Asset or Liability, You Decide

by dtpierce82 in Economics, January 23, 2011

Learn about Assets and Liabilities. Which one is more important to you? Read this to find out more about both.

Well today I would like to talk about little about Assets and Liabilities, since I promised I would post about this is a later blog here it is. Let’s start off with an Asset. What is an Asset? Well in accounting terms, it is basically a tangible or intangible item, that can be turn into cash when either sold, or put down as collateral. Examples, of assets would be homes that are owned free and clear, stocks and bonds, cars and that are owned free and clear, etc. So if you want the secret to being rich, this is it. Increase your Assets and Decrease your Liabilities.

Okay, what about liabilities? A liability, is simply something that is tangible or intangible that is purchased on credit. For example, credit cards, mortgages, debt, etc. These are deadly. You want to stay away from this stuff as much as you can. Because the more liabilities that you have the more poor that you will be. Some people say that cars are more of a liability than an asset, that is the case if you have car or a truck that you owe money on, and the car has all kinds of problems. Liabilities will completely clean your bank account out.

So my advice to all you out there today, is simply pay attention to things that you are purchasing. Ask yourself, will this purchase increase or decrease my assets or liabilities? You would obviously want to increase your Assets and Lower your Liabilities. Come on America we can do this. It is simple accounting concepts. To an accountant, the major advice they give their clients is that they need to keep a track on their assets and liabilities. Hopefully this has help you out. If you have any more questions, or comments, feel free to email me today. I will respond within 24 hours plus its free to ask my a question. Stay tuned for the following blogs, How To Setup a Budget, How To Live By A Budget.