We need to start thinking about money as a verb, which is extremely appropriate because money causes action. Thousands, even millions upon millions, get up every morning for it. It causes economies to grow or falter; it allows people a choice of where to live, what to eat and often times who to associate with. Yet money itself is inert, and like an idea, it has no value unless it is actively employed or exchanged to get work accomplished. And just like an idea can be good or bad, money can be used constructively or destructively.

When money is used constructively, money creates or buys an asset. An asset is something that creates income, can appreciate in value and sometimes allows for tax advantages like a piece of real estate or a business. I would also add that the best assets to have are those that make you a return on your investment (i.e., puts money back in your pocket.).

When money is used destructively or irresponsibly, it creates a liability. A liability is something that depreciates in value or increases your expenses. In accounting terms, that means it takes money out of your pocket. Credit card debt, also called consumer debt, is the best and most extreme example of a liability because you continue to pay for something that provides you no benefit. Cars, for example, are another liability because they decrease in value over time and you pay insurance and maintenance. Unlike credit card debt, however, they do provide the benefit of transportation.

Building wealth is all about acquiring assets with assets. (A job is not an asset because you do not own it and you have no equity from it that you can pass on to someone else like you can with a business or real estate.) A person is an asset (or a liability!) and that’s why companies have human resource divisions-to locate and place their assets.

What determines if people are assets (or liabilities) are two things everyone has: a body and a mind. From the neck down, a person’s labor is worth about $20 an hour. So what is a person’s value from the neck up? Billions of dollars. One’s thought process is the only thing separating a janitor from a professor or a ditch digger from a billionaire. How do we think about how we spend our time and money? Do we look forward to spending it on entertainment or education?

Everybody pays for something, so we’ll cover the difference between good expenses and bad expenses, good debt and bad debt. Although the difference may be intuitive, it is worth restating. Good debt is money (or time) spent that creates an asset that will give you a return on your investment, such as:

* A $400,000 real estate purchase that generates enough rental income to cover the mortgage, taxes and maintenance

* A business that has more customers than it can serve taking out a loan to expand its payroll or investment in equipment to meet the demand

* Student loans for college

A good expense might be:

* A $10,000 renovation to a house that increases its selling price by $40,000

* Paying a certified public accountant to help your business legally save $20,000 in taxes

* Educational seminars

Bad debt or bad expenses are then just the opposite. (Extra cars, TVs, season tickets to football games, eating out at restaurants when you have credit card debt, taking out a loan on a “hot stock tip,” etc.) The difficulty is that unless you have a trustworthy mentor to guide you financially, you may have to learn from some bad judgments to make good ones in the future. If you are currently over 50 and can’t yet afford to retire or have debt you could not cover with the sale of your house, you might have to admit that you do not know as much about money or finances as you thought.

Admitting the need to change and then doing something about it is quite possibly the most difficult thing to do (think dieting) because we have been taught that it is not okay to be wrong. Too often we think it is a sign of weakness to ask for help, yet the millionaires I am fortunate enough to know personally are always seeking others’ advice and often times ask the same questions of multiple sources.

There is no question that education is necessary for building wealth by expanding the billion-dollar asset that is your mind, even if you currently don’t believe your mind is worth much. But the question is, what kind of education should you get? Is a college education worth the price? I admit I had trouble including student loans as “good debt” because it could require investing up to $150,000 for a bachelor’s degree alone without the guarantee of a job when you’re done. That could be a nail-biting proposition if you did not take the time to understand how you’d apply the education.

Many people I graduated with simply waited until the end of their four or more years to find a job or get offers! This is a perfect example of how debt can be good or bad depending on the person!

The person who makes this investment an asset is the one who gets the most out of classes, looks for areas to apply the knowledge in a working environment, networks with other enterprising people, starts a business or participates in co-op programs so that he or she has good leads for employment by graduation. You might also call this working smart.

Someone who only takes classes and works service jobs may do enough to cover their expenses and gain a lot of book knowledge, but what kind of opportunities will that person have at graduation? Is that time or money spent effectively if no effort was put into finding opportunities to get a return on their education? Obviously not. Working hard is part of success, but not as big a part as working smart and putting our billion-dollar asset to use.

Armstrong Williams content can be found on RightSideWire.com. He is also the author of the new book “Reawakening Virtues.” Listen to him daily on Sirius Power 128, 7-8 p.m. and 4-5 a.m., Monday through Friday. Become a fan on Facebook at www.facebook.com/arightside and follow him on Twitter at www.twitter.com/arightside.