Brett answered his own rhetorical question by saying, "When you come right down to it, the difference really is ownership." Poor people own liabilities and rich people own assets. A liability is something that takes money out of your pocket every month, whether you like it or not – like a car payment or a flat screen TV put on the credit card. An asset, on the other hand, is something that puts money in your pocket every month, with little or no effort from you – like an investment or real estate.
So, to get back to the original question, “What is your greatest asset?” Brett said that it has been hammered into our head all of our lives, those of us in the middle class, to know that it is much better to own your home instead of renting it. So, most home owning people would probably say that their house was their greatest asset.
But, here was the concept that was paradigm-changing for me – he said that your house is not your greatest asset. Your greatest asset is the ability to earn income. Just think if you make $40,000 a year for 40 years – that would equal $1.6 million! We need to take ownership of our ability to earn income, not just rent it for a period of time! If you have a job as an employee, maybe now is the time for you to start planting the seeds for your own business – start part time during your free time then work your way to full time ownership. This is one of the secrets that the rich people have figured out and that the poor and middle class people haven’t yet discovered.
Brett went on further to point out some common differences between the poor, middle class and rich as it relates to ownership:
- Poor people rent their houses and they rent their income.
- Middle class people own their houses and they rent their income.
- Rich people own their houses and own their income too.
- Rarely ever buy liabilities with money that you earn from your labor – only buy assets with money that you earn from your labor.
- Buy liabilities with money you earn from your assets.
So, take charge of your greatest asset – own your income!!
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