It’s basically just the way I have decided to report my home equity. Rather than putting something like a $200,000 asset and a $190,000 liability I just show the difference in the asset section. It gives the same result, but avoids the big numbers.

Also, to be extra conservative, I am not guessing at the value of my home. I am actually just claiming the amount of the loan that I have payed off. So, if I took out a $200,000 mortgage and I now owe $190,000, then I claim a $10,000 asset. Any increase in the value of the home (it has increased in value) or down payment (I did make a down payment) is just icing on the asset cake.

It’s not the perfect way to track net worth, but it’s easy and conservative, so it’s the way I prefer to do it. It can be a little confusing, but I have not been shy about explaining how I track it.