Bitching about balance sheets

This is somewhat of a pet peeve; something that drives me crazy so don't bring it up or I might just pop you one!

I go nuts when people say they can borrow against the "equity" in whatever they financed.

Folks, remember the accounting equation:

assets = liabilities + equity
That means that "equity" is on the liabilities side of the balance sheet, and you can't borrow against a liability.

Put in other words, the "equity" has already been "spent" because it's a claim of the shareholders against assets. The only way to raise more money is to sell off some assets, or take on more debt (presumably by putting down assets as collateral.)

This is not idle semantic hair-splitting, or a nose-picking contest.

If even one home owner understood this, they would've been more careful about "liberating their equity".