> ## Content Index
> Fetch the complete content index at: https://www.bramadams.dev/llms.txt
> Use this file to discover other available public pages before exploring further.

# A Home is a BadAss…et
- URL: https://www.bramadams.dev/202301110059/
- Published: 2023-01-27T01:07:04.000Z
- Updated: 2023-02-22T21:28:50.000Z
- Description: Understand the difference between an asset and a liability, and prioritize buying assets that will generate cash flow to pay for a house instead of incurring a home-equity loan. Why The Home Mortgage Interest Tax Deduction is a lie for most people.
- Author: Bram Adams
- Tags: finance

> Rich people acquire assets. **The poor and middle class acquire liabilities that they think are assets.** ([Location 836](https://readwise.io/to%5Fkindle?action=open&asin=B0175P82RA&location=836&ref=bramadams.dev))

1. Housing
2. Cars
3. Expensive Colleges[\[1\]](#fn1)

> All too often, **a house only serves as a vehicle for incurring a home-equity loan to pay for mounting expenses**. ([Location 1023](https://readwise.io/to%5Fkindle?action=open&asin=B0175P82RA&location=1023&ref=bramadams.dev))

> I am not saying don’t buy a house. What I am saying is that you should understand the difference between an asset and a liability. **When I want a bigger house, I first buy assets that will generate the cash flow to pay for the house.** ([Location 1036](https://readwise.io/to%5Fkindle?action=open&asin=B0175P82RA&location=1036&ref=bramadams.dev))

> The Home Mortgage Interest Tax Deduction is a Lie  
> [Less than 1/3 of homeowner’s benefit](https://www.wsj.com/articles/SB10001424052702304709904579407111906612936?ref=bramadams.dev) from the deduction of mortgage interest.  
> More interesting than how many people benefit is *who* benefits. A nice middle class family in the 15% tax bracket might save an Andrew Jackson or a Benjamin Franklin every month for the first few years of home ownership. But a Senator might save $1,500/month at the 39.6% marginal rate on his new DC Mansion  
> **The Middle Class often buys houses based on size of payment, per the common advice of, “Buy the biggest house you can afford.”** Since every *How Much House Can You Afford* calculator includes estimates for a tax benefit, the result is just [higher housing prices](http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1308&context=jcfl&ref=bramadams.dev).  
> **For the rich, the interest tax deduction is a great subsidy. For everyone else The Home Mortgage Interest Tax Deduction is a lie. People in SF and NYC get their mortgages subsidized by the rest of the country** ([View Highlight](https://gocurrycracker.com/renters-for-life?%5F%5FreadwiseLocation=0%2F89%2F1%2F0%2F0%2F0%2F0%2F0%2F2%2F0%3A0%2C0%2F93%2F1%2F0%2F0%2F0%2F0%2F0%2F2%2F0%3A210&ref=bramadams.dev#:~:text=The%20Home%20Mortgage%20Interest%20Tax%2Cthe%20rest%20of%20the%20country))

> If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities. ([Location 882](https://readwise.io/to%5Fkindle?action=open&asin=B0175P82RA&location=882&ref=bramadams.dev))

Assets:

1. Profit earning vehicles (companies, stocks)
2. Bonds
3. Knowledge (create new wealth vehicles)

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1. allows you to cheat your class and shortcut to a higher one