On Monday I wrote about figuring out what goes into a net worth statement. Like many people in the PF world I’ve read Robert Kiyosaki who argues that assets are things that bring money into your pocket and liabilities are things that take money out of your pocket. One of the comments on the post by Enough Wealth argued that an asset can be cash flow negative and you know what I agree with him.
An asset is something that has value if sold, that doesn’t mean that you’re not still paying for it. If we were only to include items that we owned outright then houses with outstanding mortgages would never be on our net worth statements. With that said I owe my bank money for the car that I’ve been putting on my net worth statement that’s in the liabilities section.
I have to say I like My Kyosaki’s definition in that it really makes you think positively and aggressively to get a strong net worth, his ideas are based around cash-flow and not a net worth statement.
When the end of the month comes around I am going to alter my net worth statement slightly but in general items such as my car and boat will remain on the list because they really do belong there.
[tags]net worth statement, asset, liability, assets, liabilities[/tags]