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Make Your Balance Sheet Work For You

Asset Rich, Cash Poor?

How many times have you heard someone described as asset rich, cash poor? I really don’t see the point of having a lot of assets and no surplus cashflow, after all it is income that we live on. Can you imagine yourself with millions of dollars of assets AND having them return tens of thousands of dollars a month for a few hours a month of administration? This would leave a lot of time to do what you want to do. This is not a pipe dream, many retirees live this way on the income from their assets, the rest typically live on a modest state-funded pension.

The Goose That Lays The Golden Egg

I remember an age-old fable about the goose that lays the golden eggs. In this story was a magical goose that periodically lays a solid gold egg. Having assets that provide income is just like this goose. While I love the concept of the golden goose, the real moral of the story was not to destroy such assets by being greedy.

 

A Defintion of Being Rich

A good definition of being rich is having a portfolio of assets that not only increases in value over time, but provides you a regular income that exceeds your spending needs. Conceptually it is simple, but the reality is that it requires great discipline to learn coupled with determination to see it happen. Alternatively another way is to grow up in a suitable environment where these skills are taught as second nature. Either way they have to be learned.

Make The Right Choices and Act

I grew up in a hard working family that seemed to always just make ends meet. So with all due respect to my family I have learned that money comes in one hand, and then goes out the other - I just pass it on. So I had to create a vision, work smart, be disciplined, and be determined to get where I am. I had to learn most of these skills myself and put them into action. I made many, many mistakes to improve my skills (which I now call learning opportunities). Before I knew it I was ahead of the curve. Now I hang on to a lot of my income instead of passing it on.