Wealth Creation and "Assets"

Yesterday, I was doing some research on one of my favorite topics--wealth creation and assets.  I came across a few descriptions of assets and liabilities in my study of wealth.  What I read on quite a few sites that really jumped out at me, is what people do with their money and what they view as "assets".  I have read several books that discuss these asset/liability perspectives, but it was good to get a refresher.  Here is some of what I was looking at:

  • Poor people buy "stuff" things that make them feel they are living a desirable lifestyle
  • Middle class people buy "liabilities" that they view as "assets" (that have mortgages and loans attached-- cash outflows), as well as branded, designer goods that make them feel they are living "upscale"
  • Rich people buy or create assets that generate income (cash inflows), then usually buy more assets and if they do use financing (debt) it is to leverage their returns

Think about that for a moment . . . Where are you?  Where should/could you be?

A Side Note:  I started planning this post yesterday, but the funny thing is that today I was talking to my wife's cousin (who also lives in the country, about her neighbor's "junkyard" backyard.  She told me that the wife said it was because they were "poor" . . . further, my wife's cousin added that much of the stuff in the yard (a trampoline, a gazebo, and a now worthless, torn waterslide) was the result of blowing their tax stimulus check . . . 

In the coming weeks, I will be discussing and posting quite a bit more on this topic of wealth creation.


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