I just re-read my “types of assets” post explaining some of the theory behind the soon-to-be-released personal finance program I’m working on. I found a typo in there. Blast it all, I need to carefully proofread anything I post before I’ve had my first Mountain Dew in the morning.
I wrote that a house purchased for $150,000 and now appraised at $170,000 should be recorded as a $150,000 income-producing (IP) asset and a $20,000 income-consuming (IC) asset. That’s incorrect.
The house itself is a $150,000 income-consuming (IC) asset: Income-consuming because you still have to pay property taxes, maintenance, and insurance after purchasing the house. The $20,000 capital gain is a non-performing (NP) asset: Non-performing because it’s illiquid. You don’t gain access to the $20,000 until you sell the house.
Sorry for any confusion. Again, if you want to be informed when the program goes to market, e-mail me at paul@paulryburn.com and I’ll add you to the mailing list.