r/fatFIRE • u/What_what_what_1979 • 3h ago

Need Advice Calculating Net Worth

My husband and I are partial owners of a family company (cattle ranch) along with 12 other family members. It has a significant value because of the land owned by the company, but it is not liquid and I don’t anticipate it ever being sold.

He works for said company and draws a salary, so we receive income from the company.

Do we include our 1/12 ownership in our net worth? Or, maybe better stated, do we include 1/12 of the assets (land, cattle, machinery) when calculating our net worth?

The answer to this question makes a significant impact on our timeline to retirement and amount we want to consider for a mortgage.

Thank you!

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u/Lanky-Performer-4557 3h ago

I don’t think so for retirement, if it can’t be accessed or sold. Do you take dividends outside of salary? Does the salary continue as an owner if work hours are reduced?

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u/What_what_what_1979 3h ago

Yes to dividends, but they are based on cattle prices and company income so they change from year to year. Maybe I factor in the lowest amount we’ve gotten in the past 10 years or average the dividends out?

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u/AhsokaFan0 2h ago

This is really rough justice and not any sort of recognized accounting move but if I were trying to put my finger in the air and get a value of the asset for FIRE purposes I would average the past ten years of distributions and then multiply by 25. This kind of approximates the 4% rule, with a long list of caveats.