Saturday, September 16, 2006

Assets Versus Liabilities










Why some people accumulate(have) alot of debt?

"My house, My car, My cat are my assets"

Have you heard of these phrase? Yes, I bet you do.
Hmm.. Houses, cars and what a cat is an asset too?
Let me tell you what assets are?

Wikipedia: an asset
is anything owned which can produce future
economic benefit

Let's look at another word
Liability, Wikipedia explains:
liability is anything that is a hindrance, or puts individuals at a disadvantage.

In other words Assets are something that creates wealth for you, not
erode it.

SO people say "Oh my ferrari is my most favored asset"
A ferrari is not an asset, it's a liability.
You got to pay for its maintanence, if people scratch it,
you got to pay for the pain, if your dog pooped inside,
you gotta ask a proffesional to clean it.

However, At some points of time, Liabilities are
assets too, You are a company CEO, you need a
ferrari to show the power distance you have among
you and your employees.

Hey, i ask you, do you feel scared of a boss who
drive around with a small car, or a Ferrari?

So now, i think you wanna ask me, what are assets anyway?
Shops are assets if you know where to look for,
A sucessful business is an asset,
Machine are assets.

Coz they create wealth for you.














The equation of assets

Assets : Something that can create wealth for you
which can cover the liabilities

Example: Hassan, owns a shop, Lets say he earns
$50 and then he has to pay a cost of 25.
So now
50 dollars is generated. And the cost is 25.

Which means that the profits far outweight the
cost. His Shop is an asset.

Another scenario

Hassan has a dog, it earns nothing for him,
and yet he has to pay for the cost.

His dog is a liability.

This is all BizChef LuUeE has to say for today.
One important point. If you don't wanna be in debt,
make sure you know what assets and liabilities are.

I learn this from Rich Dad Poor Dad.

Sun Tzu Quote:
"now the enemy and know yourself; in a hundred battles you will never be in peril. When you are ignorant of the enemy, but know yourself, your chances of winning or losing are equal. If ignorant both of your enemy and yourself, you are certain in every battle to be in peril."

2 comments:

Nonnie King said...

Haha. Bobby will be my assets and I'll be his liabilities!

Is that true?

Seriously, I had always thought that houses and cars are assets till I read your entry.

Nice post. *Thumbs up*

Anonymous said...

hhhaha.. Nonnie, Only after investigation can i tell you that answer. mwahahaa..

But for me, a girl will be asset. hahaha.coz she can cook, she can comfort. If guy friend, they don't give a crap if i am sad. mwahaha..

Ya, last time i oso tot houses and cars are assets till i read rich dad and poor dad and it changed my thinking forever.. hahha..