I’ve given you the gems on stacking assets, but now we have to look at the other side of the coin: Liabilities. Simply put, a liability is something you owe. It’s a financial obligation that ties you to someone else.
One of the most important lessons I ever learned came from my father. I remember we were driving somewhere—I can’t remember the destination, but I’ll never forget the conversation. We were talking about independence. He told me, “In this life, try not to depend on anyone—not even me. Men will always let you down.”
Then he gave it to me straight: “Don’t owe a man anything. Try not to deal in debt.” He pointed at the car we were in and said, “Take this car. It’s mine. I own it. Nobody can take it from me. If I were making payments and missed a few, they’d be towing it away. I’ll never have a car note because I don’t know where I’ll be three years from now. I might get laid off. But if I ever got put out of my house, I could still live in this car and move around to get back to work. As long as I own it, I have a choice.”
That conversation stuck with me more than any textbook ever could. It’s about control.
The Three Faces of Liability
In the business world, especially when you’re running a holding company or managing property, you have to categorize your liabilities to know how to handle them:
- Current Liabilities: These are your short-term headaches—money due within a year. Think of things like income taxes owed or small vendor bills.
- Non-Current Liabilities: These are the long-term weights. This includes long-term loans, bonds, lease obligations, or even pension benefits. These are the “marathon” debts.
- Contingent Liabilities: These are the “What Ifs.” This is a potential liability that might happen in the future—like a pending lawsuit. This is exactly why we use LLCs and insurance; it’s our shield against the contingent stuff that can come out of nowhere.
The Reality of Debt
For most people starting out, liabilities look like student loans, personal loans, or credit card debt. You have to take the good with the bad, but you also have to be strategic. While some debt is almost impossible to avoid unless you’re already wealthy, there’s always a way to navigate it.
Where there’s a will, there’s a way. The goal isn’t just to have money; it’s to make sure that no man—and no bank—can take away your ability to move.
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