Robert Kiyosaki Blog

By Louis Lim, Business Correspondent

In view of the current economic difficulties facing many, people ought to be more ware of what’s happening in the world and how what’s happening can adversely affect their financial securities and lives; if it has not done so already!

It is not a well known secret that one can avoid being a financial casualty by simply acquiring a set of skills different from what we are usually programmed from young to have. The latter has to do with being enslaved to a job or business controlled by others; the other being about having skills to generate an income independent of any circumstance or other people.

Anyone depending solely on a job for a living would be almost completely lost if he loses his job. The unfortunate fact is that since the Multi-Nationals Companies began institutionalizing the treatment of employees as just another business resource, albeit commodity, the age of life-long employment seizes.

Financial results associated with satisfying shareholders’ expectations became the main reason for a business enterprise. Coupled with the practice of achieving short term objectives and the need to maintain share prices, retrenching workers became a normal business practice. Words like ‘downsizing’ and ‘business rationalizing’ became common business parlance.

This dehumanizing of business enterprises, prevalent throughout 18th and 19th century industrializing Britain was revived and practice by American businesses. The new reality in a capitalist environment anywhere means a worker is subject to his job being taken away any day. More importantly, this means also that the individual worker must realize quickly the insecurity of a job.

What then is a worker to do to secure himself? Off course there are skills like being a doctor or dentist and others which are not down sizable. However, most workers are dispensable!

Men are, however, born with an innate creativity which can be described as entrepreneurial but this has historically been replaced by skills which are intended for us to work for someone else. The result is that only the top five per cent or so of employees can acquire financially independence (with high salaries) while the rest remained dependent and vulnerable all their lives.

To acquire these forgotten skills would require a change in mindset from one of being a worker (a worker’s mindset) to that of being a boss (an entrepreneurial mindset). The latter entails having a ‘Possibilities Mindset” which would enable one to know how to garner resources and knowledge and, to apply them to secure one’s own financial objectives.

Henry Ford, the car genius, once said that ‘money is not a man’s security; he is his own security’. What he meant was that a man’s security lies in his knowledge and skills. However, if your skill and knowledge is tied to working for someone then those skills and knowledge can be replaced any time.

However, Henry Ford is not wrong; if a man’s skills and knowledge is in the area of creating a money making enterprise. Robert Kiyosaki, a very successful entrepreneur, said that ‘every man must mind his own business’. He didn’t express it too well but what he meant is that ‘to have financial security a person must learn to develop his own money making business’. Is this possible? Every man? In my opinion, in today’ new reality, any worker who wants financial security has no other option!

Off course, whenever an uninitiated thinks of starting a business he thinks of big capital, connections, special knowledge and skills. For a man who has little money and has just lost his job, it’s even more unrealistic to think of starting his own business. However, many have done it, albeit, at great odds.

But what if you are not retrenched yet? And you have some time to learn. Could you invest in a money-making skill that can provide an alternative income? Could you learn to be an entrepreneur with little resources and connections?

The answer is yes but you have to adopt an entrepreneur mind-set; which really means that you to start believing in possibilities! Remember that when Bill Gates and Steve Jobs started their little enterprises in garages all they had mainly were their belief in possibilities. The amazing fact is that because of them the possibilities have increased exponentially with the advent of the internet.

Besides a strong belief in possibilities, an entrepreneur is one who learns to gather resources, knowledge and skills and organize them into money making processes. In most conventional businesses, this is usually a huge ask for any newcomer. Fortunately,, there are now other avenues where starting a business is made more possible for any one with little money and is prepared to spend time learning.

For example, the internet has made it easier to start your own business. The main thing you would need is a good PC, some affordable money, a willingness to learn and a lot of belief in yourself. What is to be learned is seldom difficult; a man’s limitation to success is often his own lack of self-belief!

If your motivation is create a secure financial situation for you and your loved ones, you need to be an entrepreneur. The days of secure employment is long over and moreover, personal wealth is seldom acquired by working for others.

See original here:
Entrepreneurship – A Panacea For Job Insecurity?

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?

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

On a sunny autumn Friday, Bader Bahmad and fellow members of a financial education seminar at the Fort Washington Public Library branch were discussing rudimentary principles, such as the difference between needs and wants.

In a run-down conference room on the library’s deserted second floor, they talked about saving money. Asked to give examples of items they should save for, one woman mentioned a $7.99 blouse she saw earlier in the week and another said a pack of cigarettes. A talkative blonde said she has never saved for anything.

Cheryl Hines of Cornell University’s Cooperative Extension community program led the discussion. She provided handouts that explained the difference between short, medium and long-term savings goals; she offered tips for tracking money, like using a notebook to record expenditures.

Bahmad, 39, found the seminar a bit basic, but she liked the reminders because she and her three children are supported solely by her husband’s earnings as a taxi driver. She strictly limits spending on discretionary goods. “In every hour of the day, if I don’t need it, I’m not doing it,” Bahmad said.

Badmad’s struggle is complicated. In Washington Heights where she lives, families are lucky to have a bank account. While 12 percent of Manhattan households don’t have a standard checking account, 25 percent of African Americans and 27 percent of Hispanics in Manhattan – the majority populations uptown – live unbanked, according to a survey last year by Pew Charitable Trusts. In effect, they pay an average $1,042 annually in check cashing fees.

Bahmad has been trying to make ends meet in the U.S. for close to 15 years. An immigrant from Lebanon, she used to sew scarves and dresses for stores in Brooklyn and Manhattan. When she returned to her home country three years ago to be closer to her family, leaving her husband behind in New York, she sold her sewing machines.

But the distance strained her marriage, and Bahmad returned to New York after two years. “Here you’re missing something, over there you’re missing something,” she said.

Now back in America without a job, Bahmad is looking for financial advice. As a start, she attended the free seminar at the Public Library.

Instructor Milly DuBouchet, who teaches similar classes in Washington Heights, finds it hard to address intricate financial problems because her audience has never had the means to save money. “It’s hard for them to save 10 percent of their income monthly when they can’t necessarily pay their phone bill every month,” she said. “Financial literacy is at a bare minimum in our community.”

To help, the Bloomberg administration created the Office of Financial Empowerment, where DuBouchet also works. It offers personal finance workshops and free private counseling.

Lower-income people may lack a basic understanding of credit ratings and the principles of debt, according to DuBouchet. Many of her clients have been denied loans and “they want to see why,” she said. Moreover, “A lot of people consider credit cards quote unquote free money.” She tries to tell her seminar members and private clients how FICO scores are compiled and reminds those in debt, “If you stop paying it, they don’t forget about you.”

Workshops offering basic financial information can be found all over upper Manhattan. Friends Jenny Gil and Angela Ariza attended one specifically for women at City College. Both women, immigrants from Colombia, readily admit they know little about personal finance.

Gil, 27, is lucky to have less than $5,000 in debt, which she described as “not impossible.” She works in a restaurant office and is trying to repay what she owes so that she can start saving and investing – only she doesn’t know how.

She blames her financial illiteracy on Colombian cultural norms. She was raised with the belief that women don’t handle finances because they are too complex. “It’s the new days and now women take care of their own business,” she said.

Gil has done some reading on her own, like “Rich Dad, Poor Dad” by Robert Kiyosaki, but still has trouble grasping certain fundamental financial concepts. To remedy the problem, she thinks personal finances should become part of the high school curriculum.

Donny Lynn Burton agrees. A vice president at the Harlem office of the non-profit Operation Hope, which offers seminars in credit and money management as well as individual credit counseling, she constantly meets people in similar situations.
Her clients live very differently from the middle class. “They live paycheck to paycheck,” Burton said. “They don’t understand the benefits of having an account” in a bank. She shows them how to create budgets and has them come in regularly to stay on track.

But often they start much too late, which she blames on pride. It frustrates her that most people in foreclosure know what lies ahead but don’t take action. ‘They never try to call their bank to work something out,” Burton said. She spends a lot of time assuring her clients that they can negotiate because the bank is better off if they stay in their homes.

She, too, would like to see financial education begin in high school, before people wade into major financial decisions.

Original post:
Seeking Basic Financial Education

by Dayana Yochim

Procrastinators, rejoice! I’m not going to bombard you with an all-inclusive list of year-end financial housekeeping chores. Instead, I’m going to present the absolute must-dos — the four top-priority tax-related tasks that even world-class foot-draggers can’t put off. Legally, at least.

Once you get rolling, you may be motivated to seek extra credit — and a little more breathing room before next April. If you’re so inclined, I’ve also included some other tax-related chores that will eventually need your attention. No pressure. Just sayin’.

1. Slash next year’s out-of-pocket health-care/dependent-care expenses
During open-benefits enrollment, you not only have the opportunity to tweak your health-care coverage but also to secure savings of 25% or more on all of those out-of-pocket medical and dependent-care expenses.

This cost-cutting technique is possible with flexible spending accounts. FSAs come in two flavors — medical and dependent-care. In a nutshell, you fund FSAs with pre-tax dollars taken out of every paycheck. When you incur expenses not covered by your health-insurance plan, or if you write a check for dependent care, then you submit a receipt and get paid back with the money you set aside. See your plan pamphlet for eligible expenses.

Your must-do: Sign up. Not enrolled in your employer’s FSA program? Dude! Do it now. If you contributed $1,200 (about the national average) to a medical or dependent-care FSA and are in the 25% tax bracket, you’ll save about $420 annually, including federal and Social Security taxes paid, or $35 a month. To nail the contribution amount, use the worksheet from your plan or fiddle with the Health Expense Calculator at planforyourhealth.com.

Blow-off-able (for now): Using up last year’s FSA dollars. If you already have an FSA but haven’t used up all your dollars, don’t rush off to buy extra pairs of bifocals just yet. Many plans have extended the allowable time frame to incur expenses by two and a half months, so you may not have to scramble to spend the cash you’ve already set aside. (Check with your HR folks to be sure.) And for help managing all those receipts, ask your vendor for a hand. If you buy your prescriptions at one place, ask for an annual rundown of what you’ve spent. Many drugstores can easily provide that information for you.

2. Minimize next April’s tax tab
Time and money are short around the holidays. But saving strategically to minimize your April tax hit is the best gift you can give yourself. Right now, see whether you’re on schedule to max out your employer-sponsored retirement plan. Contribution limits this year are $16,500; if you’re 50 or older, you may be eligible to contribute $22,000.

Your must-do: Bump up your retirement-plan contributions. Since the remaining numbers of pay periods before the deadline is dwindling, opportunities for maxing out your 401(k) or other employer-sponsored plan are limited. Find out whether your plan lets you defer a heftier chunk of your final 2009 paychecks — some allow up to 100% of your compensation. It may be painful to pass up the pay, but giving up the compounding tax-deferred income is worse. What’s more, socking away money in a traditional retirement plan reduces your taxable income. If you’re in the 25% tax bracket, you’ll shave $250 off your federal tax bill for every $1,000 you contribute to your 401(k).

Blow-off-able (for now): Fully funding your IRA. If money’s tight, allocate any extra dollars to your company’s retirement plan instead of to your IRA. You have until April 15, 2010, to fully fund your IRA; but, again, the deadline for work-retirement plan contributions is Dec. 31, 2009.

3. Prioritize your final paychecks
Once you have the year’s final pay stub in hand, don’t just gawk at the size of Uncle Sam’s take. Strategize a few last-minute tax-time maneuvers.

Your must-do: Put off collecting income, if you can. It’s hard to postpone pay, particularly during the spendy holiday stretch. But deferring some compensation — such as a bonus, or, if you’re retired, a retirement-account withdrawal — for one more month may be a better long-term financial move. Also note how your remaining paydays might affect your eligibility to make deductible IRA contributions, both this year and next.

Blow-off-able (for now): Withholding. More than 70% of Americans overpay their taxes every year. Sure, a refund is nice, but it’s even nicer to earn interest on your money instead of giving the government a free loan. Check your withholdings with the Form W-4 Assistant at paycheckcity.com. You can change your withholdings at any time of the year, so no deadline is looming. Still, you may be inspired to put this item on your “must do” list when you realize you’re letting Uncle Sam borrow money that you’d just get back anyway.

4. Pretty up your portfolio
Yeah, it’s been a lousy year on Wall Street, but the IRS kindly offers a little salve for those who have taken a hit. You can reduce the capital gains taxes you owe on any investments held and sold for a profit in regular, taxable accounts by offsetting the tab with capital losses from stocks that have declined in value. So if you’ve seen big losses, getting a tax break is at least a little bit of good news.

Your must-do: Sell your losers. Get rid of floundering investments and either put the money in another (but not identical) investment or wait 31 days and buy the investment back (to avoid breaking the IRS’s “wash sale” rules).Tax-loss selling must be completed by Dec. 31. But don’t do it willy-nilly: If you bought a stock at multiple cost bases, sell the most expensive shares first. If you don’t have capital gains in your taxable accounts to offset the losses but you still have investments worth less than what you paid for them, you can use capital losses to reduce your ordinary income by up to $3,000 a year. If you’re in the 25% tax bracket, doing so will reduce your taxes by $750.

Blow-off-able (for now): Dumping every loser from your portfolio. Got more stinker stocks than you can shake a stick at? The IRS allows you to carry over your losses for use in future years. You also may want to live with your losers a while longer, since getting caught up in a logjam of investors who are also selling off their shares may drive prices down even more.

Here is the original:
Don’t Blow Off These Four Year-End Money ‘Must-Dos’

Many people don’t realize that they have a fear of success. For the longest, I thought to myself:

“Why would I fear success when success is my most desirable goal? What kind of crazy person has a fear of success?”

There are plenty of people who have a fear of success. I didn’t realize that I had issues with this until I noticed that there were certain things that I wouldn’t do and I couldn’t figure out why. What was/is holding me back? Sometimes people fear success because they don’t know if they can live up to their achievements. Self-sabotaging behavior will usually occur when we have this problem. It can be defined as procrastination, a lack of motivation, etc.

How do you know you have a fear of success or self-sabotage issues?

Sometimes we will look at someone as being lazy when they have a problem with a fear of success. They will talk about the many things that they want to do with their life. They may have planned everything out and started on their journey, but instead of doing something about it they waste time surfing the net, watching TV or whatever else they can find to waste time. Being “all talk-no action” is a major problem that must be resolved.

Not trying and focusing on the negative is self-sabotaging behavior. This also leads to a fear of failure which is a major topic for another article.

Procrastinating and wasting time on activities that don’t help you achieve your goals is also a sign of self-sabotage. It’s very easy to stay busy with “life”, but if you don’t recognize this issue, “life” will pass you by.

All means of self-sabotage provides an excuse for you if you don’t live up to your own expectations. Instead of facing the fear that we may not be good enough, smart enough, etc.we can blame it on something minor like a lack of time. In order to correct an issue, we need to recognize that the issue exists.

How do we overcome a fear of success?

• Figure out why you have a fear of success – Take a look at your past experiences and how they affected your outlook on life or confidence in your own ability to succeed.
• Failure is your friend – Don’t be afraid to try something new. If you fail, learn from the experience and don’t repeat the same mistakes. How many times did we fall down as a toddler before we were able to walk?
• Self-competition – Don’t beat yourself up if you haven’t achieved the “success” of your peers. Many times what we see is not reality. You may be better off than the person looking like they have it all, but are so deep in debt it’s crazy. Make an effort to push yourself to the next level. If you are a competitive person by nature it’s crucial not to beat yourself up over defeat. Use the “defeat” to push yourself harder.
• Think Positive – This is a reoccurring theme here. Positive thought will outweigh all negative circumstances you may experience.

See the rest here:
Fear of Success