How Assets Became Liabilities?

When someone ask you about your SALN, or the information about your assets and liabilities, you just get your SALN sheet and bring in front of your friends, but in this article, I will going to clarify the difference between an assets and liabilities for this is just the continuation of our previous post on personal finance that talks about millionaire’s mindset for success.

You have a lot of assets, but you don’t know what are those, these assets are your properties such as the big properties and small properties, we have to define them one by one.

• Big Properties – real estate, house and lot, your corporation, your luxury cars, your established building, your company, your store, your investment types such as stocks, bonds, etc…
• Small Properties – motorcycle, gadgets, home appliances and furniture etc..

Liabilities, Debt, Credits

A liabilities is a debt, how much money you borrowed from a bank or from lending company, how much money you have to pay monthly, your electric bills, water, internet bills, credit cards, monthly tuition for kids education etc.. These are called liabilities.

Know the Differences

Now, you know already the meaning of assets and liabilities, and what are these things. This time, let us know how assets turns into a liabilities, this is very important, for many of us are making a big mistakes.

How Assets Became Liabilities?

Example;Juan wants to buy a brand new car using monthly amortization or car loans, since Juan has a permanent job, he is willing to pay for the monthly amortization of car. The situation is very common, we are buying cars using car loans or the “drive now pay later”, the point in this story is, a car is an asset that makes liabilities because of monthly amortization.

To make that car an asset, you have to use that car in order for you to make money out of it. Maybe a wedding car, car rental, student school service, etc. Since that car now is making money, then that is the right time to call it a real assets.

Millionaire’s Mindset for Success

In the topic millionaire’s mindset, a millionaire and a rich person don’t want any thing that will become a liabilities, he wants everything to become an assets, an assets to make money out of these things and making these things as his money machines, he use money to buy things and make money, most of us, use money to buy things and make liabilities. In simple details, a rich person is wise and smart in using money and things.

I hope you love this post, and you learned something from this topic, in my next article, as a part of millionaire’s mindset, I will write a topic on how to achieve time and financial freedom.