Thursday, November 27, 2014

I've Zero networth!

I've finally reached zero! But what's the big deal? Zero is not a big deal, right? Well, not if you begin with positive, became negative, and then back to zero again. Reaching zero means you've erased the negative and now you're on a fresh start to begin being positive again.

What am I talking about? It's my net worth!

I still owe HDB $440k now. I halve this to take into account the portion shared by my wife, so that's $220k. The last I've checked, my current networth is $226k.

This is how I calculated my networth. It's just Assets minus Liabilities.

My assets are: (all $226k of it)

1) Whatever I have in wallet, drawers, mattresses, tin cans
2) All my bank accounts combined
3) Money market fund
3) Paypal and other online cash accounts that have some digital cash inside
4) All my investments holdings, marked to market
5) All my whole life policies surrender value
6) All the amount in my CPF (less than 40k overall, which isn't much)

(Take note that I did not include the market value of my HDB flat)

My liabilities are: (all $220k of it)

1) Credit card bills
2) Car loan (left about 5k)
3) And the biggest meanest of them all, HDB loan of 226k after taking into account my wife's 'portion'

And I'm positive by 6k!

Well, actually there's nothing much to shout about, it's just another day actually and I don't even feel particularly happy. It's a milestone that tells me I'm on the right track. Personally, I think cash flow is more important than networth. I can't just throw in all I've got and sell of half my stake of my HDB to my wife and declare myself free, can I? Of course not. So, this is at best one indicator of my financial health.

To borrow from someone, the best has yet to come.


B said...


Some companies we look at book value, some we look at earnings.

LP earnings potential is massive. Using a DDM modelling with 10% growth year on year and 2% discount rate, LP is a great stock to own over the next few years :D

Please unlock your hidden value.

la papillion said...

Hi B,

LOL! LP stocks is 100% owned by 1 major shareholder - WIFE! I don't think she's selling anytime soon ;) LP bonds also 100% subscribed (actually, it's close to 200% subscribed, so new issues going to come out soon. But that's another post, haha

B said...

I might confuse this with another post but will the right issue being LP legacy offering 18% yield per annum? Can I book to be one of the shareholder please?

la papillion said...

Hi B,

No lah! That's like LP ponzi (oops, I've said how I feel about 'that' news) scheme haha!

I'm talking about LP bonds, which is investing my parents money. They wanted to put in another 100k (where did they get all the money from???). I'm very very reluctant to take it. If I do, this time I won't be able to guarantee them back their capital cos I'm overstretched. It'll be something with higher returns than the previous (2.5% or higher) but some exposure in equities, no capital guaranteed.

Investopenly said...

LP : Just curious, why you excluded the value of your HDB in the networth calculation? How would you consider it (if it falls neither in asset or liability)?

Createwealth8888 said...

The direction of crossing over of zero is important.


la papillion said...

Hi Richard,

I excluded the market value of the HDB because at the end of the lease, there'll be nothing left. I don't pin my hopes on an enbloc exercise or HDB renewing the leasehold.

If I have to consider the market value of the flat, it'll fall squarely into the assets portion of the balance sheet. To own that asset, I have to borrow money for it, so there'll be a corresponding row with the liabilities portion in it.

If the liabilities part is more than the market value, I 'lost' money, so net net it's a 'liability'. If the market value is > liabilities part, net net I 'made' money, so it's a 'asset'.

la papillion said...

Hi bro8888,

That is very very true. Agree fully!

^_^ said...

is a HDB flat that you live in, an asset or a liability?

Singapore Man of Leisure said...



Feels "light" right?

la papillion said...

Hi Felix,

I'm confused when you asked me that. There's too many definition of assets out there now that I'm not sure which assets you're referring to in your question.

If you're talking about accounting asset, HDB is of course an asset. But it is there because of the debts that is incurred. If you're talking about Kiyo's definition where an asset is something that generates cashflow, then nope, it's not an asset.

Which are you referring to? Are there more definitions?

la papillion said...


Haha! I feel as light as yesterday and as heavy as today ;)

Cory said...
This comment has been removed by the author.
Cory said...

Well i feel you need to be consistent. If you consider the loan for your HDB in your networth, you also need to include HDB asset value as if you decide to sell at today estimate price.

la papillion said...

Hi Cory,

Well, I am consistent. That had been how I've measured it since I started. It might not be the same as others, but I'm not comparing with others so that benchmark is not important to me. My purpose of calculating my networth (according to my own definition) is so that I can see how I've grown over the years.

I disagree...I think if I'm going to hold the HDB till maturity, that's the long term value of my property. That way, I don't have any illusions on liquidizing my property to release the cash value in it.

Works better for this way :)

Rolf Suey said...

Zero in net worth but hero in knowledge!

My 15HWW said...

Hi LP,

I am also about there but not fair comparison since your house is probably worth more? =p

Think many other readers picked on this asset part and I can understand why you didn't include it.

One should only include it if one doesn't mind downgrading or even renting in the future.

la papillion said...

Hi Rolf,

Haha, hopefully with the chance of being a superhero! :)

la papillion said...

Hi 15hww,

Nah, don't think my house is worth more...i don't stay where you think I'm staying lol!

I guess there's a lot of different ways to calculate networth. Some only counted the liquid portion, with the idea that there's no point including things that they can't convert to cash easily because they can't save you in time. I guess as long as it serves your purpose, it's good enough. Not like we're trying to compare networth with each other - I don't play this game haha!

Createwealth8888 said...

Our home is the asset of last resort when all else failed

My 15HWW said...

Hi LP,

My bad. Got confused. Don't have to rub it in anymore. =p

Don't worry, I don't play that game too and I don't think anybody should. It's a game that even if you win, you ultimately lose.

la papillion said...

Hi bro8888,

I hope it won't really come down to that. For me, the last resort is family. When all else fails, have to rely on family, not my house.

la papillion said...

Hi 15hww,

"It's a game that even if you win, you ultimately lose."

I like the way you phrase it. Sounds like a line from Roxette, "you play to win only to lose" haha

darren said...

Hi LP,

It's inspiring that you have reached this milestone in the long journey towards financial freedom. it is a great place to be and hopefully we can all get there one day too.

la papillion said...

Hi retailtrader,

Thank you thank you :) That's where we're working towards! :)

Kevin said...


I like your method of calculating net-worth, and this is particularly relevant to me because during recent conversations with my wife, we both realized that we have become rather fond of our home and the neighbourhood.

A few years ago, I thought that it would be a "5-years-and-flip" kind of property and I would tend to include the market value of my apartment in net worth calculations. But now, I have started considering the possibility.. that what if we like it so much that we never move? Excluding market value of HDB but including HDB loan would thus makes sense.

Anyway, to borrow a saying (I forgot who), "He who is contented is rich." Congratulations LP on your achievement! I am tempted to do a similar calculation for myself.

la papillion said...

Hi Kevin,

Haha, I guess this makes sense especially if you're not planning to flip the property :) I am unlikely to sell my home, and even if I did it, I would still count it this way. It's way more conservative (some pple say it's too conservative haha).

Pls do blog about it, I would love to see your take on this!