If you’ve cosigned a car loan for a sibling or guaranteed a lease for a friend, you’ve probably hit this question the first time you built a net worth tracker: does that debt count against my net worth?
The honest answer is “not yet, but maybe.” You’re not making the payments, so subtracting the full balance from your net worth overstates your obligations. But if the primary borrower defaults, the lender can come to you for the whole thing — so pretending it doesn’t exist understates your risk.
The fix is a tracker with two layers: a headline net worth that excludes contingent liabilities, and a visible footnote section that lists them. This is general record-keeping guidance for your own personal tracker, not legal or accounting advice — how a cosigned debt is treated on a loan application, in a divorce, or in bankruptcy is a different question for a professional.
What a contingent liability actually is
A contingent liability is a debt you’d owe only if some triggering event happens — most commonly, someone else failing to pay a loan you attached your name to. Until that trigger, it costs you nothing directly (though it does sit on your credit report and affect your debt-to-income ratio when you apply for credit).
The dividing line for your tracker: are you obligated to make payments today? If yes, it’s a real liability. If only under a what-if, it’s contingent.
What counts and what doesn’t
This table covers the cases that generate the most confusion:
| Item | Contingent liability? | How to handle it in your tracker |
|---|---|---|
| Loan you cosigned, borrower is current | Yes | Exclude from total; list in a footnote section with the full balance |
| Loan you cosigned, borrower has defaulted or you’re making payments | No — it’s now real | Move the balance (or your realistic exposure) into liabilities |
| Lease or loan you guaranteed for someone else | Yes | Footnote with maximum exposure |
| Joint loan where you’re a co-borrower (both names, shared benefit) | No | Full balance in liabilities — you’re primarily liable, not contingently |
| Your own mortgage, car loan, cards, student loans | No | Ordinary liabilities |
| Being an authorized user on someone else’s credit card | No liability at all | Ignore — authorized users generally aren’t liable for the debt |
| Pending lawsuit or disputed bill against you | Yes | Footnote with an estimate; too speculative for the total |
The co-borrower row trips people up most. Cosigning (you’re backup) and co-borrowing (you’re an equal borrower, often on an asset you share, like a joint mortgage) look similar but belong on opposite sides of the line. If you both signed for something you both use, count it as yours.
Building the tracker
A spreadsheet is the best tool for this because apps don’t natively understand “maybe” debts — more on that below. Structure it in three blocks:
Assets. Cash, savings, brokerage and retirement accounts, home value (use a conservative estimate), vehicles if you care to include them.
Liabilities. Every debt you’re currently obligated on: mortgage, car loan, cards, student loans, and any formerly-contingent debt that has gone live.
Contingent exposures — the footnote block. Below the net worth line, add a clearly separated section. For each item record:
- What it is and who the primary borrower is
- The current balance (ask the borrower, or check your own credit report — cosigned accounts appear there)
- The monthly payment you’d inherit on default
- Status: current / late / in trouble
Your formula stays Net worth = Assets − Liabilities. The contingent block deliberately sits outside the math but inside your field of view. Some people add a second memo line — “net worth if all contingencies hit” — which is a useful stress test: if that number is alarming, your emergency fund is probably too small for the risk you’ve signed up for.
Worked example (all figures illustrative): $12,000 cash + $45,000 retirement + $230,000 home = $287,000 assets. $195,000 mortgage + $9,000 car loan = $204,000 liabilities. Headline net worth: $83,000. Footnote: cosigned auto loan, $14,500 remaining, $310/month, borrower current. Stress-test line: $68,500. One glance tells you both the true current picture and the size of the what-if.
Why “exclude but footnote” beats the alternatives
Versus counting the full balance: subtracting a debt someone else is faithfully paying makes your net worth look worse than reality, which distorts every decision you base on it — how aggressively to invest, whether you can afford a move, how you’re trending year over year.
Versus ignoring it entirely: the failure mode here is worse. Cosigned defaults don’t announce themselves politely; often the cosigner learns about missed payments only when their own credit score drops. Keeping the exposure on the same page you review monthly means you check in on it monthly.
The footnote habit matters even when everything’s fine. The whole value of a net worth statement is that it’s honest, and an honest one acknowledges obligations that exist on paper even when they’re dormant.
What the apps can and can’t do
Current tools handle this with varying grace:
- Spreadsheets (Google Sheets or Excel) — the best fit. Full control over what’s in the total, and a footnote section is just rows below the formula.
- Monarch Money and Copilot — both support manual accounts, so you can add a cosigned loan as a manual liability, but it will be subtracted from your headline net worth. Workaround: leave it out and keep a note elsewhere, or accept the lower number.
- Empower — free net worth dashboard (formerly Personal Capital); same limitation, since linked and manual liabilities all hit the total.
- YNAB — a budgeting tool first; fine for tracking payments you’re actually making, not designed for contingent exposure.
If you see older articles recommending Mint for this, note that Mint shut down in 2024. And no mainstream app currently has a native “contingent liability” category — which is the practical argument for keeping your canonical net worth statement in a spreadsheet and using apps for the day-to-day feeds.
Reviewing and reclassifying
Update the tracker monthly, and give the contingent block a slightly deeper check quarterly:
- Confirm the borrower is current — ask directly, or watch your credit report for late marks on the account.
- Update the remaining balance as it amortizes down.
- Reclassify the moment reality changes. First missed payment that lands on you: move your expected exposure into real liabilities. Loan paid off or refinanced out of your name: delete the row, and enjoy the small ritual.
The short version
Your headline net worth should count only debts you’re obligated on today. Everything you’ve cosigned or guaranteed goes in a footnote section directly below it — named, sized, and status-checked — so it stays out of the math but never out of sight. A spreadsheet handles this better than any current app, and a quarterly check on each contingent item turns the worst cosigning surprise (finding out at default) into one you saw coming.