Assets vs. liability

all debt you owe is a liability, anything you own is an asset. if you own your own home and owe 100,000 on it, but it is only worth 80,000....that would be a 20,000 dollar liability. on the form you would list the 80,000 as an asset, and the 100,000 as a liability. clear as mud? lol. i just did this....so pm me if you need to. my agency had a form they sent out that had things listed to jog your memory about what you own- jewelery, furniture, cars, homes...and about what you owed...credit card, student loans, mortgages, car loans, etc.

yup, everything you own MINUS everything you owe = your net worth. a simple way to get the value of the contents of your home, is to look on your home owners insurance policy. Whatever it states as the replacement amount for the "contents of your home" can be used in your asset column. this would cover furnishings, clothings, toys, dishes, and other normal household items. You can count your jewelry, art, antique furniture or other valuables separately. Don't forget to count savings bonds, CDs (the money kind), retirement accounts, valuable collections, cars, motorcycles, boats, RVs and any equity in your home.

We were told by our agency that we cannot use the replacement value given by our home owner's insurance because it is has to be resale value, not replacement value. Is there a way to do this besides walking from room to room assigning random values to everything in the cupboards? We don't have enough cash to meet the minimum assets, so we have to rely on our contents.

yes, that is what I would do. walk room to room and figure in your head, if I sold this today, what would someone pay for it? you might actually come up with a higher figure than your home owner insurance says. and really, is your placing agency going to come in and say, "you know, that couch is pretty beat up, I think you overestimated on that one by $75." I think the thing that would keep most people from reaching the net worth is lots of debt or not much in retirement or home equity.

Unfortunately, most used things in your home, except for gold, silver, diamonds, fine art, antiques, etc., have virtually no value if you've had them for a few years. If you held a yard sale that included basically everything except your underpants--from furniture to clothes to small kitchen appliances -- you'd be darn lucky to get 1/3 of the price you paid, if the items were of good quality and purchased in the last couple of years. Clothing REALLY loses value once it's worn, so having a lot of it really doesn't count. In my estimation, I'd take the replacement value and tell the agency that you will use 30% of it as the number. That's probably a pretty reasonable figure. If you have any "scheduled" items, such as expensive jewelry or silverware, that are separately listed on your policy, you might be able to get the agency to agree to use the appraised value. But even there, you may be shocked at what the market is like. I tried to sell a nice set of sterling silver flatware about six years ago. I was shocked to learn that I'd be paid only for the weight of the silver, which really didn't amount to much. Young people, I was told, no longer want sterling silver flatware when they get married, and hardly anyone else is in the market, either. And no one wants the really ornate stuff, unless it's antique. Unfortunately, if you absolutely have to rely on the contents of your home to come up with a net worth that's acceptable for China, you are probably not going to make it. The thing that boosts your net worth the most is equity in a home, which you don't have if you rent or if you just bought a house and didn't make a large down payment. The thing that really hurts your net worth is a lot of debt -- credit card debt, car loans, student loans, and a mortgage that probably should never have been approved because it's too large. You don't need "cash" to prove net worth, though obviously a lot of money in bank accounts and safe investments would be terrific. A house that you've been paying off for 20 years on a 30 year mortgage with a low interest rate, would be great, especially if it has appreciated in value. A car or boat that's fairly new and that you purchased for cash or paid off quickly would be great. Computers and other electronics, unless they are almost new, are likely to be bought by a professional only to use for spare parts. Thus, you will get very little money, especially if there's newer stuff out there. Forget a TV that's not HD or flat-screen. Forget all but the most recent computers. My agency accepted "replacement cost" as the basis of my valuation of the things I owned. However, that was over a decade ago. Today, agencies are more savvy. While they certainly want China to accept their candidates, they also want to be realistic. Most people spend on things that don't really improve their net worth. One of the most eye-opening things for me was having to sell the contents of my mother's home when she died. She had a lot of nice things, and kept them up meticulously. But except for a brand new lanai set with tags still on it, and a dining room set that was under five years old and in like-new condition, I got very, very little money -- nothing like what replacing the items would have cost me. There were some large pieces that I wound up practically giving to the couple that bought the house; they were too large and heavy to interest most people, even though they were expensive. I know that it's hard to focus on anything except adoption right now, but do remember, for the future, that focusing on maximizing net worth is not a bad strategy. Minimize purchases of things that don't have lasting value -- do you NEED 10 pairs of shoes? Put money into buying a house, but don't get sucked into deals by mortgage companies that require only 5% down or that approve you for a loan that over-extends you. Buy a cheaper car, and put down as much cash as possible. Pay off your credit card debt, and use a debit card or cash for most purchases. And save as much as you can each month, both in a 401K or similar plan, and in shorter term investments. I hate to say it, but if you don't meet China's requirements, you may want to change countries or, if you are young enough, you may want to make a commitment to taking three years or so to implement a new financial strategy. Sharon