Politics

[Brent in Az]

Isn't a home also a type of liability since it has to be insured?

 

[Brent in Az]

Chuck Norris has died at 86.
One of the original old school Hollywood martial arts bad asses .

 

[Tex .416]

The same is true all over the world..

View attachment 753531

thats paris..


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thats Bradford, UK..

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Thats Gottengin Germany


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Thats just outside Bonn Germany..

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these are migrant Roma in Malmo Sweden..



Im afraid Im not seeing your point..

All of those countries have substantially more social welfare programs than the US.. and yet they have notable numbers of people living in abject poverty and filth..

Of course there are poor people in the US.. there are 340M US citizens and a super conservative estimate is that there are another 18M illegals in the US as well..

The question is how does someone define "poor" or poverty?

If you use the World Banks definition of poverty (less than $3 per day) then exactly zero americans live in poverty...

If you use the US's definition of poverty (less than $20 per day) then just under 6% are in poverty.. and a conservative estimate is that over 70% of those people choose to be in poverty (refuse to work, etc) or have mental or physical health issues that prevent work and become wards of the state)..

What most people consider "poor" in the US is actually pretty damn wealthy by the worlds standard.. People living in our "projects" (government provided housing) live significantly better than anyone in any of the photos above..

The US, despite liberals trying desperately hard to change things, doesnt prescribe to the same social welfare systems that Europe does.. and its honestly pretty proud that it doesnt..

In contrast to the US, by the German definition of poverty, roughly 16% of Germans live below the poverty line and another 5% live at "risk" of dropping below the poverty line.. Germany defines poverty as less than 1440 euro a month..

15.4% of French live below the French definition of poverty (1041 Euro a month)...

etc etc...

Apologies for repeating something I have shared before, but worth repeating.

When my wife and I were in Tanzania, one of the local guides commented that he wanted to move to the US. When I asked why, he said he wanted to live in a country where there was so much food that even poor people are fat.

That is a pretty powerful reference point for what constitutes “poor.”

 

[Wheels]

Isn't a home also a type of liability since it has to be insured?

Accounting classes are way in my past so I am happy to be corrected but from my understanding the simple answer is no.

Insurance is an expenses found primarily on the income statement. Again, the difference between a balance sheet and an income statement.

Technically insurance could also show up as an asset on a balance sheet since insurance is prepaid. ie: you prepay $6,000 home insurance for the year and have used three months of insurance. There are nine months to go in the year so you have $4,500 of prepaid insurance so that is an asset on your balance sheet. Property Taxes are paid in arrears. If they are $3,000 per year, you technically owe $750 after three months. This would show up under liabilities on your balance sheet. Most homeowners would never be this technical in filling out financial statements for themselves or a lending institution.

When you deal with assets and liabilities you are generally only dealing with a balance sheet. When you’re dealing with income and expenses you are generally dealing with an income statement.

I’m not sure if this is helpful, but from a technical perspective I’m pretty sure it is correct. I’m also happy to be corrected if there are any CPA’s or CA’s that want to chime in.

 

[Brent in Az]

Accounting classes are way in my past so I am happy to be corrected but from my understanding the simple answer is no.

Insurance is an expenses found primarily on the income statement. Again, the difference between a balance sheet and an income statement.

Technically insurance could also show up as an asset on a balance sheet since insurance is prepaid. ie: you prepay $6,000 home insurance for the year and have used three months of insurance. There are nine months to go in the year so you have $4,500 of prepaid insurance so that is an asset on your balance sheet. Property Taxes are paid in arrears. If they are $3,000 per year, you technically owe $750 after three months. This would show up under liabilities on your balance sheet. Most homeowners would never be this technical in filling out financial statements for themselves or a lending institution.

When you deal with assets and liabilities you are generally only dealing with a balance sheet. When you’re dealing with income and expenses you are generally dealing with an income statement.

I’m not sure if this is helpful, but from a technical perspective I’m pretty sure it is correct. I’m also happy to be corrected if there are any CPA’s or CA’s that want to chime in.

It's probably just the insurance underwriters that would consider it a liability.

 

[Altitude sickness]

“Technically insurance could also show up as an asset on a balance sheet since insurance is prepaid. ie: you prepay $6,000 home insurance for the year and have used three months of insurance. There are nine months to go in the year so you have $4,500 of prepaid insurance so that is an asset on your balance sheet. Property Taxes are paid in arrears. If they are $3,000 per year, you technically owe $750 after three months. This would show up under liabilities on your balance sheet. Most homeowners would never be this technical in filling out financial statements for themselves or a lending institution.”

Jokingly, I would love you as my tax man. But not so much as my accountant.

That logic is similar to buying something you don’t need because it’s on sale and thinking you saved money.

If you owe money to anything or anyone it’s a liability. Prepaying does not change that reality.

Go ask a lender or a bank if debt on anything. credit cards, your residence, cars, boats, ask if it goes in your liability or your asset column. They may deduct the amount of liability (risk) , for any equity but it’s still seen as a negative.

 

[Red Leg]

“Technically insurance could also show up as an asset on a balance sheet since insurance is prepaid. ie: you prepay $6,000 home insurance for the year and have used three months of insurance. There are nine months to go in the year so you have $4,500 of prepaid insurance so that is an asset on your balance sheet. Property Taxes are paid in arrears. If they are $3,000 per year, you technically owe $750 after three months. This would show up under liabilities on your balance sheet. Most homeowners would never be this technical in filling out financial statements for themselves or a lending institution.”

Jokingly, I would love you as my tax man. But not so much as my accountant.

That logic is similar to buying something you don’t need because it’s on sale and thinking you saved money.

If you owe money to anything or anyone it’s a liability. Prepaying does not change that reality.

Go ask a lender or a bank if debt on anything. credit cards, your residence, cars, boats, ask if it goes in your liability or your asset column. They may deduct the amount of liability (risk) , for any equity but it’s still seen as a negative.

Go ask a lender or a bank if a home without a mortgage is an asset or a liability. Regardless of what some personal finance influencer might claim, such a property is an asset on any balance sheet. Yes, even when owned outright, it is a cost center for budgetary planning and concerns with respect to upkeep, insurance, etc. But those costs in no way prevent the home from being an asset on any legal declaration of net worth.

 

[Tanks]

I think the whole discussion evolves around liquid vs illiquid assets. When looking at retirement income, I do not look at homes etc., I do not factor them in the 4% a year of withdrawal rate of assets most financial planners talk about. However, they do factor in the yearly budget as an expense for maintenance, insurance etc..

They definitely factor in as an asset when one is discussing estate planning and possible Federal estate taxes.

 

[mark-hunter]

When my wife and I were in Tanzania, one of the local guides commented that he wanted to move to the US. When I asked why, he said he wanted to live in a country where there was so much food that even poor people are fat.

Some 25 years ago when I was junior officer on a cargo ship, we caught a stowaway.
My duty was to question him and send the standard questionnaire with answers to the company, who will then send it to authorities.

One of the questions was: Why do you want to go to Europe?
Answer: Because nobody works there, and everybody is rich.

I think that is the standard answer that holds today for that profile and for majority of immigrants.

 

[Altitude sickness]

Go ask a lender or a bank if a home without a mortgage is an asset or a liability. Regardless of what some personal finance influencer might claim, such a property is an asset on any balance sheet. Yes, even when owned outright, it is a cost center for budgetary planning and concerns with respect to upkeep, insurance, etc. But those costs in no way prevent the home from being an asset on any legal declaration of net worth.

I was purposefully defending one side of the asset/liabilities debate. Not for petty arguments but for discussion sake.

I own a residence and a vacation rental home. I consider them an asset.

I was assigned that side of the debate to defend.

Now I have to defend another side of the coin.
BRRRR method (Buy, Rehab, Rent, Refinance, Repeat

I joke. I’ll stop with the protagonist postings.

 

[Wheels]

“Technically insurance could also show up as an asset on a balance sheet since insurance is prepaid. ie: you prepay $6,000 home insurance for the year and have used three months of insurance. There are nine months to go in the year so you have $4,500 of prepaid insurance so that is an asset on your balance sheet. Property Taxes are paid in arrears. If they are $3,000 per year, you technically owe $750 after three months. This would show up under liabilities on your balance sheet. Most homeowners would never be this technical in filling out financial statements for themselves or a lending institution.”

Jokingly, I would love you as my tax man. But not so much as my accountant.

That logic is similar to buying something you don’t need because it’s on sale and thinking you saved money.

If you owe money to anything or anyone it’s a liability. Prepaying does not change that reality.

Go ask a lender or a bank if debt on anything. credit cards, your residence, cars, boats, ask if it goes in your liability or your asset column. They may deduct the amount of liability (risk) , for any equity but it’s still seen as a negative.

Your original post was about Robert Kiyosaki. People like him and Dave Ramsey have done a great job of helping millions of people understand basic financial concepts and helped them get out of debt. My hats off to them and people like them. They give the basics and I agree with most of what they say but certainly not all.

I’m all about living within my means and being financially prudent. I used to teach a class at church that was very similar to what Dave Ramsey now does in his Financial Peace series. In the late 90’s I ran across Ramsey’s material and used it for a couple of years (less prep for me) then turned the facilitator role over to others so I could focus on different projects. I am sure Ramsey is more engaging and thus successful than I ever was in imparting knowledge since Financial Peace is still taught one quarter every year for over 25 years at church. I would have burned out long before.

We are probably talking past ourselves here but from a technical perspective:

Balance Sheet deals with assets and liabilities. It is a moment in time.

Income Statement deals with income and expenses over a period of time.

Generally speaking insurance is an expense. An expense is part of an income statement. ( even though I gave an example of how it could fall on a balance sheet) Over a year it definitely cost an individual real money.


You give four examples credit cards, residence,cars,boats.

Credit cards is an expense for the amount you pay off monthly. If you carry a balance it becomes a liability on the balance sheet

Residence is an asset. There may be corresponding costs but it is still an asset. If you carry a note on the residence it is a liability. Your insurance is an expense.

Car is an asset. There may be corresponding costs but it is still an asset. If you carry a note on the car it is a liability. Insurance etc is an expense.

Boat is an asset. There may be corresponding costs but it is still an asset. If you carry a note on the boat it is a liability. Insurance etc is an expense.


I do understand where you are coming from and agree with you in part. I also agree with you 100% that debt on non investments is a negative. All I’m trying to do is clarify terminology.

 

[Altitude sickness]

I’ve been taking history and financial courses on the online Peterson Academy. They have economic professors with 180 degree theories on banking, local, state federal and global finance. It’s overwhelming and informative.

They make the financial portions interesting because they weave history into it.
For instance, John law the Scott that the French government paid to run their banking system.

And how his methods, tools, policies and procedures are still used in banks all over the world. He was eventually run out of France but his systems still work to this day.

John Law, the man who blew up the French economy

The rise and fall of the world's first millionaire, a swashbuckling Scottish financier who all but bankrupted 18th-century France, may offer lessons for the world's first trillionaire and those making billions from Bitcoin.

engelsbergideas.com

 

[Tundra Tiger]

Your original post was about Robert Kiyosaki. People like him and Dave Ramsey have done a great job of helping millions of people understand basic financial concepts and helped them get out of debt. My hats off to them and people like them. They give the basics and I agree with most of what they say but certainly not all.

I’m all about living within my means and being financially prudent. I used to teach a class at church that was very similar to what Dave Ramsey now does in his Financial Peace series. In the late 90’s I ran across Ramsey’s material and used it for a couple of years (less prep for me) then turned the facilitator role over to others so I could focus on different projects. I am sure Ramsey is more engaging and thus successful than I ever was in imparting knowledge since Financial Peace is still taught one quarter every year for over 25 years at church. I would have burned out long before.

We are probably talking past ourselves here but from a technical perspective:

Balance Sheet deals with assets and liabilities. It is a moment in time.

Income Statement deals with income and expenses over a period of time.

Generally speaking insurance is an expense. An expense is part of an income statement. ( even though I gave an example of how it could fall on a balance sheet) Over a year it definitely cost an individual real money.


You give four examples credit cards, residence,cars,boats.

Credit cards is an expense for the amount you pay off monthly. If you carry a balance it becomes a liability on the balance sheet

Residence is an asset. There may be corresponding costs but it is still an asset. If you carry a note on the residence it is a liability. Your insurance is an expense.

Car is an asset. There may be corresponding costs but it is still an asset. If you carry a note on the car it is a liability. Insurance etc is an expense.

Boat is an asset. There may be corresponding costs but it is still an asset. If you carry a note on the boat it is a liability. Insurance etc is an expense.


I do understand where you are coming from and agree with you in part. I also agree with you 100% that debt on non investments is a negative. All I’m trying to do is clarify terminology.

Love Dave Ramsey. For what it's worth, I am a "free spirit" not a "nerd".

 

[CoElkHunter]

These days I complain when it gets above 80.
I need to move to cool mountain country.

Norway?

 

[jpr9954]

 

[CoElkHunter]

These days I complain when it gets above 80.
I need to move to cool mountain country.

Heck, it was 80 here yesterday and supposed to be 80 plus today. Should be snowing here this time of year.

 

[Andrew62]

That logic is similar to buying something you don’t need because it’s on sale and thinking you saved money.

If only my girlfriend understood this!!! lol

 

[Brent in Az]

Norway?

NOoooooooo........

 

[Scott CWO]

Interesting video. I continue to maintain a home with equity is an asset - one without a note is a much larger asset. Yes, unless inherited, it is an asset that will be legally expressed in part as a capital gain - that value above purchase price and improvements cost basis. But the original full cost basis is also recovered if the house has no note. If inherited, there is no capital gain issue at all generated prior to inheritance. I realize some personal finance educators claim an "asset" must generate cash flow. I do not have an MBA, but my mentor at my Tuck executive course had a rhetorical question to address this very issue. If you were required to prepare a declaration of your net worth, would it include your home as an asset or liability? I rest my case.

100% correct. In business school accounting courses, we learn that assets = capital + liabilities on a Balance Sheet. For example, if a piece of real estate is worth $750k with a loan of $250k on it, the capital is $500k. I own my home and property free and clear without a mortgage so it is an asset and valued as all capital.

Many financial advisors will try to convince people without mortgages to take out a home equity loan and invest in the markets. Some people want every penny they own invested in markets. I have not followed that kind of advice. I would rather own my real estate free and clear and invest other funds in the markets. Where I live and throughout most of the country, real estate increases in value steadily as well. Could I make more in the markets with my real estate equity? Yes, probably, but to me, there’s a great sense of security in knowing that my home is owned outright. In a severe economic downturn, I don’t want to owe a desperate bank anything, especially if my income drops and other investments in the market go down.

 

[Scott CWO]

We agree with each other. I don’t argue with General Officers. A paid off thing can be in the asset column.

But just because you own a thing without payments. Does not make it an asset.


It’s potentially a place holder of value but if it’s not generating income it’s technically not an asset.

It’s Semantics and definitions only since we need shelter and a place to live.

Of course It’s best for the house to gain value over 15-30 years. Or if you never had to pay interest, insurance, taxes and maintenance out of your wallet.

Assets aren’t defined as things that produce income. Assets are things of value such as cash, equipment, real estate, stocks, etc…