My 21st Birthday

A Guide on Investing in Assets over Liabilities

Today is my 28th birthday. So, in honor of the day, I’m gonna tell you the story of my 21st birthday. 

Every year, my birthday happens during Shark Week, so when I turned 21 my parents decided to throw me a shark themed birthday party. We had a surfboard supplement as a beer pong table, nautical solo cups, Jaws balloons and streamers, endless blue Curacao, and a giant watermelon shark filled with vodka infused Swedish fish. Needless to say, we were prepared for a very fun, long night. 

After a few hours and 45 spirited Swedish Fish, we decided to go bar hopping in downtown Chicago. We ended up at a bar on Lincoln Avenue where things started to get a bit out of hand. I had tried to dance on the bar and then two of the guys from the party started to get into a fight (one had kissed me and another one got jealous and threw him on the ground). It was turning from the best night ever into a sharknado really quick when two of my best friends grabbed me and said, “We’re going somewhere you’re going to love.”

A few blocks later, we ended up at our local 7-11 with 3 family sized bags of chips in hand, a jar of Tostitos salsa, and some mystery cheese. We then walked to a stoop and talked about life, our friendship and how much we loved each other for the next 2 hours. I still look back on that day as one of my favorite memories and that leads me to today’s topic: Investing in assets over liabilities, because life is gonna throw a lot of sh*t at you but your assets will keep you afloat.

WTF are you talking about?

An asset is a resource (such as cash, property, or stocks) with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit. On the other hand, a liability is something a person or company owes such as student loans, credit card debt or mortgages.

What does this have in common with the Birthday?

  1. Liabilities are inevitable: There were clearly some liabilities at my birthday - Swedish fish being one of the main drama inducing culprits. The guys that caused the bar fight were also far from innocent. No matter what you do, there is likely going to be drama on your 21st birthday. Liabilities are inevitable in life as well  - you’re going to take out debt maybe for college or to buy a home and you most certainly will have a credit card (if not, we are going to need to talk about good and bad credit). It’s how you deal with them that matters most.

  2. Assets will keep you afloat: My biggest assets on my birthday were my friends.  They saw the night starting to slip away and just as I was losing hope, they saved me. Physical assets will do the same for you. For instance, if you have credit card debt, you’re going to need cash to be able to pay off the debt. You may also decide to invest in a property. While you need to take out a mortgage to buy the property, at the end of the day you will own the house which is an asset and a potential additional revenue stream.

What Should I do next?

  1. Buy Liabilities WITH your Assets: We live in a consumer society where we are often incentivized to buy liabilities first. We get our paycheck and want to be able to spend it to gratify ourselves. However, what if you used a portion of your salary to buy an asset that could eventually pay for a liability. Now, I’m not saying go buy a house tomorrow to pay for your upcoming trip to Ibiza, but start to think about it. What if you bought a number of stocks and gave yourself a goal to use the capital appreciation to buy the luggage you’ve been pining over. In that case, you didn’t lose any money, you just purchased something with asset appreciation.

  2. Buy Assets & Make Your Money Work For You: I used to hate this phrase to be honest. I thought it was so cliche but by the time I was 5 years into my career working 12 hours a day, it started to click. I work very hard for my money, why can’t it work hard for me? Well, it turns out it really can if you set goals to purchase assets than can generate passive income.

  3. Buy a Property: I recently wrote an article on this if you want to dig in deeper, but I want to hammer home that homes are assets. While some would argue they are liabilities due to upkeep, taxes and mortgage payments, you can generate revenue through home ownership in many ways. For one, the properly can increase in value over time, you can rent it out for income, and you could remove having to pay rent (which is DEFINITELY a liability).

  4. Invest in Yourself: You are the most important asset in your life, so don’t forget to invest in yourself. Whether it's through mental health, physical health, or education.  I left my role at an investment bank albeit I took a reduction on my income, but I did that to invest in myself and start my own business. Don’t forget that making decisions that impact your financial wellness isn’t just about how you spend your dollars.

  5. Invest in a good network: I am a firm believer that you aren’t going to get through this life alone, so make sure you spend your time surrounding yourself with people that are going to build you up. For example, when I quit my job to start a business, I joined a company called On Deck to meet other like minded founders and potential business partners. While I paid for the program, I encountered so many opportunities just by growing my personal network. Let’s also not forget that on my 21st how my friends saved me - no matter your age, the people you surround yourself with matter both personally and professionally.

Things to Be Mindful Of:

  1. Assets can turn into liabilities: I adore my mom and she did everything she could to make sure I had the best birthday ever. I have always seen her as one of my most precious assets. That being said, she was another victim of the Swedish Fish and her behavior shifted from asset to liability as the night progressed (sorry mom, i love you!!). This can happen to your own assets as well. For example, if you invest in a property that might require more work than the value you can extract from it, you might be dealing with more of a liability than an asset.

  2. Assets can be mental liabilities: One of my favorite financial wellness tactics is simplicity. For example, let’s say you have a home and the home is filled with everything you need and you know where everything is. You have a level of comfort with simplicity and organization. On the other hand, you might have a home that is filled with a lot of things (maybe even valuable things) but you might not know where they are, how they got there, or if you even have a use for them. However, rather than organizing the home and using the things you already have, you continue buying things because you can’t find what you might already have. Confusing? Well, that’s the point. Although you want to own assets, make sure you know what you own, how much you own and where it all is otherwise things can be lost in the mix.

  3. Liabilities are not all bad: This take requires its own article entirely, but debt, loans, credit cards, mortgages, etc. are not bad. They only turn sour when you lose site of them. They can also be bad if you bite off more than you can chew. Therefore, when you face your liabilities, make sure to get a handle on what you’re dealing with by consolidating and knowing your total and setting a plan forward.

What’s next?

Thank you for reading!! If there is a topic you want to discuss, please DM me on Instagram at @notyourbfsinvestmentadvice or email me at kelsey@aurafinance.io. I also am building a company called Aura - a financial wellness and investment platform. If you’re interested in joining the beta, sign up here.

See you next week lover!

Disclaimer: 

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