Chapter Five Today when we want a new liability, maybe a new car or vacation house, all we have to do is acquire or develop an asset first, and that asset will pay for the liability. A year ago, in the midst of the financial chaos, I wanted a new Ferrari. When I told Kim what I was going to buy, she did not say, “You can’t have a new Ferrari. We can’t afford it.” Nor did she say, “Why do you need a Ferrari? You already have a Lamborghini, Porsche, Bentley and a Ford truck.” And she didn’t say, “Which car are you going to sell?” She does not say those words because she knows a new liability will make us richer. Rather than remind me of how many cars I already have, she simply said, “What are you going to invest in?” In other words, what asset are you going to buy that will pay for the liability? I had already found a new oil well project and invested in the well. When the oil well produced, the income from the well’s production paid for the Ferrari. The well is estimated to produce oil for about 20 years. The Ferrari will be paid for long before that oil runs dry. Kim is happy because she has a new asset, and I am happy because I have a new Ferrari. Our rule is simple: Assets buy our liabilities. Rather than live below our means, we expand our means by focusing on the asset column. Over the years, I have written books, bought a mini-warehouse, and subdivided land to buy liabilities. Some of the liabilities, such as the cars, are long gone, but the assets still provide cash flow. Our liabilities inspire us to become richer. We also forbid ourselves from saying, “I can’t afford it,” or “You can’t have this or that.” We know we can afford anything we want if we acquire assets first. Knowing how to create or acquire assets is why the rich do not work for money.
by Rich Dad, Robert Kiyosaki