The Truth of Credit

Most bankers and financial planners will tell you that your house is your greatest asset. Robert Kiyosaki (of Rich Dad Poor Dad) has a different view. He says that your house is a liability not an asset. Simply put, an asset is something that puts money in your pocket, a liability takes money out.

I know what you’re thinking; but it’s true, your home does not actively produce income for you. Typically homes appreciate in value but you have to borrow against your house or sell it to ever see this money. In simple terms, home appreciation does not put cash into you bank account each month. Instead, your mortgage payment takes money out. Therefore, this is an asset for the bank not you!

The TRUTH is I don’t want you to get into the mindset that the banks own everyone and everything. However, just remember when you refinance a home to pay off credit cards (etc…) you are just financing the debt somewhere else at a much better interest rate. So in actuality your home acts as more of a “security blanket” than a asset by definition.

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