Rule #2 of #10 - 10 Financial Rules
The next couple of weeks i'll will discuss the 10 rules of financial freedom.
Today is the second lesson starting.
Start your week right.
If you haven’t read lesson #1:
https://steemit.com/life/@only.ray/rule-1-of-10-10-financial-rules
2. Rent to Own - Define Assets and Liablities properly
You are never get to financial freedom if you mix up assets with liabilites!
Well, in the debt market the price of money is interest.
And in the equity market the price is that you’re giving away an equity stake in your company and that's whether you going to the public market to raise equity capital or you’re in the private market rasing equity capital.
Money is just a commodity with a price
But debt and equity is very different.
When equity is raising you’re capital and giving equity in return that’s not necessarily a liability because it can acutally be an asset.
The debt market is totally different because you’re paying interest and you’re doing it on a schedule and you have a liability to make those payments on that schedule.
Take debts personally
No, serious. Take it personally.
You’re taking on the risk you’re signing up for the schedule payments and that is a liability that is not equal for a debt you taking as a director for your own company which is limited in its liability.
If you don’t stick to the payment schedule then it means that you personally could end up insolvent not your company which is totally different.
What is a liability?
I.e. Mortgages are a liability.
Notwithstanding that you have an asset if you rent the house you have bought with the liability of the mortgage it is simultaneously a liability in which you could end up insolvent if you can’t pay the monthly insalment schedule.
But of course it is an asset. Just for the bank.
An asset puts money in your pocket
A liability takes money away from your pocket.
I would appreciate if you tell me what you think of that?!
Next week i discuss about building your own infrastucture.
Cheers!
only.ray