No. I am not talking about your home with mortgage.
No. I am not talking about your hire-purchase vehicle either.

As most people understand, the mortgage of their home is the liability. You owe the bank money. In return, you need to charge your house title to the bank as collateral. So you think you actually have an asset to pay for your liability. You think your actual home is the “asset”, that when you can’t afford the installment, it can pay off your mortgage by being auctioned to third parties. You are right, but it won’t get you rich.

For the rich people with higher financial IQ, they know that the house they are staying in is actually a liability. It is a luxury item. It takes money out of your pocket! In fact, it takes more money than you think. Beside the mortgage installment, you are paying for the renovation, electrical appliances, household bill etc.

Now, let’s come back to the golden question: DO YOU HAVE THE ASSETS TO PAY FOR YOUR LIABILITIES?
A local entrepreneur in pre-school education wants to have a new S-class Mercedes Benz. That’s a liability. He recruited a new talented business partner and opened up another kindergarten. In 3 months time, the child care and education centre is giving him RM5000 net profit every month. His partner is taking care of the centre, while he is shopping for his new luxury car. That’s an asset.

BRABUS S-B8
Creative Commons License photo credit: mujitra

I have some down line agents who are very independent and making sales week after week. I trained them in the first few months in business, and they can practically do business on their own after that. I got overriding commission from every sale they make. They are my assets. They help to pay for my car loan, my liability.

So, do you have the assets to pay for your liability?


KCLau
KCLau

Personal finance author and trainer

    14 replies to "Do you have the assets to pay for your liabilities?"

    • rob

      Do you have a suggestion for part- time business, a business where you do not need to be there all the time, a business where income is generated in your absence, a business that is passive?

      • KCLau

        @ Rob,

        You can learn about internet marketing.

    • Carnival of Net Worth #7

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    • 22

      Understood…intercalated witht Kiyosaki's advice…nice

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    • Mike

      I disagree with employees having limited time. Employees have more than enough time, it is just that many choose to build liabilities rather than assets early in their career. You just need to set retirement as your number 1 priority very early on.

      I agrees with leveraging which is what companies are actually doing but it is easier said than done. Anyway we are the ones who decide our own destiny

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      Do you have the assets to pay for your liabilities? | Personal Finance Money Tips…

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      Do you have the assets to pay for your liabilities? | Personal Finance Money Tips…

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    • KCLau

      Employees can build assets from part time business, real estates and paper assets (stocks, unit trust etc). Due to the limited time, it is a big challenge for employees to build a substantial amount of assets.

      In fact, employees are the biggest asset of a successful business. Once the employees fail to deliver the value, they become the liabilities.

    • anonymous

      Not everyone will have such 'assets' like you do. I can see people from Multi-level marketing, insurance, investment planner – unit trusts, etc will have such 'People Assets”.

      What about those working as mere employees? They're just getting their monthly pay… How would u suggest people in this category to have assets like you ?

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