What is an asset? What is a liability?

Last week I was in the search for a birthday present for hubby. Which in itself is an art. He is impossible to buy for and I know that a dress shirt for work would not do.

I love browsing the financial isle of the book store. I get inspired by all these books about how to make your money work for you - but I must admit, some of them are just too darn hard to read.

All the financial jargon that I am still trying to get a handle on drives me nuts! Can't they just spell it out in normal english? It's like some of them don't want you to know how to get rich without paying out your nose for advice.

Then I picked up Rich Dad Poor Dad. Aha! This is a book I could get into. I quickly flipped to the middle and was instantly hooked. I not only found Dave's birthday present but it opened my eyes to another way of thinking.

That night I sat on the couch and read the whole book out loud (in between kids showers and bedtime stories) to Dave. My gift to him will hopefully be financial freedom and early retirement. Wouldn't that be awesome?!

So what was the "grab"? A simple sentence.... "What is an asset? What is a liability?"

I seriously thought I knew this. Just the other day, Dave and I were going through how much we thought we owned. We counted of course our investments, how much we thought our house was worth, cars and household "stuff" and added it together and thought - ok not bad.

But herein lies the catch!...ASSETS are something that makes you money - generates income.

Does your house generate income? We all know our cars sure don't. We've all heard the old saying that your car depreciates 20% as soon as you drive it off the lot.

But our pride and joy home is not an asset?

Stop right there! I know you are thinking - well once it is paid for (no mortgage, the ultimate goal in life) it turns into an asset. BUT IT DOESN'T. It will ALWAYS cost you something.

You will always have to pay tax, heat, water and maintenance. The only way I will let you say your home is an asset is if you have a renter that pays enough to you that it covers all of that plus some.

Hmmm, makes you think doesn't it? You may scream and yell at the computer all you wish and tell me that you will sell your home for double the amount you paid! Good for you. If you get that amount and downsize (which most people don't - they always super size) and you take that extra cash and invest it and make 10% on your money to cover and pay for those yearly expenses.

I love that sentence. To me that is the key. It sucked to discover that we basically have no assets but it sure kicked me in the butt to get me some of that "asset stuff".

He really focused on purchasing real estate. Now I don't understand how to go about doing that with limited cash flow, plus he is from the States, which does make it harder to convert over to Canadian rules of real estate. Either way, great book. I recommend picking it up for $10 bucks.

So this is my new task - to find a way to bring in more assets - one of course we have started - Investing.

It is time to "Mind my own Business". ( I love that he calls it that).