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When downsizing became the “in” thing lo do, millions of workers | found out their largest so-called asset, their home, was eating them alive, j Their asset, called a house, still cost them money every monthTheir car, another “asset,” was eating them aliveThe golf clubs in the garage that cost $1,000 were not worth 51,000 anymore Without job security, they had nothing to fall back on What they thought were assets could not help them survive in a time of financial crisis
1 assume most of us have filled out a credit application for a banker to buy a house or to buy a car It is always interesting to look at the “net worth’1 section It is interesting because of what accepted banking and accounting practices allow a person to count as assets
One day, to get a loan, my financial position did not look too goodSo I added my new golf clubs, my art collection, gucci horsebit hobo books, stereo, television, Armani suits, wristwatches, shoes and other personal effects to boost the number in the asset column
But I was turned down for the loan because I had too much investment real estateThe loan committee did not like that 1 made so much money off of apartment housesThey wanted to know why I did not have a normal job, with a salaryThey did not question the Armani suits, golf clubs or art collection Life is sometimes tough when you do not fit the “standard” profile
I cringe every time I hear someone say to me that their net worth is a million dollars or $100,000 dollars or whatever One of the main reasons net worth is not accurate is simply because the moment you begin selling your assets, you are taxed for any gains
So many people have put themselves in deep financial trouble when they run short of incomeTo raise cash, they sell their deville watch assetsFirst, their personal assets can generally be sold for only a fraction of the value that is listed in their personal balance sheetOr if there is a gain on the sale of the assets, they are taxed on the gainSo again, the government takes its share of the gain, thus reducing the amount available to help them out
Of debtThat is why I say someone’s net worth is often “worth less” than they think
Start minding your own businessKeep your daytime job, but start buying real assets, not liabilities or personal effects that have no real value once you get them homeA new car loses nearly 25 percent of the price you pay for it the moment you drive it off the lotIt is not a true asset even if your banker lets you list it as one My $400 new titanium driver was worth S150 the moment I teed off
For adults, keep your expenses low, reduce your liabilities and diligently build a white chloe bag base of solid assetsFor young people who have not yet left home, it is important for parents to teach them the difference between an asset and a liability Get them to start building a solid asset column before they leave home, get married, buy a house, have kids and get stuck in a risky financial position, clinging to a job and buying everything on credit I see so many young couples who get married and trap themselves into a lifestyle that will not let them get out of debt for most of their working years
For most people, just as the last child leaves home, the parents realize they have not adequately prepared for retirement and they begin to scramble to put some money awayThen, their own parents become ill and they find themselves with new responsibilities
So what kind of assets am I suggesting that you or your children acquire? In my world, real assets fall into louis vuitton kabelky several different categories:
1Businesses that do not require my presenceI own them, but they are managed or run by other people If I have to work there, it’s not a businessIncome-generating real estateRoyalties from intellectual property such as music, scripts, patentsAnd anything else that has value, produces income or appreciates and has a ready market
As a young boy, my educated dad encouraged me to find a safe jobMy rich dad, on the other hand, encouraged me to begin acquiring assets that I loved “If you don’t love it, you won’t take care of it I collect real estate simply because I love buildings and land I love shopping for them 1 could look at them all day longWhen problems arise, the problems are not so bad that it changes my love for real estate For people who hate real estate, they shouldn’t buy it
I love stocks of small companies, especially chanel diamond watches startu