Wednesday, January 25, 2012

WW: Asset

Welcome to Word Wednesday. The word this week is Asset.

The common usage of Asset is anything you could sell for money. For instance a banker will ask you what your assets are, and will look for houses, cars, boats, furniture and even golf clubs. They are looking for an answer to the question, "If you stop paying me, what can be sold to cover your debt to me?"

I find this usage of asset a bit misleading. Robert Kiyosaki, in his book Rich Dad, Poor Dad, states that assets generate you income, or as he states assets feed you. The idea is that if something is costing you money to own, it's not really an asset.

Take a house, for instance. Even if you sell your house, you'll need somewhere to live (although your parents basement may be an option, that comes with a different price). And homes cost money, a lot of money. Property taxes, interest payments, insurance, upkeep, maintenance, decorations, cleaning, etc. So while the banker has no problem with you going to live in your parent's basement to cover his loan to you, you'd be better off to look at things that generate you income (especially passive income) as an asset. Don't fool yourself.

I always felt that my greatest asset was not my physical ability, it was my mental ability. 
Bruce Jenner 


 noun \ˈa-ˌset also -sət\

Definition of ASSET

plurala : the property of a deceased person subject by law to the payment of his or her debts and legaciesb : the entire property of a person, association, corporation, or estate applicable or subject to the payment of debts
: advantageresource <his wit is his chief asset>
a : an item of value ownedb plural : the items on a balance sheet showing the book value of property owned
: something useful in an effort to foil or defeat an enemy: asa : a piece of military equipmentb : spy

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