A Life of Liabilities

For Throwback Thursday (in advance)!  This was a post I wrote for minimizeme.org.  It was an eye-opening exercise, and a day of regret.  I hope it serves to inspire you to consider investing in assets and minimizing your liabilities in your finances, and perhaps your relationships in life!

About ten years ago I was exposed to the idea of buying assets instead of liabilities.  The message was slow to take root, as I hurried to buy more new clothes, electronic gadgets, and put a small fortune in restaurant food through my intestinal tract.

This message taught that instead of rushing to buy things that depreciate in value, one should focus their energies on buying things that will generate more money, and increase in value.  Things like this are stocks, mutual funds, intellectual property rights, patents, etc.  (Debatable is real estate.  Houses often are liabilities - they depreciate, and suck funds into themselves in the form of updates and repairs.)

Off the top of my head, I suspect that 95 to 97 percent of everything I have ever bought in my life could be considered a liability.  My vehicles.  My bikes.  My electronics.  My...you get the idea.  If I had all that potential back, no telling what I could achieve!

The Husband came through the room just as I had finished listing all my assets to date, and all the categories of spending on liabilities.  Pouting, I bemoaned my own stupidity.  He looked at me with wide eyes and nodded furiously in agreement that we had allowed our potential to be plundered with careless habits.  “Today is the first day of the rest of our lives!” He said with a touch of desperation.

The Husband is right.  Today is the first day of the rest of my life.  I can’t do anything about the waste in the past, but I can take the knowledge that I gained from my real world education at Life U and live differently from this day forward.

Ask yourself as you are in Stuff-Mart, the real estate agent’s car, and the car lot “What return will I get on this investment?”  If you really will get thousands of hours of enjoyment from that MP3 player you are considering, you should probably get it.  However if you are going to be dissatisfied when your MP3 is an antique, and ready to jump in a relationship with a newer model in a year or less, may I say it pays to pause?

If you think that you need leather seats, satellite radio, seat warmers, and a sunroof to run errands in...ahem...it pays to pause.  You may look impressive, but that new chariot you got at Car-Mart instantly dropped in value, and I am going to lecture you if you leased it. 

An older car has had most of the severe depreciation wrung out of it.  Think fuel economy, reliability, and safety rating instead of bells and whistles.  My car is a 2001 Hyundai that has a nearly perfect body, 100,000 miles, and starts up consistently.  It gets decent gas milage and even has cruise control, and (get this) a cassette player!  If I had to sell it, I would be able to get close to what I paid for it, which wasn’t much.  

If you must use your little green employees to buy liabilities (and, really, there is no way around at least some purchases like that) then use those little green guys on something that is going to suck less of their lives away than something else (like a new car, designer clothes, and new model electronics).  Think borrowed, used, refurbished, repurposed, and comparison shop at the least!

For more information on how to live your best with less (and know the difference between assets and liabilities) order your copy of Simple Fly Life:  The Manual, today!  Available on Amazon in print and ebook formats.