at]microsoft.com...
- quote -

Hey Richard,

I agree with Chris that the contra-asset account is a better technique but
overkill for our purposes.

I setup a yearly recurring bill that pays from the auto asset account to a
payee called 'auto depreciation', a phantom payee which seems appropriate.

This allows my net worth to be tracked and I have a reminder in the Bills to
apply the depreciation once a year.

I personally use 20% of the current value as the depreciation amount each
year. What values do you like to use?


"Richard Forester" wrote:

- quote -

On 2005-04-20, Richard Forester <richard_forester[at]msn.com> wrote:
- quote -

485 is getting built.... S..L..O..W..L..Y..

Right now you can take 485 from I-85, head south bound and end up
back on I-77 right before you hit S. Carolina. You can go a bit
past I-77, but not much.

On 2005-04-19, Dick Watson <littlegreengecko[at]mind-enufalready-spring.com> wrote:
- quote -

I wouldn't either because the cars have a finite amount of
depreciation potential (e.g. my $13000 Neon can only depreciate
$13000). But for the last 3 years, they've done a pretty good job
of staying roughly even. Part of it is that Charlotte, NC has not
seen anywhere near the housing boom that the rest of the country has
seen. We're in a buyer's market and have been for several years.
Given that, if my house actually appreciates a total of $13000
during the lifetime of the Neon, I'll be surprised.

I know this is getting a bit off subject but you live in Charlotte? Did
they ever open up the I-485 to I-85 connector? I lived there for 3 or so
months last summer and was very frustrated at the constant delays and being
forced to use I-77.

Richard


"Mark Horn" <mark[at]hornclan.com> wrote in message
news:slrnd6cklb.8t8.mark[at]home.hornclan.com...
- quote -



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I agree the effects are complimentary; my guess before any research is that
I wouldn't expect this to hold true in $ terms for very long even if it were
true today. Of course the housing market, the age of cars, etc, all plays
into this. If you have a clapped out high mileage '92 Civic, your annual $
depreciation looks a lot different than if you go out today and buy a
brand-new M-B SL65 AMG. Likewise, if you have a $30k trailer in Pigs
Knuckle, IA, your $ appreciation looks a lot different than if you have a
brownstone on 5th avenue in Manhattan, NYC, NY, or a beach front house in
Malibu, CA, or Poipu, HI, or even a loft in San Jose, CA.

"Mark Horn" <mark[at]hornclan.com> wrote in message
news:slrnd6aqf8.410.mark[at]home.hornclan.com...
- quote -

On 2005-04-19, Dick Watson <littlegreengecko[at]mind-enufalready-spring.com> wrote:
- quote -

Right. That's my point. My cars depreciate at roughly the same
rate as my house appreciates.

Yah, but next month your cars will depreciate and (hopefully) your house
will appreciate.

"Mark Horn" <mark[at]hornclan.com> wrote in message
news:slrnd6aglb.32i.mark[at]home.hornclan.com...
- quote -

On 2005-04-19, Dick Watson <littlegreengecko[at]mind-enufalready-spring.com> wrote:
- quote -

Thanks for the feedback! They probably don't offset to exactly
zero, but as of right now, based on the sales prices of similar
houses in my neighborhood, it's pretty darn close (+/- $500)

The only benefits to the Asset account for the house are net worth and
tracking additions to cost basis. (Though the cost basis problem isn't
nearly as important as it used to be due to changes in tax law.)

I don't see any real issues with what you are (not) doing except that the
cars will come and go and their values will not decline as any kind of
inverse function of the real estate value. I agree the errors are on the
margin; I don't agree that at any given point they are likely to offset to
0.

"Mark Horn" <mark[at]hornclan.com> wrote in message
news:slrnd6a72t.1rg.mark[at]home.hornclan.com...
- quote -

On 2005-04-19, Dick Watson <littlegreengecko[at]mind-enufalready-spring.com> wrote:
- quote -

Out of curiosity, do you see any general problems with the way that
I'm doing it? Also, what value do you get out of tracking the asset
value of your house? Is it to be able to have a better guess at
your net worth or is there something else that you get out of it?

I've been tracking the value of the house asset and making corresponding
adjustments in the asset account. Of necessity, these are very crude
valuations and I try to make sure they are conservative to account for
things I can't account for like commissions to sell it.

"Mark Horn" <mark[at]hornclan.com> wrote in message
news:slrnd6a5jf.1lq.mark[at]home.hornclan.com...
- quote -

On 2005-04-19, Dick Watson <littlegreengecko[at]mind-enufalready-spring.com> wrote:
- quote -

I've been using the assumption that the gain in value of my house
(which I am not tracking increases) roughly offsets the loss in
value of my two cars (which I am not tracking decreases). In the
end I'm guessing the impact on my net worth roughly balances out.

This will (obviously) not continue to work after I sell any of
those assets, but until then it's a rough estimate.

I just expense the payment(s) and don't track the cars asset values. It
biases my net worth in a conservative direction.

"Richard Forester" <richard_forester[at]msn.com> wrote in message
news:4264abe0$1_2[at]127.0.0.1...
- quote -