Uh. The 2008 housing market crash was basically the sudden growth of the poor credit ratings in the mortgage market, in, u h , 2008. It's when the bank gives loans to everyone who's contributing to the community, and eventually the loans become too much so everyone goes bankrupt. The shittiest part is that the bank ends up giving the money to the economic hierarchy, so everyones financial gains end up in the hands of a few amount of people - and soon everyone loses their job and,, in this case their house.
Alright. What is the difference between an asset and liability ?
An asset is something that will be able to provide you with future economical and financial benefit, while a liability is simply something that takes money out of your pocket. I don't completely agree with what the book is saying, because I do believe a portion of your house does count as an asset. But that is only because the longer your house is being used, the more it is worth on the market. You spend so much on your house. On mortgage, utility payments, taxes, maintenance, and more. Years and years and years of spending and spending and spending. Usually .-. at least in America, most people recieve all that money back when they sell their house - but for those who don't, it ends up being a huge financial loss and for w h a t . The longer you have these liabilities chip away at your income the harder it gets to earn that income back. How I see it, is that the difference between the rich and middle-class is that the rich own and build assets, (keep in mind that you buy a n d build. With liabilities, you can only buy). "Assets" means things like real estate, stocks, bonds, intellectual property etc. Your house is none of these. Then theres the list of things that are considered liabilities, mortgage, consumer loans, sales tax - and howabouthat? Your house fits all those categorys. Your house is real property, not real estate. Your house is an expense. And like the book says, your house shouldn't be your biggest investment, although it is for a lot of people.
Again, this doesn't mean you should stop investing in property all together. It just means to be cautious about how dependent you're becoming on your house, and making sure that the thought of being able to afford your house isn't something you constantly find yourself worrying about. Your house isn't completely a liability, but it isn't completely an asset either.
