How We Turn Liabilities Into Assets
Thinking differently about making money and enjoying the finer things in life
A while back, I found something I really wanted—a beautiful, 60-foot long sailboat. The only problem was that we didn’t have the money for it at the time, and we also knew that owning a boat was a giant liability!
But I wanted this boat.
The power of “How?”
When Robert and I got married, we talked a lot about money and how we were going to approach it together as a couple. Along the way, we came up with a few rules that continue to guide us as we grow our wealth together.
Over the last few weeks, I’ve shared some of them, like I did last week with the financial golden rule. Another rule that we came up with was that if either of us wanted something fun, like a sailboat, we never said, “No.” Instead, we always said, “How?”
I hinted on this last week when I talked about how Robert bought his dream Porsche by finding an asset that would pay for the car through cash flow.
But Robert and I also use another method for buying liabilities. We turn them into assets.
Turning liabilities into assets
For instance, when I decided I wanted a sailboat, I began to investigate ways that would allow me to purchase the boat and turn it into an asset. Instead of just letting it sit in dock in Hawaii and writing checks every month to pay for the maintenance and the loan on it, we put the boat into a charter company. When we’re not using the boat, it’s chartered throughout the Hawaiian Islands. The money from the charter business pays for the expenses of the boat.
We do the same thing with our vacation house in Hawaii. It’s a beautiful house, but since we live in Arizona, we’re not there much. So, we rent that house out most of the year for thousands of dollars a day. The cash flow easily pays for the expenses of the house, and some. Again, we took a liability, something that would normally take money out of our pockets, and turned it into an asset, something that puts money into our pocket.
And the best part is that we get to enjoy the boat and the house whenever we want to, all paid for by the businesses we turned them into.
Change your mindset; change your life
At the end of the day, living this way is all about mindset. Both Robert and I think it’s terrible to tell people they can’t have what they want. It’s a horrible way to go through life!
By shifting your mindset from, “I can’t afford this,” to, “How can I afford this?” you can literally change your life. The liabilities you want can actually make you richer as you get creative in finding ways to afford them by creating or investing in cash-flowing assets.
This is one reason why Robert and I created the CASHFLOW board game, to teach you how to think differently about money and wealth. I invite you to play the game for FREE online, simply by joining the Rich Dad Community (plus, you’ll get a bunch of other great free stuff too!)
Today is your day to change your mindset about money. How are you going to do it?