The three rule in the rich: assets and liabilities

Olivier Seban "everyone can be a rich man"

 

In order to enrich your financial knowledge, let us talk about some accounting concept. Don't run away. I will simply say. In addition, you'll find out, accounting is a special term to describe your daily activities.

 

First you have to learn to distinguish:

The income and expenditure.

The assets and liabilities.

 

Assets are all can directly or indirectly bring you money income, let the money into the bank account of the price of the transaction. The most common assets, and revenues they bring:

● the work and pay the.

The rent income of immovable property is the only bring assets.

● dividend stock.

● the interest income of investment.

 

Debt is a debt, all necessary expenses, as well as all their money.

The most common liabilities and their resulting cost:

● the tax system and tax.

● credit loans and interest.

All necessary expenses, daily life: food, clothing, entertainment etc..

● alimony, fine and so on.

 

Resolution of asset and income, liabilities and expenses between the difference is really very important. Said more clearly, an apartment you can not use the name (assets) to buy bread, but with the rent the rent.

 

Once you understand this, you must use the following formula to win sustained prosperity:

You should hold and acquisition of assets, not liabilities.

 

Remember the three target:

The increase in assets.

The control and reduction of debt.

● that income is always greater than the expenditure.

Adherence to these basic principles, your financial decisions and actions must be on the right direction.

 

For example. A credit loan to buy a LCD screen, you not only increases the debt, also produce fixed costs (monthly payments), and the assets of the blank. Contrary to the law of our wealth.

 

On the contrary, if your loan to buy the apartment, although the loans to debt burden, but the property value complement. With the gradual repayment interest loans, the proportion will continue to decrease to less than the principal. Thus, from the beginning to pay the first loan, capital ratio that is greater than the debt.

 

The ideal situation is to buy the apartment to rent, rental income to pay for the loan in full or in part, for the month. In this case, debt (mortgage) lead to costs (mortgage), by assets (apartment) revenue (rent) draw.

 

You may be in doubt, if have more assets than debt can become rich, the equation appears simple, so the number of rich people why does not increase. As long as each person pursues this rule, the world no longer poor.

 

You understand there is no mistake, but I don't think most people really understand what is the financial assets and liabilities, not to mention they can distinguish between income and assets, liabilities and cost difference. You can do an experiment. Ask the people around, to see if they have what assets and liabilities, and how to manage them. You can judge from their answer out each financial knowledge, and understand whether they have the ability to get rich.

 

"All right, but the car should be regarded as assets, because whenever I can sell it. So I buy a car loan is not excessive."

Completely mistaken. Unless a car can bring income, otherwise it just liabilities. Even if it can be sold, its value will decrease with time. So I'm going to train two new rules, allow you to more clearly distinguish the difference between assets and liabilities, let you know what kind of a way to get rich, and what kind of makes you poor.

The 1 investment is likely to rise, and (or) can bring wealth and income assets.

2 do not use the loan to buy any devaluation.

"Interest free loans? You should not tell I don't consider this loan! If no interest, the price we pay only."

The first is to promote the role of loan you spend oneself do not have money, let you think you have enough money to spend. As long as the debt, or without the payment of interest, don't use consumer loans. Be borrowing is not free.

If you want to be rich, you should prohibit the use of any consumer loans. They will only bring about debt, makes you more and more poor. The poor and middle class like to use loans to buy off the appearance of wealth (car, the new technology products and so on) these things just let you near the wealth, rather than have it; smell, but never touch.

 

Sebang"Everyone can become rich"Shanxi people's publishing house, the book 2010 (poor boy 32 years old become millionaire's secret, French Amazon financial bestsellers first name, popular in the 20's, affect hundreds of millions of reading new wealth enlightenment books)

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