So simple a cave man could get it!! The difference between an ASSET and a LIABILITY

This is a quick yet insightful post, written by Marty Boardman.

Marty is the Chief Financial Officer for Rising Sun Capital Group, LLC, a real estate investment firm based in Gilbert, AZ, just a few miles away from my real estate office in Tempe. His firm purchases homes at the courthouse steps and public REO auctions. They have two exit strategies, either fix and flip or seller financing.

If there is one thing you teach yourself about money, or more important, that you teach your kids about money, let it be the difference between an asset and a liability. It’s not a complicated difference. One makes you money(asset) and one costs you money(liability).

—————————–

It’s time for me to come clean.  I love to shop.  Not for clothes or jewelry.  That would mean immediate revocation of my man card.  No, I like to browse for gizmos, gadgets and toys.  High tech or low tech, it doesn’t matter.

On Sundays I sit at my kitchen table flipping through the slick glossy newspaper ads.  This week Best Buy has a sale on LED TVs.  Target has the movie Tombstone on blu-ray for $10 off.  And Dick’s Sporting Goods has that gas camping grill I’ve been wanting.

Then there’s Home Depot.  I can find something I want on almost every aisle.  Chase lounge chairs.  A belt sander.  And how can I live without this decorative metal ant sculpture for my backyard?

I need help.  I’m weak – a victim of the consumer culture.

They say the first step towards solving a problem is admitting that you have one.  Okay, now what?

The truth is I came to the realization that I’m a shopaholic about a year ago.  It’s been a long winding road but I’m finally on the mend thanks to this 3-step recovery process:

  1. I stay out of any store selling merchandise that requires electrical or battery power.
  2. I leave my wallet at home.
  3. Before I buy anything I ask myself – will this cost me money or make me money?

Step 3 of the recovery process is the most important.  I came up with it after reading the book Rich Kid, Poor Kid by Robert Kiyosaki.  In it he explains how an asset is something that makes you money.  A liability is something that costs you money.  So simple a child could understand this concept right?

Well, I guess I’m still a kid at heart because it took me 39 years to figure out.

Now I shop for cash flow producing real estate – at the courthouse steps and on the multiple listing service.  The fix and flip business I operate with my business partner is generating enough revenue for us to purchase 3-4 rental properties this year.

I’m proud to say that I’ve finally turned the corner with my liability addiction.  Although I still have the occasional relapse.  I recently bought a Motorola Xoom tablet.  Sure it’s a toy.  But I justified the expense because it will help me make money.  Last week I used it on the 6th hole of the golf course to place a bid on a house going to auction.

I guess I forgot to mention that I’m also a golfaholic.  Unfortunately, there’s no known cure for that.

By: Marty Boardman

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s