Your Home - Asset Or Liability?
Now it makes some sense to understand what is an asset and what is a liability?
Let's first go through the dictionary definitions: (from Dictionary.com )
Asset:
- A useful or valuable quality, person, or thing; an advantage or resource: proved herself an asset to the company.
- A valuable item that is owned.
- The state of being liable.
- Something for which one is liable; an obligation, responsibility, or debt.
- liabilities The financial obligations entered in the balance sheet of a business enterprise.
An 'Asset' is something that puts money in your pocket & a 'liability' is something that takes money out of your pocket.
I'm not sure how many of us agree with this definition. But in a sense, the definition is true. So let us come back to the question: Is your living home an asset or a liability?
I have seen people spending their lifetime saving up money for their dream house. People think that the house they live in is the biggest asset they have. Real estate values go up in due course of time, but according to our definition, it does not put any money in our pockets. Instead, your home takes money out of your pocket.
So should we still call our home an asset? I do not think so. 😀
Rush in your thoughts and let us see what ideas we generate in this thread.
-The Big K-