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RE: Why Tracking Your Net Worth Is A Great Motivator To Become Wealthy
Your house is not an asset. Or more specifically, your house is not your asset.
- The bank owns your house. You gave it to them.
- The only time you would sell your house is to buy another house, so it is not an asset that you can sell at the top of the market, or sell to pay off other debt.
- Even after you pay off your house, it is not yours. Real estate means the kings estate. The crown still owns it, and you will continue to pay rent on it.
- Even after you pay off your house, it may not be yours. Did your read the fine print on your mortgage? Most of them today do not have any inclusion that says that when you pay off the mortgage you own the home. You will have to jump through hoops, maybe even go through legal means, to become the owner of your home.
- Housing prices are based on how much people can borrow. Not on anything sustainable. So, if mortgage rates go up, your house price goes down.
- The baby-boomers will soon start flooding the market with homes. As they retire and move to smaller places or retirement homes.
- The banks will soon start flooding the market with homes. There is still a shit ton of houses withheld off the market by banks from the 2008 bubble. And soon, there will be a dollar squeeze and many banks will be looking for any way to get liquidity. Your home included.
- and don't forget maintenance.
Your house is your largest liability. It takes money out of your pocket every month. And yes, it may be the best money you spent that month, but it is still an outflow, not an income.
Assets put money in your pocket; Liabilities take money out of your pocket.
Yes, I have read these things before in a past life. I no longer worry about things I can't control. I have to pay tribute to the goverment - nothing I can do about that. Banks own everything, including politicians - nothing I can do about that.
I heard they have all these shadow homes too, been hearing that for ages - not too many homes that are vacant around me. It seems that they are just waiting and waiting I guess. Sure some companies sprung up and bought single family homes to rent out, it was profitable.
Saving money is better than earning an equivalent amount because the government tribute that is taxes. My mortgage is 2/3rds of a what I would have to pay if I rented it. Not to mention the part of the payment that goes towards the payoff. I bought it in 2014 for $98k, the house next door to me sold this past summer for $170k with a smaller sq ft but has a pool. So currently that is a paper gain of about $30k or so a year.
A kilo gold bar that you pay to have stored and guarded - is that an asset or a liability? It doesn't put money in your pocket and it costs you to have it housed so I guess that is a liability.
I read the financial gurus too, doesn't mean they are correct or that I follow every word. They say things I agree with.