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Your Home is Your Liability and Its Your Bankers Asset
Did you know your home is a liability, its your bankers asset? Many people are raised believing a car, boat, and residence are all assets on a balance sheet, but the truth is that by its very definition, an asset is something that brings in positive revenue while a liability is something that takes away income. Knowing the difference can help considerably when it comes to understanding your financial worth.
Learning the difference between liability vs assets is usually a paradigm shift for people such as yourself. Generally, people see possessions as an asset. But let us take a closer look at what defines an asset and a liability.
An asset, simply stated, puts money in your pocket. Even if your home or vehicle is paid for completely, that home or vehicle is still not putting money into your pocket. In fact, you still have insurance, taxes, repairs, and utilities to pay for meaning even if you do not make a payment on a possession, you can still find it a liability and not an asset.
People owning many properties and use those properties as rental properties, the only way to decide if those properties are an asset or a liability is to compare all the liabilities of said properties with the money brought in by the properties. If you find you have a positive cash flow, you have found a way to turn liabilities into assets. Congratulations!
The trick to becoming wealthy is to have more assets than liabilities…
A liability is anything that takes money out of your pocket. Everyone has liabilities. Something as simple as paying an electric bill is a liability. Of course, people often forget that liabilities include owning a house, car, or other large possession.
Your home is a liability, its your bankers asset. Think about it… You pay a mortgage that is your liability; your bank owns the home and that is why you make your mortgage payment to the bank. Do you see how your home is a liability and its your bankers asset?
One of the easiest ways to build assets is through an interest earning savings accounts. This is a surefire way to make your money work for you. If you have $5,000 in a non interest bearing checking account, you are making your biggest asset a liability. By taking your $5,000 and placing it into an interest bearing checking or savings account, you are allowing your money to become an asset because it is putting even more money in your pocket.
Can you see how the wealthy get wealthier while the poor get poorer?
Many people are learning that your home is a liability, its your bankers asset. By turning your money into an asset, and by understanding how to better handle and control your liabilities, you will discover a world of financial freedom. Having better choices allows you to make more money. While this is an easy concept, you will find many people struggle with turning their greatest liability into a relatively good asset.
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