Some may argue a house and car are not assets, by BMKRIGER

If a house were an asset, then why are so many people in debt when all they own is their house? Many young people are finding themselves in debt. One reason is a common misunderstanding about how to build wealth. This misconception is pointed out by best selling author Robert Kiyosaki.

According to Robert, the rich have different definitions of asset and liability. The rich think of an asset as something that puts money into your pocket, while a liability is something that takes money out of your pocket.

In his book, “Rich Dad, Poor Dad”, Robert points out that rich people really view a house as a liability, because it takes money out of your pocket, and thus increases your liabilities and expenses. (and he’s not talking about income producing properties). How does he figure?

Well, lets say you purchase a house for one million dollars. You have then a mortgage, expenses for keeping the house up such as tax, heat, etc, and… the larger the house, the larger the expenses.

A lot of people disagree with Robert’s assertion that a house is not an asset, but according to Robert, if you want to live like the rich, you have to think and behave like the rich.

Robert also disagrees that a car is an asset, for the same reason as a house. A car doesn’t gain value, it cost you money to use, it doesn’t appreciate, but yet depreciates instead. He would add this item to his liabilities, even though he could sell it (for a net loss).

According to Robert, if you want to be rich, you need to build up your asset column, which increases your income. From this extra income is where you buy your liabilities. Not from your primary income.

http://www.richdadpoordad.com.

I suggest his book for further reading if youre interested in finance.