Real Net Worth (Scott Trench model)

[Steve Schneider]

Hi everyone,

I just finished up @Scott Trench book Set For Life. I was just curious if anyone has calculated there Real Net Worth as he describes it in the book. If so I was hoping to get some advice on a few questions I have in regards to it:

- When he talks about real assets what all applies in this model? Cash obviously, but what else would apply as a real asset? What about equity in rental properties or home equity lines of credit (extremely cheap money that can be used as a down payment for more properties). 

- What about other lines of credit? 

- What else would be considered an asset in his model?

Thanks for taking the time to read this post and thanks Scott for writing such a good book. It has really motivated my fiance and I to take the next steps towards financial freedom.  

All the best,

Steve

[Scott Trench]

Hi Steve - thanks for reading the book! I'm glad that you enjoyed it! 

A line of credit is great to have in most cases, as it exposes the borrower to more opportunity, should something arise. But, I would not consider a line of credit to be an asset, as it does not increase in value and does not generate cash flows. 

I do consider real estate equity in rental properties to be real assets - rental properties generate cash flow and can be expected to reasonably appreciate in value with inflation, if bought and managed appropriately. This is in contrast to a primary residence, which may appreciate in line with inflation but does not generate income.

Other assets include stocks, bonds, businesses, and creative income streams - like a blog, book, website, or other venture. 

With respect to debt in general, I use debt to buy assets, and try to avoid it for all other purchases. But, at the same time, I like to put myself in position to have a large credit line, and the most possible access to debt that I can. Why wouldn't I? If an incredible opportunity to purchase a fantastic asset came along, and I was not financially capable of buying it, I'd be missing out!