A thought by Craig Groeschel from his book, Altar Ego: Becoming Who God Says You Are (p. 94). Zondervan. Kindle Edition. (Click on the title to go to Amazon.com to buy the book.)
Read on and see what a great thought this is.
Craig says, “Dr. Altshuler didn’t teach college because he needed the income. He was a very successful, independently wealthy businessman who taught business classes out of his love for the subject and the students.
“I asked him for his most valuable piece of financial advice, and his response changed the direction of my life. Without hesitating, Dr. Altshuler said, ‘Almost everyone your age is going to spend the next ten years buying and accumulating liabilities. If you’re smart, you won’t do what everyone else does. Wise people don’t purchase liabilities; they purchase assets.’
“Since I was only nineteen and still green around the gills, I asked him to clarify. ‘What exactly is a liability? And what’s an asset?” My professor explained that liabilities are things that depreciate, or go down in value over time. If you buy a car for twenty-eight thousand, it loses at least two thousand in value the moment you drive it off the lot. It’s no longer new. Now it’s used and worth much less. Within five years, it’s worth less than half of what you paid for it.’” He also used the example of clothes, computers, furniture, and trips.
Craig then said, “My wise teacher continued by explaining that life could be totally different if we’d take a long-term approach to managing money. Instead of buying liabilities, we should invest in assets. What’s an asset? Something that holds its value, goes up in value or produces additional revenue. A good stock is an asset. Owning a profitable business is an asset. A house is usually an asset. (I know the housing market has been pounded in recent years, but over time, real estate is generally considered a great investment.)
“At the age of nineteen, owning assets seemed unattainable to me. So I asked my professor what type of asset I could ever afford. He explained that he owned rental property and that perhaps I could buy a small house to live in and have a roommate or two whose rent would cover my payment and perhaps even provide a little more. I left that conversation and found a house to buy. It wasn’t a nice house, by any means, but I was a college guy and used to rough living. Believe it or not, I paid $14,900 for my first house. With a small down payment, my monthly mortgage on a ten-year note came to a whopping $151.77 a month. I moved in and took in a couple of roommates and immediately was making money.
“Before long, I bought a second house. I told my buddies that anyone could live in my house for a hundred dollars per guy per month. My friends were so cheap that they’d cram six or seven guys into a two-bedroom house. And in no time at all, I was a nineteen-year-old slumlord making money off my assets. Over time, I made an enormous amount of money (for a young guy) off my professor’s wise advice. While my friends dropped cash on clothes, beer, and cars, I bought cheap houses that paid nice financial dividends. Today, we’re able to do way more financially because we bought things that built wealth instead of decreased in value. Later is often better than now.”