Assets VS Liabilities

by Minority Fortune

gettyflyWhile it may seem painfully obvious what the difference is between the two, I’m afraid not many fully grasp the true differences. It’s one thing if I laid a piece of valuable art and some Air Nikes in front of a 4 year old and asked them which one is more useful. Of course he’d pick the Air Nikes. The problem is your average 25 year old would also!

Here’s the breakdown: Art = Asset; Nikes = Liability.

We should devise a system that lets us use our assets to accrue the money to pay for these liabilities.

Yes, we as African Americans invest a lot in appearances to elevate our social status. The problem is we usually trade our assets (money) for these products to maintain our social status. Am I advocating that we simply stop buying our hair products, clothing, and jewelry? Absolutely not!

Does Robert Kiyosaki use his own money to buy his cars? Nope! It comes from side income generated from his real estate properties and other investments. Someone should drop the hint to sport and entertainment stars.

Anyway, back to the difference between the two via Robert Kiyosaki. Assets put cash flow in your pocket. Liabilities take cash flow from your pocket. If you add up the amount of money going into maintaining the asset, and it surpasses the money the asset produces, then it’s a liability. Simply, if you put $500 monthly into payment, insurance, & maintenance of an asset for example, and it only returns in value $300 monthly. It’s a liability. Without even realizing it, our homes, cars, clothing, personal items, etc. are all liabilities that fail to return the financial value invested into them.

Ideas to turn our liabilities into assets?

A few would be renting out homes, rooms, and space within your real estate property or properties. Using your car as an advertising billboard (via window ads, body wrapping, license plates, etc.) for profit. Just some food for thought. Even think about reviewing products you utilize religiously. Market yourself to these companies and see if you could propose generating affiliate revenue for writing favorable reviews for these products in congested websites of value.

When buying something, analyze what the true costs will be and if it’s something of value to you. Otherwise, pass on it until you have a larger amount of assets, bringing in additional income for you.

You Answer:

How could you turn $2 into profit?

* Image courtesy of Greg Paprocki

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