Robert Kiyosaki Blog

By Janet Bodnar

It’s a challenge for adults to create a financial Web site for kids that offers age-appropriate information and is entertaining enough to hold their attention. To mark National Financial Literacy Month, I’d like to mention a few that are worth a look.

For elementary-age kids. Meet the “Centsables” (www.centsables.com). They’re six super-hero friends — named, fittingly, Franklin, Jackson, Grant, Hamilton, Penny and Suzie B. — who live in Centsinnati and can “grow to gargantuan height, run like the wind, and control the elements.” And they do it all in the service of giving kids super money-management skills. Mark DiPippa, president of Norm Hill Entertainment and creator of the project, has ambitious plans to produce it as an animated TV series.

For now, kids can enjoy the Centsables online in a series of games and comic books. The target audience — children ages 6 to 11 — can probably handle the activity pages and comic books on their own. Younger children may need a hand from parents to navigate the lessons, which include “How kids earn money” and “Taking stock of the market.”

For middle- and high-school students. CareerForward is a free, innovative online program developed by the Michigan Department of Education, Michigan Virtual University and Microsoft’s Partners in Learning unit.

The curriculum is designed to take about 20 hours to complete and may be directed by a teacher (Michigan requires all students to have at least one online learning experience before they graduate), a volunteer or an interested parent.

CareerForward isn’t focused exclusively on financial education. But there’s a unit on managing money, including lessons in budgeting and a salary calculator for future jobs.

What I like about the program is that it gets kids thinking about what they’d like to do beyond high school — the education and skills they’ll need to earn a living in the global workplace. And that, after all, will determine how much money they’ll have to manage and what their standard of living will be.

For college students. Though not an interactive Web site per se, the “Playbook for Life” guide may be downloaded or ordered at www.playbook.thehartford.com. Originally developed by The Hartford insurance company in conjunction with the NCAA, the idea was to educate student athletes about the importance of financial planning.

But the lessons are equally valuable for all college students and young adults, with sections on purchasing a house, buying (and maintaining) a car, saving for retirement, buying insurance and paying taxes.

And when your kids are ready to go out on their own, there’s a lot of useful information at Kiplinger.com in the Starting Out section.

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Sites That Foster Good Money Skills

Life is like a game of chances. You can win or you can lose. Everyday, we are faced with challenges, which can either lead us to become a winner or a loser. Learning financial literacy is essential to increase your chances of winning the game of life. Consequently, it is best to play the cash flow game to gauge how well did you grasp the concepts in winning the game of money.

Recently, I watched another video again of Robert Kiyosaki as now he talks about the so-called Game of Money where he described the four quarters of financial life dividing it into 10-year horizons and asked, “at which age will you win the game of money?”

Let’s view the four quarters of life with some inputs so that we know how will we win the game of money and retire as young as we can be.

1st Quarter (25-35 years old) – By this age, you’re probably done with your college education. Most of us start our careers when we land on our first quarter of life. We want a high-paying job, buy a car, have our credit cards and enjoy life. While many of us just want to enjoy life after graduation, it is advisable for us to:

Savings should be our top priority. When you receive your paycheck, take out a certain amount and deposit it in a savings account. Once you accumulated enough savings, transfer the bulk of it into a higher yielding deposit account. Compound interest will help it to earn more interest.

Get Insurance. Get insurance especially if you now have family and kids to support with at this age. The higher and the healthier you are, the cheaper insurance costs will be.

Learn Investment Options. Think of investment options where you can invest your extra cash. You can invest it in stocks, mutual funds, real estate, bonds, etc. Start to educate yourself financially.

2nd Quarter (35-45 years old) – By this age, you are probably at the top of your career and definitely earning much more. But this quarter may also be the time when you’re starting to have your own family so that also means higher expenses. It is advisable to:

Plan for children’s future. You are now working not just for yourself but also for your children. Plan for your children’s future by getting an educational plan or open a time deposit that’s under your children’s name and deposit an amount into it regularly.

Make sure you have enough for your emergency fund. Emergency fund is amount totally dedicated to emergency expenses such as health problems, etc. A good amount would be equal to six months up to 1 year of your monthly income. Place it in an easy accessible type of investment so that when your need arises, you can easily withdraw it.

Have a business. By this age, you could have probably known a lot of networks from friends, colleagues, acquaintances, etc. And since you’re earning much higher, then you could start your own business. Gauge yourself on what business you should start. Examine your passions and skills in choosing the right business for you.

Half Time – Kiyosaki referred after the 2nd Quarter as half time because you are in the middle before retirement. It’s also called as “mid-life crisis”. It is now time to examine yourself. You are not getting any younger anymore. Have you had enough savings to cover for your future? What did you accomplished in your life?

3rd Quarter (45-55 years old) – By this age, you are probably on top of you career, possibly a manager or vice president of the company. You could be earning more and your children may be in their college years or are already working. Retirement is just around the corner waiting for you. In this quarter of life, it is advisable to:

Allocate much of your income to investment capital. Review your investment portfolio and ask yourself if you need to transfer your funds into a higher earning investment scheme. Just be sure to have a through due diligence before you transfer your funds.

4th Quarter (55-65 years old) – By this age, your children may well be on their own now with their respective families already. You are now at the age where you can retire. You may choose to still be employed but it should not be on stressful work as you are now prone to health problems brought about by old age, which means higher health care expenses. In this age, it is advisable to:

Protect your capital. Try to preserve your capital so that you can live with on its interest. And make sure to make your last will in order.

Over Time – Kiyosaki referred after the 4th quarter as over time. If you haven’t had any accomplished things when it comes to your financial future, then that would be a great problem because sooner or later you would be “out of time” and the game of money will be “game over”.

We don’t want to retire old. As much as we could, we want to retire young so that we can still enjoy the things that we want. How could we enjoy it if we are already old with a lot of health problems associated with old age?

Personally, just like what Kiyosaki did retiring at the age of 47, I also want to win the game of money and retire on the second quarter of life. I want to enjoy life as early as I could without having to worry on going or having to work. And that is the very essence of financial freedom.

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Game of Money – Four Quarters of Life

I’ve read my fair share of financial books but there are a couple which really stick out in my mind as having a major impact on my outlook. One of these is Rich Dad, Poor Dad by Robert Kiyosaki.

There are many things I have been able to take away from this book which have challenged my thinking. The greatest challenge however is Kiyosaki’s idea of “good” debt and “bad” debt. Kiyosaki believes that you should leverage other people’s money to make money for yourself. How you leverage other people’s money is by borrowing from them, another way to say you have to go into debt. Although I understand his outlook and it does make sense to me I really had to stop and match up this concept with concepts from the Bible.

The logic behind leveraging debt makes sense. If you buy an apartment complex with borrowed money from the bank and turn a profit on that regularly, a profit that more than pays for the monthly payment you now have to the bank, then this processes will gain you money in the short term and probably in the long term. Mathematically it’s sound.

Another example is leveraging 0% offers to make money. It is argued that you should take 0% offers on credit cards or other debt opportunities because this can also make mathematical sense. If you have $2,000 on a credit card with 0% interest it would make more sense to put $2,000 in an interest bearing account than to pay off that $2,000 credit card.

I tend to be a very logical person who likes to run the numbers on everything. I think that’s why it was so hard for me to see the truth in this instance. The truth is, the end doesn’t justify the means. Just because going into debt could earn you more money or because it makes mathematical sense when you run the numbers, doesn’t make it right. This was, and sometimes still is, a very hard concept for me to grasp.

God is very clear about his stance on debt in the bible, just check it out for yourself (Romans 13:8, Proverbs 22:7). Although it never says going into debt is a sin, it makes a very clear case for why you don’t want to do it. It doesn’t make any concession for debt that makes you money or for debt that doesn’t have an interest rate.

The really tricky part in all of this is truly applying it to my life. What does that mean about buying a house? It can’t possibly mean that you shouldn’t buy a house until you can pay for it 100%…. right? Well, from reading what the bible says, I have to conclude that’s exactly what it means. The same thing goes for buying cars or furniture or education.

As you know by now, if you’ve been reading this blog, I do have debt. So I have not followed what the Bible has to say on this. To be honest with you, even now knowing what the Bible has to say I don’t think I would follow it when it comes to the house. The truth is I’m impatient and don’t want to wait the 5 or 10 years it would take to save up that kind of money. It’s harsh reality but I have to be honest with myself.

I’ll just leave it as something I’m working on. I’m not perfect yet. I hope to not get into debt again, now that my choices are made. I will work hard on getting out.

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Does the End Justify the Means?

On February 9, 2009, Experian stopped selling consumers their own score. They will of course continue selling them to creditors. Apparently, we as consumers no longer have access to FICO scores at all from them. The sell Vantage and Plus scores, which aren’t the same as FICO scores.

FICO score are the ones that matter; they are what lenders use. It’s not clear what, other than score, you’ll have access to when you apply for a loan.

There is a serious drawback for consumers here: you have to have a pull on your credit now to get a real score and you still may not have access to the information in your file. That makes it very difficult if not impossible to correct errors. It also makes it nearly impossible to enforce your rights under the fair credit laws and I suspect that that is the reason why Experian went this route.

We have the right to see the reports on which the scores are based but currently not the scores. I think we should. One of the things I find to be sleazy about this industry is that they don’t have to show you what they share with lenders.

Read the rest here:
Experian stops selling FICO scores to consumers

Think about this question for a moment. Really think about it.

Many people are interested in investing in real estate now because prices are the lowest they’ve been in years. But did you know that you need more cash/equity now to do the deal than you did at the height of the boom?

It’s true! For example 3 years ago, I bought two properties one month apart for a combined purchase price of $1.09M. After closing, I actually had about $30K IN MY POCKET! I was only required to have 30 days reserves and the cash out counted towards it and exceeded the amount required. Talk about easy access to money! And you only needed about a 650 credit score, sometimes less.

Today, those same properties would still be about the same price because of location but today, I’d need at least $273K cash for just the down payment plus nearly $80K in reserves. That’s not what I’d call ideal especially when you’ll need at least a 740 score. And we ain’t talking about no stinkin’ Plus score! You need a real FICO score. You can get all 3 real bureau scores at that link. A Plus score, which is what most sites give you is a sham. It’s not what the bureaus and it’s designed to blow sunshine you know where! There’s a reason they cost so little. You should alway know what your score is BEFORE applying with a mortgage broker. Aside from looking like a novice, you a decidedly unprepared because you don’t know what to expect. Buying real estate is a business and if you aren’t prepared to spend a little under $50 to be better prepared, you are in the wrong business! Besides, how much did you spend on mentoring or a boot camp and you still weren’t prepared?

3 years ago, you also could sometimes refinance a newly purchased property THE SAME DAY or within 6 months! Ask me how I know!

Let’s take a representative bank-owned 3-family property in Fitchburg or Worcester today that only needs minimal work. Okay, so you are probably looking at $120K to buy and $20K for repairs or perhaps $60K to buy and $100K for repairs. If it’s a typical property with 2 or 3 bedrooms, active sales comps put this at about $200K after repaired value (ARV). Your best case scenario for purchase is likely to be on a $120K purchase, about $30K down plus another $20K in repairs? Where will you get $50K? Where will you get the additional $20K reserves? 3 years ago, you could have bought that property when it was in a little better shape for $300K and only needed about $15K to buy it.

So let’s look at sources of money for down payment. Without getting too creative, you have to look to yourself.

Do you own stock? It’s harder today to borrow against a stock portfolio than 3 years ago. Unless you’ve lived under a rock, you’ve watched the value of companies listed on the New York Stock Exchange loose what, about $50 Trillion in value?

Next typical source, cash you’ve got locked away in a savings account. Most people in America now don’t have cash savings.

Instead they credit card debt. 3 years ago, it was pretty easy to throw a down payment on a credit card. Ask me how I know! Try that now with the average credit score down over 100 points, amount owed up, limits reduced and interest rates up on cards.

Next source private or hard money. There are fewer players for this since many people have lost a lot of money recently but they are still out there. I still have some private money available to me. Just not as many. Many people are scared and have gone into bunker mentality so unless you have experience, you may have a harder time getting private or hard money and you can expect higher interest rates.

So where does that leave you? There are still options. One is working with partners. I do it. It gives you options and the ability to do more deals. That’s a good thing.

And there is another way. It requires some effort on your part and maybe that scares away a lot of people. If they don’t think sourcing, financing, buying or managing real estate, much less screening tenants, contractors, your power team, etc., is work, they are deluding themselves but I see that too.

What’s the other way, the Plan B? Robert Kiyosaki talks about it in “Rich Dad Poor Dad”, “The Cashflow Quadrant” and “The Business School for People who like Helping People” and “Before You Quit Your Job”. Cashflow 202 includes it as A BUSINESS. As a matter of fact, he suggests you do it for 1-2 years before starting or buying a business because you’ll learn a lot of skills that will help you in business (including as a real estate investor). You’ll have little or no overhead and generate massive tax breaks. And you just might make a fair amount of money that will help you achieve your real estate goals. You certainly learn more about business and marketing than you ever will in a bootcamp. You’ll increase your knowledge in a way that useful for investing, you won’t spend huge amounts of time, and you won’t let someone else determine what you are worth by a paycheck. Indeed, you find something that has unlimited income potential, allows you to help people, get you out of the Rat Race sooner and fund or help fund your real estate investments. You even have the ability to grow something that will pay you even if you never want to get out of bed in the morning!

What am I talking about? Network marketing. Many people think it’s bad. Indeed, there have been some bad companies out there, some with business models that are illegal, have bad reps, etc. The majority a good, solid companies, have people involved with integrity. You can make a substantial amount of money and help other people do the same. Oh yea, and self-fund your deals. If you think like a business owner and treat it like the million dollar business opportunity that it is.

Network marketing is business ownership with low expenses. If you have ever owned a business, you are used to having expenses. I know I’ve spent millions reinvesting over the past 10 years on just one of my businesses. You also meet hundreds of potential power team members that can directly affect your real estate business. That alone should get your attention.

I was alway down on network marketing before. But I’ve found a couple I really like. I focus on one of them. There’s no pills, potions or lotions. No investory. I wouldn’t try to give you a hair cut in a blog post and I won’t try to explain the business in one. You can talk to me if you’d like to know more. I even have a 6 year old girl (obviously she’s not working the business!) I’m working with that’s in a position to make money and I expect she will make several hundred dollars THIS MONTH. So talk to me if you are interested. You’ll learn about yourself, improve yourself, learn valuable lessons that will help your real estate business and perhaps fund your deals. My business is exploding and I’ll can help you do the same if you have work ethic.

You know how to reach me.

network marketing, cashflow 202, robert kiyosaki, rich dad poor dad, real estate, funding, business, marketing, down payment

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How will you get the money for a down payment in this real estate market?