Is your house really an asset?

Most people see their home as an asset and well they should...if they own it and it makes them money.

That is what an asset is right? Something that you own that has value. So yes, a house that does not have any debt on it and it provides you with shelter and a place that you and your family can form memories is an asset.

Wait, you mean to tell me that people who have a mortgage see their house as an asset also? I suppose when I had a large mortgage, I did see the house as an asset. Not for me, the house was an asset to the bank, to me it was a liability. There must be some confusion, so let us try and sort it out.

Which is it for you?

Are you one of those people that have the financial savvy to understand that if it is costing you money then it is a liability? Do you know that until you are paying less in outgoings per year than what it would cost you in rent that your house is an asset to the bank, not you?

I am saying that everyone has the right to be able to work hard and save money to purchase somewhere to live in this world. I am not saying that all will be even, nor fair, nor just, only that there should be no roadblocks for people to do such a thing. Does that mean that you should be able to buy your first house in the middle of Sydney? Of course not, you didn’t earn it and if you really look at it, you probably don’t even want it.

My house is an asset.

My house bring joy to me each day, it keeps me and my family safe and it also costs me less to live in it than I could have renting. The other factor is that my home makes me money. It has the two fold ability to save me money but also I can bring in an income from it. I will leave the specifics for another post as there are many small enterprises that can be run from my house that bring about income.

What is your house at the moment?

What does your house give you? Is it able to shelter you, allow your family to become closer, provide you with food, with an income? Or does it bring you stress from having to meet minimum payments, is it too far from your job, do things always need fixing, are the associated costs too high?

These are questions that you will have to answer for yourself and your family but understand that if you are not in the first category you are probably not in the right spot.

What could your house be in the future?

Let’s play a game. You had enough money to replace your current income, so that you didn’t have to have a job. Now where do you live? Are you still in the same place? Now remember that you don’t have to commute to work, you don’t have to rush to get the kids to school (or whatever else timely issue you have in your life). Do you still live where you are? Why?

Do your long term goals fit with the answers above?