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The Differences Between Assets & Liabilties

Posted: Feb 20, 2009
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The Differences Between Assets & Liabilities Assets are anything that produces positive cash flow, that puts money in your pocket. Some examples of assets would be: investments, stocks, capital gains, real estate, your business and such. And then theres liabilities. Liabilities, on the other hand, take money FROM your pocket, they cost you money. And some examples would be: your house, your car, or any possessions you own that need to be repaid for that matter. Unfortunately, the poor and middle class people look at liabilities as assets. For instance, when people get a mortgage for their house, most bankers will tell them their house is an asset. But what the banker is really trying to say is that your house is the THEIR asset. In other words, its taking money from your pocket and putting money in the banks pocket. And your house will never be your asset, because even if you paid off the mortgage, you still have insurance, property taxes, and maintenance, so its still a liability. Now if you let other people live in that house and you charge them rent every month and its putting more money in your pocket than what its taking out, then that same house would automatically be considered an asset, because now its putting money in YOUR pocket. An other problem for the poor and middle class people is that they keep increasing their liabilities. For most people, when they work in a job and as they their salary increases, then so does their spending. In other words, they increase their liabilities. But they never focus on building assets though, and this is the reason why the poor and middle class are getting poorer and poorer. But the rich, on the other hand, are getting richer, because what theyre doing is focusing on increasing their assets, in other words, cashflow. And they minimize their liabilities, or to say at the least, they make their liabilities secondary to their assets. For example, if the rich wanna buy a new car, what they do is buy an asset first, something thats gonna produce positive cashflow. So that asset ends up work hard for that rich person, and it will help pay for the car he/she wants to get. And the same thing goes with wanting to get a house or any other liabilities as well too. So, in other words, the rich dont work hard for money, their money works hard for them because they keep accumulating more and more assets, whether its from investments or their business. Have a great day! Fred Gustafson

URL: http://www.celebritynetworth.com/watch/i4mZ0UoUcPs/the-differences-between-assets-liabilties/

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Education, fred gustafson, robert kiyosaki, rich dad poor dad, assets and liabilities, financial education, internet marketing, cash gifting, abundant living system, cash leverage network

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