HOW TO CONVERT A LIABILITY INTO AN ASSET (Examples)

What are Assets and Liabilities in business term?

In this article, we are talking about Millenials and money, and we went through some lessons. I don’t know how many more, but let’s continue with another experience here. And so we were talking about you know assets and liabilities. – Yes. And when you read Rich Dad Poor Dad, I said your house is not an asset, what did you think?
My mom had her properties, and she converted them into assets. I think it just depends on what you do with it, and it would be great if you could show us how to turn your house into an asset. It’s very its really fundamentals. If I could go back, I probably covered it earlier (marker rattling) but it’s a crucial question, and this is what financial education and financial literacy are. Again it starts with the financial statement, and I would say probably 95 percent of all college graduates don’t know what a financial statement is. Did you take an accounting course right? I did. I know you go through parts of this, but I say to young people like you there are six essential words to financial literacy and financial education. I don’t really care about my FICO score a fico score just basically registers are you trustworthy with borrowing money, but a bank will never sell. I get loan in the hundreds of millions of dollars. A fico score not going to get me there. It’s important but not for me. And that’s why the game is called cash flow and this is what cash flow in looks like.

So here you need income, expense, liability, asset. The first line of expense is tax, but this is a weak person cash flow pattern. It’s not how much money you make most people you know. I don’t care if you have a Ph.D. or no school at all. They can’t control the cash flowing out through their expenses, so that’s why people like Susie or men say cut up your credit cards.

CONVERT A LIABILITY INTO AN ASSET

The first thing you know most kids do when they get pay raise and all that they buy themselves a bigger house, now my house is an asset. Who tells you that? Your real estate agent. They want to give you this false sense of security while you’re getting screwed. You know but when you look at what happens with the house a personal. I mean, a personal residence that I live in the money comes in it goes out, and this is middle class, but also goes out through a mortgage. Mortgage payments, oh but I don’t have a mortgage. You still have taxes you even, you know. Hawaii just raised the property taxes on me. Which is probably why I’m going to sell. I’m going to get out of Hawaii, but you have fees, and you have upkeep, so money always flowing out.

So that’s why your house is not an asset; it’s because of its taking money from your pocket. So very said assets put money in my pocket, liabilities take money from my pocket. And so I’m not saying don’t buy a house but here is a house that. And I started when I was 25 bought my first house. It was an apartment with an investment property. I didn’t live in it, I rented it out, and it put money in my pocket. So very simple the definition of asset and liability is not the house or this, its cash flow. Where is the cash flowing? So as a young person (Robert coughing) and to all millennials or if your old financial intelligence is the ability to control cash flow. And that’s what they don’t teach you at school. They tell you to go to school, get a job. The first thing is a tax you know; you’ll pay most of your money will go out through taxes, in your lifetime.
Then they tell you to buy a house, a car—cars an asset, no cars a liability. You got insurance, gas, upkeep, and all this. Now if you buy, a taxi car it could be an asset, its cash flow. And that’s very merely it, so this is a poor person. Money goes out there’s a lot we, we just interviewed some national football league players who make millions of dollars in their 20s. And most of them are broke in two years because they can’t control cash flow. Intelligence IQ is can you manage assets and cash flow, not your college degree. College degrees are important, but they’re not going to teach you this. So the cash flow game trains you over and over and over again to get your money in here to get the cash flow this way. So I started with this, cost me 18,000 dollars.
I paid for the credit card, and I put 25 dollars in my pocket okay. It’s an infinite return because the cash flow paid for the mortgage, it paid the expenses, pays the operating costs, and I still made 25 dollars. Kim’s first year was the same, hers wasn’t 18,000 it was 50,000, 45,000, and it put 25 dollars in her pocket, but Kim now owns 6,500 rental properties. And she pays no tax because the income comes from here. – Mm-hmm If you have a job, you pay fee, but rent the rich get richer because when you have asset income taxes are less. You can get it down to zero if you want. But that’s financial intelligence, but can you control cash flow.

So what is Assests? – Assets put money into your pocket; liabilities take money out of your pocket. And so as a young person you focus on that so when you buy a new house, you’re going to say is this going to take money or put the money? You buy an apartment house is it going to make money or put money that’s it, its cash flow. Six most important words for financial intelligence and IQ are income, expense, asset and liability, but its real cash flow. Now, if I could bring up a more horrible subject is, do you think people can be assets or liabilities? – I think they could be both, to be honest. So for most young people they fall in love, they get married, they have kids. Is a child an asset or a liability? – A child is a liability. I’m not saying I don’t have kids, but you have to think the kid is expensive, and they don’t get cheaper. They get more expensive every year, you know then they go to college and then it gets even more costly. So a human being now this sounds horrible to all those socialists and communists out there, but the fact is kids cost money.