The Borrow Smart Chronicles - What Assets and Liabilities are you Managing?

Episode 20

Author

Todd Ballenger
March 22, 2024

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"You are your greatest asset. Put your time, effort and money into training, grooming, and encouraging your greatest asset."

Tom Hopkins

Weekly Spotlight: What is your greatest asset?

What is an asset or a liability?

In economic terms, a financial asset is a resource with economic value that an individual owns or controls with the expectation that it will provide a future financial benefit. A liability is something a person owes, usually a sum of money. Assets ideally grow over time and liabilities are settled over time by transferring assets to repay liabilities.

Regarding economic impact, isn’t personal growth one of the biggest contributors to your financial well-being? Personal productivity is largely a function of work effort X experience/capability. In time we learn to do more with less, which allows more time to work on ourselves, and if we work on ourselves, we develop assets that have their own unique value distinctions. We don’t want more money, we want more of what we think money can do for us.

From: Brett Winton — A look at the waves lining up around personal and economic productivity NOW!

For fun, I started a conversation with AI about personal assets and liabilities, and through a rather interesting discussion, we came up with this grouping. Managing your personal assets and liabilities is as important as your financial ones, and over time how can you really separate the two.

Personal Assets

Personal Liabilities

Health and Well-being

High Debt Levels

Education and Knowledge

Poor Health Habits

Skills and Expertise

Lack of Education or Skills

Financial Literacy and Wealth

Negative Mindset

Reputation and Personal Brand

Toxic Relationships

Social Capital and Network

Poor Financial Literacy

Adaptability and Resilience

Reputation Damage

Creativity and Innovation

Lack of Resilience

Emotional Intelligence

Limited Social Network

Control of Your Time

Time Mismanagement

Flexibility of Thought

Fixed Mindset

a BORROW SMART CONCEPT
7-Concepts for Asset/Liability Management

Here is a flyer we use when training realtors, advisors, and consumers to look deeper into the role a loan officer can play as a financial coach. The first step is to learn and understand these concepts yourself. Each concept below was used by financial advisors in their conversations with clients about asset management. When I first viewed myself differently, as a liability advisor, I took these same asset concepts and applied them to liabilities. How would a mortgage be managed if we were concerned about Safety, Liquidity, Return, etc.?

Consider this:

  • If you are a realtor, how does the house create financial wealth for your clients?

  • If you are a financial advisor, how does the cost of home ownership, and real estate equity get planned into overall financial wealth creation for your clients?

  • If you are a lender, how do safety, liquidity, and return as concepts become part of your value proposition when providing liability management to your clients?






DOWNLOAD the 7-Concepts to consider how this might apply in how you manage assets and liabilities.

LIABILITIES
What’s Happening?

I’d expect that to be the case…

The bottom 50% have about 3.5X their income in debt

Fewer and fewer houses have mortgages - more equity for future needs to be managed as part of a long term financial plan.

offices continues to stress banks as commercial loans are defaulting

rates should come down in June if inflation stays manageable

A great look at what goes into a mortgage rate from Aziz.

Ever find you are overthinking things? When I feel that way I watch this important video about thinking, and/or the challenges of not thinking!

The annual look at the rise in net worth from owning equities versus owning real estate.

REAL ESTATE
What’s Happening?

Big drop this week, the NAR lawsuit while positive for consumers tainted industry a bit and a lot of negative news on affordability and foreclosures rising.

Housing inventory and starts all rising again.

existing home sales rising

builders getting happier

overall real estate sentiment still at all time lows

the only person sadder is a used Tesla owner

The new real estate commission structure is estimated to provide a 30% drop in the $100 billion Americans pay every year in commission fees, according to investment banking firm KBW.

“The new real estate commission structure is estimated to provide a 30% drop in the $100 billion Americans pay every year in commission fees.”

Investment Firm KBW

ASSETS
What’s Happening?

from Michael Kitces, there are things AI will automate and the important things we should never try to automate

the cycles of sectors going up and down

many do not realize our rising energy dominance globablly

a look at wealth and households have about 40% of it

overall assets are going up and liabilities are going down, but net worth is kind of moving sideways this year….

“The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. But no price is too high to pay for the privilege of owning yourself.”

Nietzsche

ON BEING HUMAN
What’s Worth Sharing?

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“You are ready and able to do beautiful things in this world, and as you walk through those doors today, you will only have two choices: love or fear. Choose love, and don’t ever let fear turn you against your playful heart.”

Jim Carey

DOPAMEMES
And Other Inspirations…

Have you ever eaten these in college? Well, global sales are up 18% - why did you eat them in college? They were cheap… inflation impact?

How do I feel when rates drop below 6%?

AIdeas
Future Hacks…

A favorite AI tool for email and message brainstorming:
https://app.hey.com/ (hat tip Madison Ayer)

Here are three AI questions to ask ChatGPT after it’s done the work: (From James Clear) - but using this in other work with AI.

How could we:

1. Make it shorter.
2. Make it more appealing.
3. How could it apply to more people?

Also, short video that gets you thinking about the CURRENCY of the future.

The entire NVIDIA presentation boiled down to a few minutes. We are entering a new era with technology… it will transform work as we know it.

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