1. Simplify and get out of the rat race faster
I noticed that whenever I played the cashflow 101 game and was able to choose a “simple” profession like a truck driver for example, I was able to get out of the rat race faster. 

As a truck driver, although my salary was low, my monthly expenses were also very low. Because I had  low monthly expenses, I already had a positive cashflow and all I needed to do was just get those passive income generating deals.

After each payday, I had more money to invest, and with just a few passive income generating deals, I had enough passive income that exceeded my monthly expenses, and I was able to get out of the rat race faster.

In real life, I am applying the same strategy by reducing my monthly expenses by leading a simple life. This was also described by Bo Sanchez in his book “Simplify and Live the Good Life ” and T. Harv Eker in his book “Secrets of the Millionaire Mind”.

My family and I lead simple lives, which explains my very low target monthlypassive income which is why I know I am going to get out of the rat race in real life very soon!

2. Start with small deals first, and the big deals will follow
In the beginning of the game, I always chose small deals even if they produced little cashflow. Later on, when the market presents good opportunities, I was able to sell or “flip” these small deals and then I used the profit to buy the bigger deals that produced greater cashflow, allowing me to get out of the rat race.

In real life, I am also following the same path. I focus on single family homes or properties which may produce little cashflow at  the very least, but can actually generate significant profits if “flipped” or sold through “rent-to-own”. I can then use the profit later when they are enough to get bigger deals that can produce bigger positive cashflow.

3. Over-leverage often leads to bankruptcy
During the game, we often encounter great deals that produce a lot of positive cashflow but require a big downpayment and it is tempting to borrow money from the bank just to be able to buy those great deals. However, there is such a thing as becoming over-leveraged which can produce negative cashflow situations because of the high monthly payments for those loans.

Even if one’spassive income is enough to cover the monthly payments for those loans, imagine if something happened and the monthly income of one’s investment properties were affected, suddenly the monthly payments for the loans cause a negative cashflow and can lead to bankruptcy. The same can also happen when one is downsized. This is the reason why one should avoid deals that lead to too much exposure or over-leverage.

Applying this is real life is a no brainer. I would not dare buy those multi-unit apartments unless they were in the same price range as the single family homes I focus on. As mentioned in lesson number 2 above, I can go for those bigger deals later when profits from my small deals are enough.

4. It is better to wait for a good opportunity than settle for those not so good deals
In the game, good opportunities come in the form of deals that have big ROI potential, and can be bought with little or no downpayment, while producing positive cashflow. If any of these elements are missing, I consider a deal as “not so good” and I pass them up and just wait for the good deals.

In real life, I do the same and patiently wait for good opportunities. If a not so good deal comes my way, I can either look for ways to make it into a good deal, or I just pass it up and wait for another more worthwhile deal to pursue.

5. Learn how to spot a good deal and grab it
One of the biggest challenges one faces in the game is how to spot those good deals so that you can grab them. Sometimes a good deal is right under your nose and it slips away because you didn’t realize soon enough that it was a good deal.

I believe spotting good deals is a skill and you can only learn this skill by continuously analyzing deals. Once you get the hang of it, you will start seeing those good deals more often. Normally those deals would have normally slipped away without you knowing it. If you see good deals often, it’s just logical that you will eventually grab one of those deals right?!

6. Learn how to protect your investments
I distinctly remember games where apartment buildings getting toppled by mud and all the cashflow generated by these properties are gone, unless I am covered by insurance.

Does Ondoy and Pepeng ring a bell? Who would have thought that a game like cashflow 101 actually teaches us to protect our investments from such disasters and calamities. Better get your investments insured with “Acts of God” coverage pronto!

7. Net worth is worth less, cashflow is king
Once you play cashflow 101, you will notice its emphasis on the importance of cashflow over one’s net worth. You will see that it really is more important to have positive cashflow frompassive income. What is the use of having a big net worth if you don’t have any positive cashflow?

In real life, we should apply this by focusing on building our positive cashflow with income generating assets. Even if we have to use leverage to buy these assets, it really is okay. We call this good debt. Don’t be afraid to have good debts that buy real assets that produce the cashflow we need to get out of the rat race for real!

Get out of the rat race in the game, and in real life!

So you got out of the rat race when you played cashflow 101. So what?! That’s useless if you don’t take action and apply the lessons you have learned from the game in real life. But playing a game is one thing, doing it in real life is an entirely different thing… or is it?

I can truly say that Robert Kiyosaki’s Cashflow 101 game is a “life changing” game because my life has really changed ever since I decided to apply in real life the lessons I have learned from it. Take note that I only listed the top 7 lessons I have learned and I can assure all of you that there are more lessons one can learn from this game.

People may find it hard to believe that one can learn so much from a game and can have such a huge impact in life. I guess you just have to play the game and experience it for yourselves.

How about you, have you played Rich Dad’s cashflow 101 game? What did you learn? Are you applying them in real life?

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Top 7 lessons I learned from playing Rich Dad’s Cashflow 101 game

know most of us are working nowadays. Most of us start with the E-Employee Quadrant and the main source of our income are our jobs. Robert Kiyosaki suggested that if you are working, you need to be experienced in three essential skills to become financially free. These three skills are LEADERSHIP, MANAGEMENT and SALES AND MARKETING.

Let’s discuss it one by one:

Leadership: Leadership is one of the most critical skill that you need to learn in your job. Most businesses fail because of lack of good leadership. Leaders are instrumental to the success of a business. Every company is in search for the best CEO who will lead the business to success.

One of the things that I learned is that the highest form of leadership is servanthood. We can distinguish a good leader vs. a bad leader:

A good leader is the one who serves his people while a bad leader wants to be serve.

A good leader is the one who empowers his people while a bad leader wants to have that power.

A good leader wants his people to grow and become greater than him while a bad leader becomes insecure when someone grows because he always want to be the greatest one.

Management: To become financially free, you also need to learn the skill of management. Management involves two things; management of cash flow and management of business systems.

To manage a company’s cash flow properly, you have to know how to read financial statements. You need to take a deep thought on income statement. You have to analyze sales and accounts receivable and expenses and accounts payable. If you can learn to run a business on the basis of the numbers revealed on its financial statements, you’ll be positioning yourself for success.

To manage business systems properly, you have to understand that a company is a complex network of interdependent systems, everything from product or service development to computer systems to human resources. For the business to grow, all systems have to operate with maximum efficiency—a leak in any single one can cause the entire ship to sink.

Sales and Marketing: Sales and marketing is the last thing that you should need to learn in your job if you want to become financially free. To be good in sales and marketing, you have to learn how to communicate effectively. If you can’t speak or write well, you won’t convince people that your product or service is worth buying.

Remember that you need to work to learn something and not just to earn. If you want to become financially free, these are the skills that you should learn from your job.

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Skills You Need To Learn In Your Job

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~ Mark Bridge ~

The economic crisis has prompted many people to seek help from personal finance books, with Amazon reporting a significant uplift in sales. Classics of the genre promise a quick route to riches, while recent examples, written since the start of the downturn, tend to be more cautious and realistic in their claims.

Times Money has looked at the five bestselling financial self-help books at Waterstone’s and asked financial planners for their views on the key ideas, rating the books from one to five stars. All have a snappy style and are accessible to the novice, but some are considerably more helpful than others.

Note that the recommended retail prices shown can be beaten easily. All the books are selling at a discount at Amazon, and the fifth, by Richard Templar, is half price at Waterstone’s.

Rich Dad, Poor Dad by Robert T. Kiyosaki
Sphere, £8.99
This 1997 book, the centrepiece of the author’s self-help empire, tells the perhaps allegorical story of two fathers: Kiyosaki’s own and his best friend’s. The former, poor dad believed in working hard for a company and keeping “secure”. He died penniless. Rich dad chose to own businesses and boosted his income “passively” by investment, becoming one of the richest Hawaiians and leaving tens of millions of dollars.

Kiyosaki admires the “positive-thinking” guru Napoleon Hill (see below) and touts mantras such as “I choose to be rich and I make that choice every day”. The focus is on getting rich, rather than being comfortable. He explains that his “personal basis” is property.

Expert’s verdict
Zac Ghadially, of Yellowtail Financial Planning, says: “Building an investment income stream can work, but not for everyone. Also, we are advising people to scale down on property at the moment — to use it to meet their life goals, but not as an investment.”

Times Money rating (out of five): 1 star

How to be Smart With Your Money by Duncan Bannatyne
Orion, £12.99
This new book has the advantage that it was written for a British market with the credit crunch in mind. It offers a comprehensive guide to earning, spending, borrowing, investing, saving and budgeting — with sections on choosing a savings account and buying a car, for example. It also has a list of questions to ask when shopping for a loan. There is no get-rich-quick carrot or big “secret” to success.

Bannatyne takes a more cautious line than Kiyosaki, writing, for example, that “the golden rule of investment is to spread your risk” — a strategy dismissed by the American as for people who “go nowhere”. He emphasises that readers should stop worrying about money and start to think about it and make changes.

Expert’s verdict
Mr Ghadially agrees that thinking about money is the first step to healthier finances, and says that Yellowtail asks its clients to complete a written review — something readers of Bannatyne’s book can do on a shoestring using its budgeting charts.

Times Money rating: 5 stars

Think and Grow Rich Napoleon Hill
Vermilion, £8.99
This was first published in 1937 to spread the author’s “secret” to those who, without it, might “go through life as failures”. The secret is never spelt out but will “jump from the page”, apparently. The book is big on popular psychology, particularly positive thinking and the importance of identifying goals.

Hill’s style is rambling, with lengthy diversions on telepathy and the “transmutation of sex energy” — something apparently achieved by the author’s namesake, the French Emperor. The tone is old-fashioned and some of the specific advice is out of date.

Expert’s verdict
Jason Witcombe, of Evolve Financial Planning, says: “We start with the premise that everything is possible. Clients come to us in a financial mess because they don’t know what they want from life. Any book that makes you think about that is a good thing.”

Times Money rating: 2 stars

The Naked Trader by Robbie Burns
Harriman House, £12.99
The cover of this 2007 edition sets the laddish tone, showing the author naked at his laptop.

Burns says that anyone can make money trading shares. He explains how by outlining the mechanics of trading online and listing “winning strategies” and rules, with the classic caveat: “Only play with money you can afford to lose.”

Much of the other advice is conservative, too. For example: “My research involves finding out everything I can about a company before I consider buying.” He does offer some more original tips, such as to consider shares in companies moving up from an AIM listing to the main stock market.

Expert’s verdict
Mr Ghadially has doubts about “anyone” being able to make significant sums in the markets. He adds: “If he had a ‘system’ to make easy money, he would not be writing books.”

Times Money rating: 3 stars

How to Spend Less Without Being Miserable by Richard Templar
Pearson, £9.99
This is another book that is written with the recession in mind and offers 100 money-saving tips. These range from the very general, such as “get organised” and “remember the glass is half-full”, to specifics such as suggesting that you go out later in the evening to reduce your beer bill. Some suggestions are a little extreme. For example, readers are advised to fill old jars and bottles of premium-brand products with supermarkets’ own-brand alternatives to trick fussy loved ones into eating them.

The theme is lifestyle, rather than broader personal finance, so there is no overlap with Bannatyne’s book. Overall, the advice is uncontroversial, but may irk readers who are already fairly savvy. For example, a reviewer at Amazon.co.uk writes: “There is absolutely nothing in this book to justify its existence. It is full of banality, such as do not shop when you are hungry and use any vouchers you might have. This must be some kind of joke. Avoid at all costs.”

Expert’s verdict
Mr Witcombe says: “Your grandma told you ‘look after the pennies and the pounds will look after themselves’. It’s not true. You have to look after the pounds first — addressing big issues such as debt. It’s good to reduce day-to-day spending by cutting out things such as coffee, but do not put off going for a drink with friends. You won’t be happy and that impacts on everything, including your finances.”

Times Money rating: 2 stars