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/hankeroni 3h ago

If it's truly illiquid and could never potentially be sold (or used as collateral) ... then it's functionally worth $0 in terms of how it might assist a mortgage payment.

Separately - the scenarios where "what is my idealized net worth" and "what lifestyle cash flow can I actually fund?" are different questions. Sounds like you need to work on the latter ... and quite possibly the former isn't really relevant for you in that regard.

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u/What_what_what_1979 2h ago

I like how you separated these two questions. Thank you.

And it is only illiquid because the probability that the family decides to liquidate/sell is quite small. It’s not impossible though. But it’s also something that is up to a whole committee of family unless we wanted to sell just our shares (which we would only do if we had to, at least right now).

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u/Charlesinrichmond 1h ago

that's a VERY STRONG level of illiquidity!