Definition:
When it comes to finances a liability is money that you owe to others on a regular basis. Loans, mortgages, and credit cards are also considered liabilities. Liabilities decrease your net worth.
You may want to carefully consider any money that you have going out each month. While this money may not be considered a liability, you may look at changing how much you spend so that you can increase your net worth by saving and investing the money.
You can decrease your liabilities by eliminating your debt. You can do this by setting up a debt payment plan. You can also avoid debt by saving up for major purchases, such as a car, and paying in cash.
