Your House Is A Liability, Not An Asset

[NotDavidIcke]

Slightly controversial perhaps, but this is my argument.

Definitions:

ASSET - something that puts money INTO your pocket

LIABILITY - something that takes money OUT OF your pocket.

Using these definitions it's clear that a house is a liability.

Massives HPIs have confused people into thinking houses are assets or investments. HPIs are an illusion and do not actually increase your wealth because you always need some where to live. Downsizing would lead to a cash asset but a reduction in living standards and consequently a reduction in true wealth. HPIs therefore actually reduce your real wealth (unless of course you are a landlord, in which case these extra houses are revenue generating assets and the HPIs are an added bonus).

It seems that to get rich what you need to do is invest in genuine assets and use the ROI to pay for liabilities and add new assets.

e.g. buying a car

A car is an obvious liability because it takes money out of your pocket. So instead of buying a car with cash, what you need to do is put the cash into an asset and use the proceeds of the asset to finance the car, thus always increasing your wealth!!

[Jason]

Just to help you out:

Asset

Liability

[Neil D Possitt]

Slightly controversial perhaps, but this is my argument.

Definitions:

ASSET - something that puts money INTO your pocket

LIABILITY - something that takes money OUT OF your pocket.

Using these definitions it's clear that a house is a liability.

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Have you been reading "Rich Dad, Poor Dad", by any chance?

[NotDavidIcke]

Have you been reading "Rich Dad, Poor Dad", by any chance?

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hehe yep

[theChuz]

A house is an assest when you own it or come to sell it.

It is a liability when you are paying for it still.

If you sell it in a falling market its a depreciated assest.

It can change from assest to liability depending on timing, when you create a balance sheet it is a snapshot in time, therefore it is what _things_ are worth at that given point in time.

You can crunch numbers within reason to make it represent the outcome you want. So depending on who the balance sheet was for would be how you structure it.

If you were using your home as colateral for something then you would pitch it as an assest and portay its assest worth.

If you were heavily taxed on all assests you would count it as a liability and put foward your case as such.

One year he was an assest to the company, the next year he was a liability. Providing he still has his job he might become an assest again the following year.

Basically it can change classes depending on the situation and time period your taking into account.

If that sounds confusing think of it this way...

Employee Jo Bloggs works really hard for the company he brings in loads of new clients, he is really good at his job. Jo bloggs is an assest at this point in time.

The following year for what ever reason Jo bloggs is lazy, he has brought in no new customers , he is very bad at his job, He is now a liability to the company.

P.S

I may of said all that as a statement of fact but i'm just a lowly factory shop floor worker so take it all with a pinch of salt

EDITED:

I dont know why the f*ck im spelling asset like that, i dont even talk with a lisp. I cant be botherd to change them all, talk about brain lock

Edited August 26, 2005 by theChuz

[Neil D Possitt]

You can crunch numbers within reason to make it represent the outcome you want. So depending on who the balance sheet was for would be how you structure it.

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You didn't used to be one of Enron's auditors did you ?

[Neil D Possitt]

Quite an interesting book Rich Dad, but I sometimes feel tempted to track Robert Kiyosaki down & try to persuade him to give me his car & house for free.

"Think of all the money you'd save if I took those liabilities off your hands.........."

[Mushroom]

You didn't used to be one of Enron's auditors did you ? 

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Perhaps theChuz, with his understanding of the possibilities of numerical manipulation, would be better employed advising our dear Gordon.

[theChuz]

Perhaps theChuz, with his understanding of the possibilities of numerical manipulation, would be better employed advising our dear Gordon.

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Where do you think i got it from in the first place?

[Smell the Fear]

A house is an assest when you own it or come to sell it.

It is a liability when you are paying for it still.

If you sell it in a falling market its a depreciated assest.

It can change from assest to liability depending on timing, when you create a balance sheet it is a snapshot in time, therefore it is what _things_ are worth at that given point in time.

You can crunch numbers within reason to make it represent the outcome you want. So depending on who the balance sheet was for would be how you structure it.

If you were using your home as colateral for something then you would pitch it as an assest and portay its assest worth.

If you were heavily taxed on all assests you would count it as a liability and put foward your case as such.

One year he was an assest to the company, the next year he was a liability. Providing he still has his job he might become an assest again the following year.

Basically it can change classes depending on the situation and time period your taking into account.

If that sounds confusing think of it this way...

Employee Jo Bloggs works really hard for the company he brings in loads of new clients, he is really good at his job. Jo bloggs is an assest at this point in time.

The following year for what ever reason Jo bloggs is lazy, he has brought in no new customers , he is very bad at his job, He is now a liability to the company.

P.S

I may of said all that as a statement of fact but i'm just a lowly factory shop floor worker so take it all with a pinch of salt 

EDITED:

I dont know why the f*ck im spelling asset like that, i dont even talk with a lisp. I cant be botherd to change them all, talk about brain lock 

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The Chuz

I respect your common sense opinions, but as for your accounting: I'm afraid I have to revert to an American phrase that I have never had cause to use before.

You are an Ass Clown.

[theChuz]

The Chuz

I respect your common sense opinions, but as for your accounting: I'm afraid I have to revert to an American phrase that I have never had cause to use before.

You are an Ass Clown.

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Dont worry i will stick to manual labour work

[oracle]

Have you been reading "Rich Dad, Poor Dad", by any chance?

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not davidicke obviously has GCSE business studies!!!,he's a bit more advanced than the self-help books in smiths!

..spot on with the analogies....houses are either assets OR liabilities,depending on when they are bought.they are a bit more mutable than cars,which are just a blatant liability financially.....funnily enough so are holidays which are the two biggest reasons for increasing liability on property?

does that make sense?????...it doesn't to me!

[Jason]

Dont worry i will stick to manual labour work 

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Chuz

How's the stock market trading coming along? I bet alot of your work mates look at you in total confusion when you talk about all these numbers...

[theChuz]

Chuz

How's the stock market trading coming along? I bet alot of your work mates look at you in total confusion when you talk about all these numbers...

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ah ya know how it is just gained 6% today . I have to throw in alot of "sh*t, t*ts, f*ck and b*llocks" whenever i speak to people at work and on a slightly disturbing note some of them can not take a value and +/- 10% . I was gobsmacked the other day when i had to explain to them.

Still, i shall quietly collect my money each month, build my empire then sod off to pastures greener.

[NotDavidIcke]

not davidicke obviously has GCSE business studies!!!,he's a bit more advanced than the self-help books in smiths!

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cheers