Are You Buying Assets Or Liabilities?
You earn money and literally, you have to spend everything. Maybe you lost your job, you do some freelance work to make some money. When you start making more money, your financial situation improves. Now you have savings and you can buy different things. So are you buying assets or liabilities?
We have the desire to get recognition and sometimes do something to show off. You might make financial decisions that prevent our financial growth. The interesting thing is, you feel like you are holding assets and doing good, but you actually hold a liability.
Everyone needs a house to live in. Many people take loans from the bank to buy or build a house. When you have a house, it feels great. But you have to pay the loans with interest for the next 15 to 20 years. You think that's okay.
In case something happens and you are unable to pay back loans with interest, do you think the bank will let you go? You think you hold an asset, but later realize that's a liability. And you have to pay for that for a long time.
Sometimes we make reckless decisions just to show off. You decide to buy a new car. Do you really need that car? Or, you do like to draw people's attention with your brand-new car?
As soon as you see your financial situation improve and move in a positive direction, you decide to buy such things that put you in a vulnerable situation. Will you generate money from that? Moreover, you have to spend money on that regularly.
You buy a liability thinking that as an asset and now your expenses increase because of that. Think twice before buying something that takes money out of your pocket when you hold that.
Instead, you can buy assets that will generate income for you. You can reinvest your earnings and grow your wealth. If you don't think about the outcome of your financial decision, there is a high chance you will fall into a trap over and over.
You may see people showing lavish lifestyles and doing impressive things on social media. You wish you would live a life like them. The truth is, most of the things you see on social media are not real or that's not the full picture.
There is a big difference between looking rich and being rich. So it is up to what you want to be and how you like to see yourself in the future. Thank you for reading this post. Please feel free to leave your comments. That's it for now. I'll be back with another post.
In my opinion I think it is better to have more assets than liabilities.