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Your House :Asset Or Liability ?


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Some notes after read of Rich Dad,Poor Dad.

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Your House :Asset Or Liability ?

  1. 1. Your House: Asset or Liability ? from <<Rich Dad, Poor Dad>> Presented By Wenbin July, 2009
  2. 2. Agenda  Asset and Liability: Concept in Accounting  Asset and Liability: New perspective from Rich Dad, Poor Dad  Balance Sheet vs. Income Statement  What’s the criteria to determine  Suggestions from the Book  Discussion
  3. 3. Asset and Liability--Accounting •Asset ● Something possessed by a business entity from which future economic benefits may be obtained. Any item of economic Value owned by an individual or corporation ● •Liability ● A liability is defined as an Obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future.
  4. 4. Asset and Liability--Rich Dad , Poor Dad •Asset ● Definition: Puts Money in Your Pocket ● Feature : Positive Cash Flow and Generate Income ● Examples: Stocks, bonds, notes, real estate, business, IP etc. •Liability ● Definition: Takes Money away from You ● Feature : Negative Cash Flow and Generate Expense ● Examples: Mortgage, car loan, credit cards, school loans etc.
  5. 5. Balance sheet vs. Income Statement Balance Sheet Assets Liabilities Income Expense Income Statement
  6. 6. What’s the criteria to determine •Your house is NOT paid off : ● More money out than renting income---Liability ● Less money out than renting income--- Asset •Your house is paid off: ● You are having the house as residence--Liability ● You paid less money out than your renting income--Asset Income vs. Expense !!
  7. 7. Suggestions from the Book •Asset always comes first . ● It is never too late to start building your financial empire • Let Money Work for You. ● Every RMB is an employee. They works to bring more RMB while you’re asleep • Invest in Yourself ! ● Work to learn: manage people/biz system/cash flow etc • Always Prepare to Run Your Own Business
  8. 8. Make Your Dream Comes True !!