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| Yes you should be alarmed, but not because of anything within your control. You should be commended though for realizing that putting an artificial number on your balance sheet only makes YOU feel better. As soon as the financial institutions get a hold of it, they will put their own values in place of yours. That replaced number for each item would scare the bejesus out of most people. I would guess your 15% is still conservative and could go as high as 40% right now.
Values are realistic at today's auction price only. That number changes drastically with the market and in 6 months time can be totally different. For example, I have a 1688 combine that I was offered $40,000 in the peak of machinery prices. Six months later, out of curiosity I called and was offered $15,000 for it.
Many people are still trying to use the $40,000 figure on the balance sheet, but I guarantee the bank with slash that line item with one closer to the $15,000 figure.
I have never adjusted our land prices on our balance sheets through the inflated prices a few years back. I'm still probably low on what it would bring at auction, but it's a lot closer now than it was 3 years ago. | |
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Net worth declining
