Question

Discussion: Homeownership is often thought of as the "American Dream": Discuss this with your classmates: Discussion Home ownership is a huge expense. Is it realistic for you? What are your thoughts as you researched the answer for your assignment? Do the thoughts of insurance, maintenance, liability make you want to retreat to a nice safe condo or to rent a nice apartment or even a home? What about that first car? Do you really need a new car that you can not afford or do you just want one? Lots to discuss.

Answer 1

1 As per "RICH DAD POOR DAD" book , you have to focus on building assets not liabilities.

2 Assets are those things which create positive cashflows in future for the individual.

3 Liabilities are those which create negative cashflows in future.

4 As buying the first car when you cannot afford is just creating a liability ,as in future you have to pay lot of expenses to maintain a car ( which creates negative cash flows).

5 Home ownership is often a dream of every individual but it is only viable when it is asset for you not a liability.

1. Asset means house will create positive cashflows in terms of rents,value appreciation etc
2. Liability means house will bring lot of expenses.
3. You have do asset-liability analysis i.e cost-benefit analysis before taking any decision.