The American Dream – Asset or Liability?
Ah – the American Dream – own your own home! We’ve all heard this – it’s been programmed into our heads. “When you rent – you’re throwing money down the drain, you can’t take a tax deduction for the mortgage interest”. Robert Kiyosaki, author of “Rich Dad, Poor Dad”, takes a total opposite view. He believes a house is a liability unless it is bringing in income. But I challenge both- is it true?
If you’ve been following me long enough, you know how much I dislike “cookie-cutter” solutions. Well, the American Dream of owning a home is a “cookie-cutter” belief to me, as well as the piece of advice to “pay off your mortgage as soon as you can” AND what Robert Kiyosaki believes.
WHY, YOU ASK?
EVERY SITUATION IS DIFFERENT
A home can be an asset or liability not only FINANCIALLY but EMOTIONALLY. It doesn’t always come down to dollars and cents. Consider the following situations – is it an asset or a liability?
- It is bringing in income – you have a rental home
- You are in some type of transition – divorce, relocating, retiring – or just not sure of any of the above
- You have a young family and need a stable place to raise your kids
- You plan on living there for a long time (paid off or not)
- You have the nicest house in the neighborhood and the company in town that employs 50% of the population is closing it’s doors
- You need some cash flow, you want to use the equity in your home to refinance
See what I mean? Can you say a definitive YES or NO to any of these situations? Do you know all the details behind each situation?