Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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Bankruptcy Is Not the End Of The World

by William Blake You may have had to file for bankruptcy because of events that have affected your financial circumstances. Bankruptcy, however, is not the end. . Deciding to file for bankruptcy is not easy. But many people have had to and are now able to care for their finances stably. You can dust yourself off and get back on your financial feet even after bankruptcy.   All damage done to your credit by the bankruptcy process can be healed. Chapter 7 bankruptcy eliminates all of your debts, and some of your assets. Afterwards, building up your credit again is dependent on you paying your bills in a timely fashion. Be responsible with what you still have left. You still have your home. Make utility payments on time. Establishing a record of timely payments is one way to work towards fixing your credit. After a few months, apply for a secured credit card. Secured cards require the cardholder to pay a deposit. This is the money that you will start with. Over time, you may qualify for an unsecured credit card. Keep just one credit card. And don’t charge purchases on it needlessly. Simply having a credit card that can be used in emergencies is a way to build back your damaged credit. Train yourself to pay for everything in cash. Unless you have cash to back up a purchase, don’t buy anything; this could be one reason bankruptcy was filed in the first place. Going back to using cash is a healthy way to build up a bank account and savings account balance. Plan to succeed. Since you have already experienced bankruptcy, you know you don’t want to go through the process again. Establishing a good savings plan that includes an emergency fund will help you prevent any future need to file for bankruptcy. Credit card payments shouldn’t present any kind of problem after having had all of your debt eradicated. When you do get a credit card again, you can expect to be bombarded with offers from credit card companies. They will do there best to get your business, but you can resist them if you are determined to stay out of debt. Learn to live within your means. This requires that you be prepared for the unexpected. Credit counseling classes or meetings with a financial advisor can be helpful, since they will provide you with great tips on how to maximize your savings and care for your expenses responsibly. A financial advisor can take the extra money that you put in a savings account and show you how to invest for the future. One day you...

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ECON 101: Credit Crunch for Dummies

By SCOTT MAYEROWITZ ABC NEWS Business Unit Is your head spinning these days trying follow what is going on with the economy? Subprime. Collateralized Debt Obligations. Liquidity. Every day it seems as if these words — which nobody you knew was using just a few months ago — are being thrown around. The stock market is down. Government officials are scrambling to find ways to help the economy. And a lot of people are talking about a recession. So what does it all mean? And how did this all begin, especially when just a few years ago the economy was booming thanks to the red-hot real estate market? Well, that’s where the problem starts. A combination of low interest rates and aggressive new lending practices in the late 1990s and early 2000s led to a buying frenzy. Many banks were enticing first-time home buyers into the market with pitches of “historically low interest rates” and “no down payment required.” In June 2003, the Federal Reserve had lowered its key Fed Funds interest rate to just 1 percent. Mortgage rates were of course higher, but were still considered a relative bargain. Banks had also changed the way they made loans, opening up the American dream of homeownership to a whole new group of people who had always considered themselves renters. The Mortgage Boom With rising home values, almost everyone believed they could get rich just by buying a home. And pretty much everyone — even those with terrible credit histories — could get a home loan. Many got adjustable-rate mortgages with low, introductory teaser rates that made their mortgage payments affordable. Those rates would eventually reset to higher ones, but many owners planned to sell first or refinance. Even high-risk borrowers — if they made their mortgage payments on time and built up a good credit history — could refinance into a more traditional fixed-rate mortgage before their interest rates reset. And since the home would undoubtedly be worth more than it was just a few years ago, the banks were willing to lend out more money because the collateral for a loan — the house — would theoretically be worth even more in a year or two. How Wall Street Profited To facilitate some of these new loans to riskier borrowers, lenders and those on Wall Street came up with new ways to package them up and sell them off to big pension funds, private equity firms, mutual funds, foreign investors and any other investors looking to profit from the housing boom. Gone were the good old days when everything was simpler, where a local bank manager who knew...

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How to Protect Yourself in an Economic Crisis

– Sandra Simmons Does the current economic crisis have you worried? Are you wondering how achieve financial freedom so you can protect yourself and your family from the coming financial crash? Here is what you need to know. The first thing you need to understand is what the word economics means in terms of thinking about your family, and how you can use what it means to your financial advantage. Forget what the media says about economics when they talk about the roller coaster ride of the stock market, supply and demand, inflation, banking industry mortgage defaults and the unemployment rate. Those are ‘economic characteristics’ that measure an area much larger than you can control. What you can control is your own household economics. The definition of economics I am using is the original one; meaning “the art or science of managing a household or business.” And that is something that you, as an individual, can control. There is an art to managing a household. It takes having certain skills and abilities, like organizing things so they run smoothly. There is a science of managing a household, especially in the area involving money. Here is what you can do to make sure that the economics of your household are strong and stable, even though the economy of the country may be on the slippery slide to financial disaster. 1 – Spend Less Than You Make Take a lesson from your parents or grandparents who made very little, but lived very well. Keep expenses down to a level below what you bring home in your paycheck after taxes. The fastest road to financial disaster is spending more than you make. It’s possible to maintain your quality of life while cutting optional spending. This can be done by doing something as simple as renting a movie and making popcorn at home instead of going to the theatre, to buying a new used car instead of a brand new car. 2 – Pay CASH Every time you purchase something using credit cards that you cannot pay off as soon as the statement arrives, you are committing your future earnings to the credit company. Those future earnings will be needed to pay your regular household expenses, so you end up in economic slavery known as the credit trap. The exception is purchasing property that increases in value, such as buying a home or investing in a commercial building that puts more income in your pocket. Tip: When paying with cash; negotiate a cash discount. When the economy is sliding down and credit is harder to get, the guy with the cash is king. In...

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Lessons Learned From the US Financial Economic Crisis

 – By Roosevelt Cooper – As we enter the 2nd year of the US Financial Economic Crisis that started in August of 2007 with the sub-prime lending meltdown, the impact on the economy and the average American has been devastating. Economy.com is predicting that by the end of 2008 over 2.8 million US households will either be in foreclosure, be forced to give their house over to their lender and move out or sell their home for an amount lower than their actual mortgage balance. And Federal Reserve Chairman Ben Bernanke said that mortgage defaults wouldn’t harm the US economy! So far besides foreclosures being at an all time high, we’ve had the collapse of practically every sub-prime lender out there including New Century Financial, which was the largest subprime leanding company in the United States. Even regular lenders like American Home Mortgage and Countrywide Financial Corporation were effected. AHM filed bankruptcy and CFC narrowly avoided it with a last minute loan. If you brought a home in the last year or so, take a look at your property value. There’s a good chance it is lower than what your mortgage balance is. And to think all of the financial experts bashed Robert Kiyosaki ten years ago when he said your personal residence was a liability not an asset back in 1997 in his best selling book Rich Dad Poor Dad We also saw the collapse of many of the largest companies in the world in the financial sector. In March of 2008, Bear Sterns, one of the largest investment banks in the world was forced to sell itself to JP Morgan and Chase for a fraction of what it traded for prior to its collapse. The source? Investing in a wide variety of high risk investments, many of which was tied to the sub prime lending crisis. In September of 2008, the Federal Housing Finance Agency announced that it was taking over Fannie May and Freddie Mac. This was done because there were huge concerns that due to the two companies’ exposure to the mortgage market, increasing loan defaults could result in the companies failing to meet its obligations and commitments. Merrill Lynch was forced to sell to Bank of America due to its massive losses from the subprime lending market. Lehman Brothers was forced to file bankruptcy due to is losses from the mortgage crisis. Then it was announced in the same month that AIG – American International Group, which was the 18th largest company in the world was at serious risk of going out of business as well. Despite the fact that most of the companies’...

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In This Chaotic Market, Stay Steady With These Solid Investing Tenets

~ By Anne Kates Smith ~ Kiplinger’s Personal Finance What are we supposed to make of this whiplash market? I’m certain that the only sane way to play the crazy ups and downs is to hold fast to the investing tenets we at Kiplinger have preached for years (that’s why they’re tenets). Among them: ?  Most investors are lousy market-timers. So don’t attempt it, period. Take a look at a couple of the worst months for mutual fund net redemptions on record: In October 1987, investors withdrew 3.6 percent of stock-fund assets, and in July 2002, the net outflow was 2.05 percent, according to the Leuthold Group, a research firm in Minneapolis. A year after investors bailed, the Standard & Poor’s 500-stock index was up 10.8 and 8.6 percent, respectively. The two-year gains were 35 and 21 percent, respectively. ?  Calling market bottoms is a futile exercise. The stock market typically bottoms just past the midpoint of an economic downturn. One year past the trough, the average gain — dating back to 1892 — is nearly 44 percent, says Leuthold. ?  It’s all about buying low and selling high. No need to fixate on market legends such as Joe Kennedy or Warren E. Buffett. Regular folk can ensure they are buying low and selling high by dollar-cost averaging and rebalancing their portfolios. By Definition, dollar-cost averaging (investing the same dollar amount in the market at regular intervals) gets you more shares when prices are low and fewer when prices are high. Just as important, and maybe more so, averaging forces you to keep putting money into stocks (or stock funds) when you might otherwise not do so — that is, when share prices are falling. If you are contributing to a 401(k) or other similar plan, you are dollar-cost averaging. ?  No market is a monolith, so you have to diversify. The stock market’s dismal performance this year has challenged the conventional wisdom about the desirability of diversification. Just about every sector and every foreign stock market has sunk. Most segments of the bond market have lost money, too, although it has been possible to eke out a positive return by investing in Treasury bonds. My guess is that this year will turn out to be an anomaly. So I stand by the tried-and-true formula of maintaining a diverse portfolio, which you can achieve by investing in a mutual fund that is pegged to a broad index, or by holding a mix of funds, including those that focus on small-company stocks, large-company stocks, stocks of fast-growing companies, bargain-priced shares, international stocks and so on. For a graphic illustration of...

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BlogTalkRadio: US Economy Turmoil

South Asian Journalists Association (SAJA) presents a talk radio show on 24 Sep, discussing the various aspects of the turmoil in the current U.S. economy. Speakers includes: Vikas Bajaj, business reporter, The New York Times; Anirvan Banerji, co-director of research at the Economic Cycle Research Institute; John Laxmi, co-founder of a New York-based private equity firm with $4 billion under management (and SAJA treasurer); Sudeep Reddy, economics reporter and “Real Time Economics” blogger, The Wall Street Journal.   BlogTalkRadio: US Economy...

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Meet Neel Kashkari: The Man With the $700 Billion Wallet

– Wall Street Journal | Oct 6, 2008  – – Posted by Heidi N. Moore  – A Goldman Sachs Group alumnus in charge of the nation’s economic rescue? How unusual. Except, of course, it isn’t. As The Wall Street Journal’s Deborah Solomon reported today, Treasury Secretary Hank Paulson is promoting Neel Kashkari, the Treasury’s assistant secretary for international affairs, to be the point man overseeing the $700 billion financial bailout as the interim head of Paulson’s Office of Financial Stability. The full appointment would need Senate confirmation, which is unlikely to come given the short remaining tenure in this Administration. The move essentially puts a new title on what Kashkari he has been doing since he joined Treasury in 2006–examining the consequences of an economic housing fallout. Kashkari was one of three Treasury staffers–including general counsel Robert Hoyt and head of legislative affairs Kevin Fromer–who stayed up until 4 a.m. last Sunday putting together the $700 billion bailout bill that was shot down by House Republicans the next day. Kashkari is an Indian-American who has a few things in common with Paulson . Both are former Goldman Sachs bankers, though Kashkari, at 35 years old, is much younger and was just a vice president-level banker in Goldman’s San Francisco technology banking effort when Paulson tapped him to join Treasury. Both also are Midwesterners. Kashkari grew up in Stow, Ohio, and earned a bachelor’s and master’s degree in engineering from the University of Illinois at Urbana-Champaign. Paulson was raised in Barrington Hills, Ill. And both sport similar hairstyles– or lack thereof. Kashkari didn’t take a conventional route into banking. He started out as an aerospace engineer at TRW, developing technology for NASA projects like the James Webb Space Telescope, the replacement to Hubble, which is scheduled to launch in 2013. He earned an M.B.A. at the University of Pennsylvania’s Wharton School of Business. While there, one of his professors was Michael Useem, who liked to put students through grueling, Outward Bound-type strengths of endurance and strategy. Kashkari participated in one Army simulation in 2002 at Fort Dix, where he was quoted in this 2002 Philadelphia Inquirer article in a comment just as applicable to today’s financial crisis as the project he was working on: “We were all taught to play nice,” Kashkari said. “So who’s going to fight in the sandbox?” After Wharton, Kashkari joined Goldman and worked in San Francisco, where he advised companies that create computer security programs like antivirus software. He and his wife, Minal, still keep a house in California. Paulson likes to surround himself with people he’s comfortable with: people, mostly, from Goldman Sachs. Paulson’s inner...

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4 Kinds of Money

Excerpted from:4 Kinds of...

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Saving’s not enough, invest your money

When we hear the word money, what comes to mind — savings in banks, investment in mutual funds, investment in equity, investment in real estate, investment in antiques? In my opinion, it is a combination of all. Investment gurus call it the ‘diversification of portfolio’. We learn the discipline to manage money effectively outside the classrooms. It reminds me of an old incident. Once, almost 20 years ago, I visited my friend and we were busy talking when her young son entered happily, showing his mom a $100 note gifted by his granny. All he wanted to do with it is buy chocolate. His mother explained to him that chocolates are unhealthy and he should do something else with the note, preferably put it in his piggy bank. Reluctantly, he agreed. A few months later, I happened to visit her again. That day she was busy with her son, helping him open his piggy bank, overloaded with coins and notes. They both counted them and were delighted that the total was beyond their expectations. Again this time as a responsible mother, she advised him to put this fund into a savings account. She taught him to fill up the deposit slip. The boy tried, but could not. So his mom filled the slip and he left for the bank along with an office help. Years rolled by, and his mom is now proud of his saving habits. However, the amount is earning interest only in the bank. “To save must be a habit of childhood, but to invest must be the habit of adulthood.” My friend, as a responsible mother, could reach only her son’s childhood and not beyond. What is the count of your investment portfolios? Are you working for money or is money working for you? “The poor and the middle-class work for money. The rich get the money to work for them”- Robert Kiyosaki, the author of Rich dad poor dad said in the book. It’s generally seen that many people have the habit of switching off their minds when it comes to money matters. People in the other category have a habit of exercising their minds when it comes to money. The difference depends on many criteria. It doesn’t matter if the child doesn’t listen to you, or doesn’t obey you. The child always observes you. Since childhood, we listen to and observe many things in our parents, teachers, friends and others. This plays a vital role in developing our thinking patterns. I will explain two different thinking patterns by picking up some of the effective sentences from Rich dad poor dad. Generally, we veer...

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Open Your Mind To Wealth

Robert Kiyosaki’s bestseller, Rich Dad, Poor Dad, has helped millions to create roadmaps to their financial goals. Central to his series is the notion of open-mindedness. Instead of sizing up a situation and saying, “I can’t afford that,” he suggests saying, “How can I afford that?” By reshaping the idea into an open-ended question, creativity is stimulated, which leads to inspiration. Here’s a list of critical thoughts and their positive replacements. I hope these help to prime your mind for money-making thoughts. Instead of saying: We can’t afford it.That’s too expensive. I don’t have enough money. I’ll never be able to afford that. That’s a waste of money. It’s too late to get started. I’m not good with numbers or investing. It’s too risky. I really want to get that! Replace with: How can we afford it?Where can I get that for less? How can I make more money? When will I be able to afford that? How can I make that productive? How can we let another day go by? Where can I learn more? What could reduce the risk? Do I really need that? As open-ended thinking becomes more natural for you, you’ll also find yourself better able to help clients who have critical objections. Plus, the difference in this kind of thinking is tremendous. If you aren’t already quieting your critic, you’ll find that these suggestions bring excitement into your daily life. Consider writing out this list, and adding to it when you discover new negative thoughts. Invent positive replacements, and write those down, too. Review the list frequently, and practice! More: Open Your Mind To...

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