Do you buy assests or Liabilities?
 

Frame of thought - when you buy stuff - do you buy assets or liabilities?


Better yet - do you buy liabilities that you tell yourself is an asset?

examples of typical liabilities that many think are assets

you car
the house you live in
your boat
your moterbike
cloths
jewlry



So what do you buy when you buy things? Assets or liabilities?

Have you been reading Rich Dad Poor Dad?

I buy liabilities to help enjoy life, assets to make more money. Weee!

I try to buy assets as much as possible nowdays.

Rich Dad Poor Dad :)

ask DH - I have read that book but I honestly thought like this before reading it.


posting cause a friend told me my house was an asset today. I've never sceen it as such - don't get me wrong - LOVE this place - but I just see it as a money pit asset wise

all of the above.

stealing that stuff will just get you into trouble.

The house you live in would be seen as an asset if you sold it for more than you bought it, right?

A house is an asset according to today's market... (raising value all the time) Unless you go mike tyson on it, spending 55 mills and resell it to 50cents for 5 mills.

Agreed. A lot of his thinking process wasn't that different than how I was already thinking, but he did give some good ideas and insight on a few things. Houses are a money pit.

to be honest that's just a way to justify the money being an asset but in reality you'll dump it into another house and most likly won't profit from it.


think like this - if the value goes up - to get another place that keeps you in the same status - you have to spend just as much - so there really isn't any asset value to it unless you want to LOWER your standard of living and that just sets you back - mentally and socially.

Are houses still going up big time in Montreal? It depends on the market, value isn't going up everywhere anymore, a lot of people are in trouble.

I don't think Robert Kiyosaki considers it an asset
I kind of consider it both
it does go up, it diffinetaly beats renting


There is some stat out there that the average homeowner's net worth is lke 160k, and renters is 4k or less, don't remember the exact quotes


In reality it's an asset if you rent out the other rooms and the other people pay for your rent in the house.


But if you have a $5000/mo payment on your house, that it's in some ways a liability, because you could go get a $800/mo place
and then go get


10 properties that negatively cashflow $400 a month , so much more you can do with that money.

By the way I could teach all of you how to buy 100 houses in the next few years over a post on Gfy

Near Ottawa about 3.5 % a year steady.

thing with the canadian market is that the interest aren't tax deductable like in the US, so the house boom wasn't nearly as big

You can think like that about anything you buy that gain value too... what is an asset then ?

My rich dad told me to buy assets.

Actually, truth be known, my grandparents instilled this in me. I don't think that (basic) living is tough. Keep your monthly expenses as low as you possibly can and only buy things when you actually have the money.

an asset is something that puts money in my pocket - and more then it takes out

:1orglaugh I had that exact same thought.

Only buy liabilies if they are deeply discounted.

:1orglaugh

Whats the point of making money if you don't spend it a little. Just don't go overboard

well my car that i own is around 10years old , wont buy a new car as it doesn't make a sound investment ,
i rent my home , works out much cheaper compared to buying a house, money i save i put into investments

don't need fancy things to splash my wealth , not that i don't buy stuff , just don't buy shit cause i have the money to burn

In reality renting shouldn't be cheaper than buying a home
if you count in the tax deductions at the end of the year.

Renting is ok in situations you are going to live 18 months or less
just because of closing costs and real estate commissions

It sounds like you are blindly repeating what rich dad poor dad book says...

well in australian coditions after you crunch the numbers ,

over 20 years, you'd pay 300k interest on a 250K loan (thats the figures I worked out a few months ago)
if you payed 200 p/w rent for 52wks x 20 years that equals 200K. If you saved like you would have paid a mortgage ($250pw x 52wk x 20) thats $260k in savings, not including interest, dividends or money made from investments.
With that you can argue rent going up (like I could say interest rate going up), inflation, a property boom etc. you could also include the 3-6% a year your property will go up (some are going up higher right now, but they're the ones you can't afford to buy now anyway), and I could argue shire rates and their steady increase, property upkeep etc,

Is Dolf De Roos big where you are?
I think he originates from New Zealand

He is an advisor friend of Robert Kiyosaki

In my opionion an asset it something that either (in somewhat simplified terms):
1. generates positive cashflow
2. appreciates in value

So if you buy a car and lease it to someone for more than your costs, depreciation, etc, then in that case it's an asset...

Same with a house, if you buy a house and it appreciates more than all your costs, then it's an asset too... it's completely irrevelant if you live in there yourself or if you rent it out..

Real businessman are WAY past worrying about what is an asset or a liability, they worry about buying assets that have highest ROI...

yep like a trailer house
for example would go down in value since it's personal property
but soon it would be paid off and cashflow nicely

What do you think of De Roos? My dad and I have been looking at some apartment buildings to buy, he currently owns a duplex with great cashflow and he reads a lot of De Roos. Do you like him? Have any recommendations for authors that definitely need to be read?

Sometimes my Assets are Liabilites.... damnit.

not really particular whether items are an asset or liability... i see to it that the value of whatever item i buy will appreciate in the future.

I totally agree with you. :thumbsup

well if a house gain 3.5 % value a year and you pay for it cash... consider it an asset since the repair cost aren't 3.5 % a year...

there are also taxes, insurance, etc :winkwink:

and if inflation is 3.5% per year or more
are you making anything really?

on an all cash invested that is

LOL! I love that one! I am going to start using it :thumbsup

DH

The way I see it, my house is not an asset but NOT owning my house is a liability. Bit of a no-win situation.

So long as you make decent repayments on your mortgage and get it paid off quickly. And don't buy a house you can't afford. If you are earning enough to pay for a mansion, then you should be doing something better with the money.

Renting looks great on paper but sucks big time when you get evicted every few years coz the owner wants to sell. At least where I live anyway.

HighRoller - I'm off to look at your post now ;)

ummm you said the same thing twice a different way

I'll second that. I'm finally living in the same place for more than a year for the first time in 6 years.

Paying off your house is not the best idea

read missed fortune 101
or the regular version of Missed Fortune

who thinks clothes are assets? I buy both things I need and things I want.

Instead of liabilities and assets

I would say good debt and bad debt

that's clearly defines it more I think

Cool. I'll go check it out.

Not saying I 100% agree with you but I've learnt to listen to as many opinions as possible when it comes to finance (so long as they can be backed up).

Got any more good suggestions? Appart from the obvious ones?

Rich Dad Poor Dad is kind of the starting point
and he has about 18 purple and yellow books
about 5 from him and 12 from his advisors


The idea behind missed fortune is a lot of things
keep in mind especially on rentals
interest can be written off as a tax deduction
if you pay off your own house you lose that tax deduction
if you take a 7% interest rate on your house
and take the effective rate with deductions etc

might be more like 4.8% for example

If you always had your house 100% leveraged but had all equity in another liquid asset, can you beat 4.8%? sure you can that's easy


How would you like to be in a market with 100,000 houses going down in value
people want to walk a bad economy in certain markets?

If the bank had 100,000 homes not paying, which homes do you think they will take the time to foreclose on first

the one owing $15,000 as a balance
or the ones owing $200k balance?

equity in a house gets zero return

Ain't no way lumps of metal such as cars, boats, bikes or clothes are assets - they are playthings - some out of necessity. Stones and metals can be, - depends on whether ya paid thru the nose for it in a "fine jewellery" store and at markups common in that biz :) A house can be, - depends on the financing blah.

Only my :2 cents: worth, but the best "asset" ever is pure soil in the form of land - nobody can make that, and it keeps getting shorter in supply. :)

I buy jewelries and I think this is the best investment one should have.