[Arthalion]

Assets are only those things that give you positive cash flow,

Actually, he just got his terminology wrong. Assets are things that have positive VALUES...and for most people, cars are NOT assets. My own car has an appraised value of around $16,000 right now, but I still owe $18,000 on it. It's contribution to my net worth is -$2000, making it a liability, not an asset. It's debt, not savings.

Personally, I can't remember the last time I spoke with someone who actually bought a new car for cash. Practically all new auto sales are financed, and most used cars are financed as well, meaning that very few of them qualify as assets. An asset is something that you can PROFIT from if you SELL them, or that generates positive cash flow.

By the time a car is paid off enough to have it qualify as an asset, it's value has typically depreciated so much that it's a negligible asset at best. When looking at the lifetime economic health of an individual, cars are ALWAYS liabilities. It's almost impossible to regain your investment from an automobile, and they cause a net reduction in your lifetime savings. Unless you're investing in old Auburns and Duesenberg's, cars are one of the worst "investments" a person can make.

[x5452]

I was quoting the part of the definition of asset, which is pertinent to the discussion of savings and which tod had ignored. I was not claiming that was the explicit and complete definition.

[Toddsterpatriot]

Assets are things that have positive VALUES...and for most people, cars are NOT assets

Wrong. A car is an asset whether it is paid for or not. You shouldn't combine assets and liabilities, it's bad accounting.

It's debt, not savings.

Your debt is $18,000 your asset is $16,000.

Personally, I can't remember the last time I spoke with someone who actually bought a new car for cash.

Nice to meet you, I paid for my last car with cash.

An asset is something that you can PROFIT from if you SELL them, or that generates positive cash flow.

Wrong.

By the time a car is paid off enough to have it qualify as an asset, it's value has typically depreciated so much that it's a negligible asset at best.

But an asset nonetheless. Please tell x5452, he's still confused.

It's almost impossible to regain your investment from an automobile, and they cause a net reduction in your lifetime savings.

Who said it was an investment? Who said it was savings? It's an asset.

[sitetest]

Dear Arthalion,

Actually, no matter how much owes on the car, it's still an asset. It's just that one may have a greater liability - a car loan - attached to the asset.

On my company's balance sheet, the actual equipment we own goes in the assets column, regardless of the loan liabilities attached to them. Any debt goes in the liabilities column.

It's nice when the assets column is greater than the liabilities column, but that's a risk of starting and owning a business. ;-)


sitetest