Oops! I’ve Been Overestimating Our Net Worth

I use a spreadsheet to track all of our financial information, including sheets that I’ve created for tracking income and spending from our checking account, savings accounts, as well as our credit cards, investments, and pretty much everything else financial related.  The spreadsheet serves me well and has evolved over time.

I know there are online options out there but I’ve been using this for so long that I am just so familiar and comfortable with using it, and have no desire to switch over to Mint or anything else.

Maybe some day.

But I did recently happen to see that I’ve been overestimating our net worth, probably for quite some time.

One of the things I track is all of our bank account balances.  In the same section, I also track our outstanding credit card balance.

So for example, I might have:

Bank 1 Checking: $2,000
Bank 1 Saving: $1,000
Money Market 1: $5,000
Online Saving: $5,000
Credit Card Balances: -$1,000

These are all calculated on the day of the month that I do our net worth tracking.  In this case, adding all of the numbers together would yield a ‘balance’ in this area of $12,000.

The problem was, in the ‘total’ section, I was subtracting the credit card balances.  As we’ve all learned from our basic math classes, subtracting a negative number has the net result of adding it in there.  So, in essence for this example I would have been adding $1,000 to the balance, and would have been getting a total of $14,000.

This basically means that for as long as I’ve had the error, I was overstating our net worth by two times the amount of whatever our credit card balance was.

I don’t keep that level of detail on a month to month basis, so I’m not going to go back and correct anything.  In most months, this is a pretty low number, usually between $400 and $700.  It’s not going to throw our numbers off that much.

And, it actually happened to fall on a good month, as our net worth went up by a good chunk from some good action in the stock market.  So, even after correcting the error, our net worth still showed a nice bump over last month, when it was wrong (and probably for at least a couple of years before that).

I should probably go through and look at the rest of my formulas to make sure that everything jives.  I do have quite a few checks and balances that I’ve built in so I’m fairly confident that our numbers are correct, but you never know.

Have you ever caught an error of your own doing?  How much did it throw you off or cost you?

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8 thoughts on “Oops! I’ve Been Overestimating Our Net Worth

  1. I made an oops when I was paying off student loans earlier this year. I submitted a fat payment of over $1,000 toward a loan and it didn’t take it out of my bank account after a few days like it usually did so I submitted the payment again. The day after that it took out BOTH payments! Thankfully we had enough in our bank account to avoid any overdraft messes and we didn’t have to eat ramen noodles for a month to compensate.
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    • That’s a pretty big oops, but I guess it’s one way to force yourself to pay off the loan a little faster 🙂

    • We don’t have a pension plan, so don’t have to worry about that. For cars, I do, only because it is such a big asset and it’s a good reminder that when the values go down it creates a negative effect on your net worth. Meaning, don’t buy expensive cars 🙂

  2. How is it that you would expect me to follow your blogs when you cannot even get basic asset and liability data correct to arrive at net worth. Remember. Assets minus what you owe = net worth

    • I certainly understand that. I was merely pointing out a mistake in the formula. I never said I was perfect. Follow at your own risk 🙂

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