VivianVanatu

Bad Expenses and Good Expenses

May 8th 2012 at 1:04 PM

Many people fear of spending money because they don't know the difference between bad expenses and good expenses. They fear spending money starting a business and they think that buying a bigger house or a new car is an investment.

The reason I wrote this article is because too many people don't realize what their doing with their money and they think they are investing the money, but in reality they are spending the money. Some other people fear and avoid spending money, but in some cases those expenses might be an investment that could bring them more money.

This article will help you understand better and make the difference between an investment (a good expense) and real expenses (or a bad expenses).

In fact things are very simple:

BAD EXPENSES TAKE MONEY OUT of your pocket, while GOOD EXPENSES PUT MONEY INTO your pocket.

One BAD EXPENSE EXAMPLE: Let's say you buy a car for personal use. Besides the price of the car, from now on you will have to pay for gas, insurance, service and parts. Those are costs associated to the use of a car. Since that car is constantly taking money out of your pocket without putting any into your pocket, the car is considered as a bad expense.

One GOOD EXPENSE EXAMPLE: We will take the same car as an example, but instead of using the car for personal purposes, we will rent the car to someone else. Let's say that we rent the car for 25$ a day for 21 days/month. That means 525$ a month will be the income from that car. If we substract the expenses, which are 400$, we will have an income of 125$ from that car. Now the car is putting money into our pocket instead of taking money out of the pocket.

READ MORE

0 comments
Please to comment

sign in

Username
Password
Remember Me


New to IM faceplate? join free!

Lost Password? click here