Building assets to purchase liablilities

As a walk past the Ritz Carlton on my way to work every morning, I can't help but notice the small convoy of cars that are parked outside. Foreign automobiles like Porchse 911's and Range Rovers grace the sidewalk of the pricey hotel as a symbol of the wealth of its guests. Bering the car fanatic that I am with a bit boyish aspiration inside me, I tell myself "that's my car". Especially the dark gray Maybach 57 with the curtains closed. The epitome of automobile opulence.

I want it so bad I can taste it. I can't wait for the day that I can actually afford one. Of course I could finance it and waste my money on a depreciating liability that's taking money out of my pocket every month. Or I can increase my financial IQ-ask Kiyosaki would say- and purchase it the right the way.

So what is the right way, I'm glad that you asked. The right way is to purchase an income producing asset first and use that income to puchase the liability, in this case your dream car. You may say this is a lot to go through just to get the car you want. But our focus here is on building wealth the right way. So let's look at an example.

Let's say you wanted to purchase a 2010 Land Rover Range Rover(excellent choice), you decide to finance it and you've gotten an insurance quote and your total monthly payment is $1000. What you do now is create an asset that will bring you $1000 a month in passive income(see how to make $1000 a month on IB). I would suggest building at least 1500 in passive income, just to be on the safe side. But once you've done this, you can now have your asset pay for the liability and that's the true meaning of luxury. So long after you have paid the car off, you will still have the asset and the car.