Liabilities

Abstract

It’s no secret that many of us build our economic future on borrowed funds. That’s not always a bad thing, but too much of anything can create problems. We call these obligations liabilities and, in the world of personal finance, they can play a big role in how we live our lives. These obligations come with significant costs. For example, buying a home involves one of the greatest liabilities many of us will ever assume: a mortgage. A mortgage is a sizeable obligation with the costs to match. Many of us use credit cards to finance our regular purchases and, as a result, incur hefty charges when we carry a balance. If we attend college, chances are that student loans will cover part of the tab. Of course, that comes at a price. Get the picture? Most of us will have liabilities on our personal balance sheet and, while these debts are not all bad, having too many can be a problem. The most common personal finance liabilities include the following: