Financial assets and liabilities are simply tools. Nothing more – nothing less. A common mistake people make is attaching too much emotion to certain assets or liabilities. This often prompts poor decisions.
No financial asset in and of itself can directly make your life better. There is no inherent value in them other than the money someone will pay you for them. If you have an asset – you hold it so that it can appreciate and you can later sell it for a profit. You can only accomplish this if someone buys it from you later for more than you paid for it. If it is a cash flow producing asset, that cash flow is only produced because some person writes you a check. People are the only real assets. And people determine the value of every physical asset.
Many people misapply scripture and, thus, think that liabilities are always bad. Yet the Bible does not say this. It does say:
“It is well with the man who is gracious and lends;
He will maintain his cause in judgment.” (Psalm 112:5)
How can it be good to lend, but bad to borrow? It doesn’t make sense and is contrary to the way that God works for a transaction where one side is doing right and the other is doing wrong. God does not ask us to do things to injure another. Yet, this is exactly what the person who says you should avoid all liabilities would say.
When they are saying this, they might refer to the scripture…
“Owe nothing to anyone except to love one another; for he who loves his neighbor has fulfilled the law.” (Romans 13:8)
But in doing so, they are ignoring the verse that directly proceeds it which is…
“Render to all what is due them: tax to whom tax is due; custom to whom custom; fear to whom fear; honor to whom honor.” (Romans 13:7)
Paul is saying that you should pay to people what you said you would. If someone loaned you money, they did so either as a friend (in which case you should repay that friendship with timely payments) or at interest for profit.
We’ll continue this discussion tomorrow. Won’t you have someone join us?
Photo credit: SuperlativeQuip