Read? Opportunity and Outcome??? (2)
What is an asset?
An asset is something that can continuously or periodically put cash into our pocket.
What is liability?
Liability is something that can continuously or periodically take away cash from our pocket.
So is our residential home an asset or liability?
When we are still paying monthly mortgage loan on our residential home, it is a liability as it is taking away cash from our pocket. It is only when we have fully paid up our residential home; it has stopped becoming a liability but not an asset yet as it doesn't put any cash into our pocket.
This is probably the reason why the widely accepted method of computing our net worth is to exclude the value of our residential home as an asset but to include any outstanding mortgage loan as liability.
Renting out rooms from our residential home
When we rent out rooms ......