<\/span><\/h2>\nMoney that you earn, through employment earning, business earnings or otherwise, should always be invested into assets and not liabilities after paying your required expenses. Now, what does this mean? An asset is something that adds value to your life and also appreciates in value. A liability depreciates.<\/p>\n
For example, at the time, a home was thought of as a liability. It’s an enormous object that you live in and have to pay the bank in exchange for loaning you the money to live there. Most of us cannot pay that loan back for 25-30 years.<\/p>\n
Kiyosaki postured that this could be turned into an asset, such as buying a duplex, renting out one side, and living in the other. In that way, some or all of your house expenses are covered, while the land and building appreciate in value.<\/p>\n
Other things, such as cars, depreciate in value quickly and indefinitely. However, if you have purchased enough assets (stocks, real estate and business) that bring you an extremely positive cash flow that would more than cover your car payments, then purchasing a vehicle through your company, and not yourself could be turned into an asset.<\/p>\n
The depreciation, gas, and insurance write-offs, covered with the other cash flows would essentially make an Aston Martin feel like a free purchase. The entirety of the book can be summed up here; once your passive income surpasses your recurring expenses, you are now considered RICH.<\/u><\/p>\n