Who’s richer? Siapa lagi kaya? Part 2

Part 1 is located here.

Now, consider this:

You earn a salary of $10,000 per month and your expenses amount to $9,900 per month. You live an extravagant lifestyle, accompanying yourself with a the latest gadgets and machines, expensive cars, and etc.

Your friend earns a salary of $2,000 per month and his expenses amount to $1,500 per month. He lives a modest lifestyle.

Assume also that other things remain constant (ceteris paribus).

Now, the big question. Who’s better off?

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Who’s richer? Siapa lagi kaya? Part 1

Here’s something to think about.

Consider this:

You own a one-billion-dollar asset, fully financed by the bank. i.e. you took a loan of $1 billion, thus owing $1 billion.

The homeless person you usually see on the streets has no assets at all and has no debts.

Assume also that other things remain constant (ceteris paribus).

Now, the question is, who’s richer?

[Read more…]

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