Your House and Car Are Assets or Liabilities

Your House and Car Are Assets or Liabilities?

Last Updated on 2021-11-28

Your House and Car Are Assets or Liabilities?

In school, the teacher taught us in Accounting that Houses/Real Estate or Cars must be categorized under Asset. Because we all know that famous accounting formula

▶️ Asset = Liabilities + Equity ◀️

In real life, Robert Kiyosaki has a different point of view about assets. Referring to the book 《Rich Dad Poor Dad
What are assets? Assets put money in your pocket regularly and it only costs you a little time to manage your assets.
What are liabilities? Liabilities take money out of your pocket. No matter it’s a regular or a one-time thing.

Now, let’s wear the new glasses of assets and liabilities to look at our houses or cars. If we rent them out to others, they are assets. Because they generate income for us. If we’re using them, then it’s liabilities because we pay house tax, gasoline, and maintenance fee for both.

Rich Dad and Poor Dad

I believed that this book《Rich Dad Poor Dad》 is the first money management book for many of us. It was published in 1997 and brought us the concept of 4 quadrants which are E / S / B / I. Back at that time, it was mind-blowing for many people. It simply tells you the opposite of what an accounting teacher was teaching us at University.

⭐️E stands for Employee – trade time for money
⭐️S stands for Self-employed – trade time for money
⭐️B stands for Business owner – People work for you (OPT)
⭐️I stands for Investor – Money work for you (OPM)

It divides people into 4 quadrants and the key factors here are OPT and OPM. OPT stands for Other People’s Time and OPM stands for Other People’s Money. When you are in the E and S quadrants, the amount of active work determines income. You have to trade your time for money, once you stop and the income stream stops as well.

But income doesn’t depend on active work when you are in the B and I quadrants. You can use OPT and OPM to help you. The most common example is investing in STOCK or Real Estate. You get paid yield dividends or the rent from tenants periodically. They definitely categorized as assets.

Assets vs. Liabilities

Examples of assets are –

Stocks
ETFs
Bonds
REITs
Digital Assets – Blog / YouTube / IG / TikTok
Real estate for rent
Dropshipping Business
Print On Demand Business

Examples of liabilities are –

Real estate for one’s own residential purposes (Mortgage debt)
Car for one’s own commute purposes
Bank debt
Taxes owed
Student loan

Is Student Loan Considered as Liabilities?

According to 《Rich Dad Poor Dad》 context, a student loan is taking money out of your pocket and that would be considered a liability. However, I believe that it is definitely not A Liability. Just like Warren Buffett once said.

The best investment you can make, is an investment in yourself. The more you learn, the more you earn.

Warren Buffett
Warren Buffet_001

The tricky part is that YOU WILL NOT make more money than you can cognize. It is the root of your money blueprint. The only way to change THAT is to learn. Thus – the more you learn, the more you earn. The appearance/result(how much money you make) will only change after you change your cognition(root) about money.

That’s why I never stop learning and reading. We cannot control the quality of courses we took but we can think this way : Why do we hesitate to sign up for a $100 USD course that might be helpful but turn around immediately buy a $1099 USD iPhone in the blink of an eye?

If you don’t know what I am talking about, you can click here – 《Millionaire Mind Intensive Online Course Review | 6 Jars System

Start Investing in Assets and Yourself

Today, we can basically learn everything from the Internet. Open Google and YouTube and enter the keywords that you’re looking for. Boom! Many Google search results and tutorial YouTube videos are there for us to be self-taught. All we gotta do is spend our time.

It doesn’t necessarily have to be “financial assets”, it could be digital assets. Like I am creating this my own blog that might generate passive income for me in the future. Stop thinking how to make a perfect plan and wait for this and that. Just take actions right now.

It’s now or never!!


If there is any question, please comment down below and let me know.
Welcome to hit that share button if you find this helpful.
by RexyCafe

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