Wednesday, February 1, 2012

WW: Liability

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

As with Asset, Liability has several meanings in actual use. Bankers typically just consider debts to be liabilities. Robert Kiyosaki, in his book Rich Dad, Poor Dad, states that a liability is anything that continually drains money from your accounts, or as he states it "Assets feed you, Liabilities eat you."

Now that we've talked about both assets and liabilities, let's look at some Kiyosakian views in our personal lives. Homes would be liabilities, as there is not only a mortgage, insurance and property tax but also maintenance. A stock with a dividend would be an asset, as it is paying you on a regular basis. Royalties would be in the same classification. You do the work up front, and receive income for a period of time after that.

If you change your financial view of your world to these definitions of Assets and Liabilities, it gives you a more realistic view of where you stand. If you then focus on acquiring assets and divesting liabilities, you will better be able to weather life's storms as they come.

For we must be one thing or the other, an asset or a liability, the sinew in your wing to help you soar, or the chain to bind you to earth. 
Countee Cullen 


 noun \ˌlī-ə-ˈbi-lə-tē\
plural li·a·bil·i·ties

Definition of LIABILITY

a : the quality or state of being liableb : probability
: something for which one is liable; especially : pecuniary obligation : debt —usually used in plural
: one that acts as a disadvantage : drawback


\ˈlī-ə-bəl, especially in sense 2 often ˈlī-bəl\

Definition of LIABLE

a : obligated according to law or equity : responsibleb : subject to appropriation or attachment
a : being in a position to incur —used with to <liable to a fine>b : exposed or subject to some usually adverse contingency or action <watch out or you're liable to fall>

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