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rhollerith_dot_com comments on The 5-Second Level - Less Wrong
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Agreed. Kiyosaki's "Rich dad Poor dad" has lots of good advice about the difference between "good debt" and "bad debt".
AFAI recall it boiled down to "only borrow money for assets, not liabilities"
ie - good debt is borrowing for things that will continue to make you more money (including your appreciating house or your business) and bad debt is for things like holidays or house redecorating projects - things that simply take cash our of your hand.
This has worked pretty well for me so far too.
Only borrow money for assets, not expenses.
The book defines a liability as "something that takes money from your pocket" - so the two can be considered roughly equivalent.
OK, but that's not the standard definition of a liability used by accountants and such.
Yes, that is discussed in the book. He makes a big deal about the difference. In fact he discuses the seeming inconsistency of accountant putting large items into the "assets" column that do nothing but depreciate in value...
I'd argue that the main point of Rich dad, poor dad can be summarised as:
1) assets put money into your pocket, liabilities take money out of it 2) you gain wealth by adding to your assets instead of your liabilities
It's roughly equivalent to the dietary advice of "you lose weight by making sure there are more calories being spent than eaten"
Well, it makes me sad to see a very standardized and crisp term like "liability" used in such a confusing and nonstandard way. Especially when there is another equally crisp and very standardized term ("expense") that could be used instead. And I do not want to talk about it anymore.