Acquire Assets First, Before Liabilities

If you want to stay on top in the game of money, you need to acquire assets first before liabilities. Assets put money in your pocket while liabilities take money away from your pocket. You want to go for what puts money in your pocket first before going for what takes money away from your pocket. This means you want to go for what generates income first before acquiring what generates expenses.

The reason people hold unto jobs they hate is because outside of their wages from that job, all they have is expenses. This means if you take the job out of the equation, all that is left is expenses. This position is that of financial insecurity and weakness. You negotiate from a point of weakness because you do not have the choice to walk away.

We all love the good things in life. They make life fun to live. Nice cars, homes, clothes, holidays, phones, toys, furniture, electronics, you name it. No matter how hard you try to deny it, we all love nice things, and we do deserve the best. Flying economy class is not fun. On long-haul flights, it can be deadly if you do not move around. Poverty is not a badge of honor.

Going without perpetually is not the way to live. After saving, investing, and denying yourself for a season or two, a payday makes it all worthwhile, attaining financial independence and financial freedom, living life on your terms, away from the tyranny of the clock, and a boss that wants to plant a GPS on you.

How can you afford these things?

Most people reach for the shortest cut – they use their salary, and if it is not enough, they supplement it with a loan. They get the item and start enjoying it today while using tomorrow’s money to pay for it. In some instances, you keep paying after the item is long gone. If you love the latest automobiles, you may keep paying in perpetuity, trading in and piling up more debts as new models hit the showrooms.

There is nothing wrong with giving yourself a treat or indulging in a lap of luxury, but the million-dollar question is – who pays for it? Are you paying for it with your sweat and blood a.k.a your salary or do you own an asset that is paying for it? Can you replace that car if you lose your job or retire from your job? Is your trading your life for liabilities?

The sad thing about spending your wages on depreciating items is that years down the line, there is nothing to show for your years of toil and sweat. It is all gone with the wind without a trace, except for some photo albums that show what once was. Your money is gone, and the item is gone. All you have left is grey hairs and hope for more money.

There is a scene I love watching on CNN, usually shown in fast-forward mode. You see an empty thoroughfare. Then it quickly fills up and then empties as the afternoon gives way to nighttime. If your life is played back in fast-forward mode from when you started working till now, what will it show in terms of the direction of your cash flow? The most typical pattern would be cash being exchanged for stuff, stuff that lingers for a while and then end up with the thrash. Our wardrobes, stuff, and cars will come and go as we grow older with nothing to show for the daily 9 to 5 toil.

What do you have that actually puts money into your pocket?