Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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Rent Out Your Home. Cut Your Taxes.

Cherie Kerr wants out of her home. The 65-year-old comedian and public speaking coach paid $590,000 for a 1,150-square-foot Los Angeles condo two and a half years ago–only to find the construction so flimsy that her upstairs neighbor woke her up by dropping a coin on the wooden floor. “A defect hell,” fumes Kerr of her newly built abode. She has moved back into a suburban home she still owns and would love to unload the apartment, but housing values have fallen so far that she figures such a move would lock in a $200,000 loss. The good news is that Kerr is anything but stuck. A real estate agent recently informed her that the condo can fetch $3,300 a month in rent. That’s enough to cover her mortgage and property taxes. So Kerr has decided to lease out her condo until values rebound. While she no longer harbors visions of becoming rich off the downtown L.A. property, things could be a lot worse. “It’ll be a tax writeoff,” she says. Kerr has lots of company these days. No less a financier (and former do-it-yourself tax preparer) than Treasury Secretary Timothy Geithner is leasing out his Mamaroneck, N.Y. home after failing to get for it a bid he was willing to accept. If you’re one of the horde suffering real estate buyer’s remorse, you too may be able to turn a modest profit renting out your albatross of a residence. How can that be? Thank the trove of tax breaks for residential landlords. The first step in figuring out whether renting makes sense is to find out how much your place is worth. A professional appraisal is best, but written statements from a few Realtors will do as long as they agree on the value and stipulate how much is attributable to land and how much to the building. (The appraisal, as you’ll see later, is essential for two separate tax calculations.) The next step is to see how much the property will fetch in monthly rent and weigh that against the costs and tax consequences. As a landlord, you can’t claim mortgage interest as an itemized deduction on Schedule A of your tax return. Instead, you deduct interest costs, plus property taxes, monthly condo fees, insurance and anything you pay to a property manager (most charge 10% of rent) against rental income on Schedule E. You can also expense travel and other costs you personally incur to look after the property. The other big tax deduction for landlords is depreciation. The tax code allows you to divide the value of your building (but not the land) by 27.5...

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The Rich Dad Difference Videos (#9 – #11)

Video #9 – Life’s 4 Quarters Video #10 – The CashFlow Game Video #11 – The Cone of Learning (Last...

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The Rich Dad Difference Videos (#5 – #8)

Video #5 – Bad Debt vs Good Debt Video #6 – Live Above Your Means Video #7 – 3 Types of Income Video #8 – Investing isn’t...

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Don’t Fear Failure

~ Robert Kiyosaki One of the reasons so many people don’t become entrepreneurs is because they’re afraid of failing. They’re afraid of making mistakes. They’re afraid of losing money. But if people can’t overcome these psychological fears, they’d be better off keeping their day jobs. In the early 1980s, when my first major business failed, I thought I was the stupidest person in the world. Being flat broke and getting calls from creditors made me wish I had never wanted to be an entrepreneur. I even wanted my old job back. But instead of condemning me for failing, my rich dad gave me one of life’s most important lessons: “You’re fortunate to have failed. You now have the opportunity to learn how to turn bad luck into good luck. If you can do that, you’ll have a life of more and more good luck.” Here are three key points for turning bad luck into good luck: Don’t blame. When my rich dad asked me what went wrong, the first thing I did was blame my partners and the economy. He immediately said, “Never blame anyone for your failures.””But it was their fault,” I replied.Shaking his head, my rich dad said, “If you blame someone else, you’ll never learn from your mistake. If you blame, you give your power away.” Remember, there are no victims–only volunteers. And you volunteered to become an entrepreneur. Meet new partners. My rich dad said, “In every bad deal, I have always met good people. Some became new partners.” Still hating two of my partners, it was hard for me to understand this statement, yet I took my rich dad’s advice and began sifting through the wreckage.Today, one of my best friends came from that business fiasco. In the ruins of other business failures, I met my current partner in real estate and another partner in my franchise business. If not for the failures, I wouldn’t have met those fellow entrepreneurs and gone on to make millions of dollars with them. Study your mistakes. “Mistakes are priceless,” my rich dad told me. “Study them, learn and profit from them.”Again, this lesson was hard to hear. Being angry and broke, I wanted to run from my mistakes. But rather than run from my failure, I went back to my factory, studied my mistakes and resurrected the business. This is how I turn bad luck into good luck. Remember, making mistakes and becoming smarter is the job of an entrepreneur; not making mistakes is the job of an...

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Don’t Let Tough Times Get the Best of You!

Robert talks about how to make the best of this economy and come out on top in this interview on one of the most highly viewed stations in New York, Fox 5. Read more here: Don’t Let Tough Times Get the Best of...

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Why Are Americans So Willing To Dig Themselves Deep Into Debt?

The New York Times has an article that tells the story of Diane McLeod and her insurmountable debt. http://www.nytimes.com/2008/07/20/business/20debt Even though she’s going through foreclosure on her home, she’s still getting credit card offers from “Urban Bank!” With the aftermath of the sub-prime crash still wreaking havoc, Americans are finding themselves in very uncomfortable debt positions. The blog post on the Consumerist asks, ‘What happened to our values?’ I don’t think it’s a question of values, I think it’s a question of education. Students graduate high school without the slightest idea of what awaits them in terms of credit and debt. Most of them don’t even know what an income statement or balance sheet is. Why do we have such a financially illiterate populace here in the U.S. and what can be done about it? See original here: Why Are Americans So Willing To Dig Themselves Deep Into...

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Why Financial Experts Don’t Work

~ David Shafer ~ The hardest thing for some folks to understand is why taking advice from or turning your money over to experts doesn’t work.  After all, that is what we have been trained to do, listen to experts! There are two problems with this strategy. First, is the problem of our own emotional/mental structures.  Taking advice from experts doesn’t change our own mental structures.  If we don’t change the way we think about money, if we don’t change our understanding about money, if we don’t create a wealth creating environment in our lives, then we will fail to create wealth.  It is as simple as that.  By going to a “financial expert” we are demonstrating an unwillingness to take control of our own lives and that is what needs to be done in order to create wealth.  Study after study demonstrates this. We can not outsource control and expect to have above average results. Secondly, the masses of “financial experts” out there are mostly folks just like you, that haven’t taken control of their own finances, or turn themselves into active participants in their own financial lives.  What, you say?  Yes, that’s right how many folks in the financial expert category are actually wealthy?  How many have made their wealth through investing?  Most, if they have acquired any wealth, do it by having superior sales abilities that turns into superior income.  But as a class, they are wealth underachievers, meaning they have less wealth given their income, than the average.  I read that the average “financial expert” has an income of $80,000, in which they aren’t very good, at least below average, at turning into wealth. Original post: Why Financial Experts Don’t...

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Your House Is Not An Asset

In the video, Robert Kiyosaki (of Rich Dad, Poor Dad fame and someone with more knowledge than me) explains exactly why (with a helpful accounting diagram) the house you own is not an asset and, instead, is a liability. Kiyosaki makes some very helpful points, such as: People today call their liabilities “assets”; The concept that an item that takes money out of your pocket is a liability, and an item that puts money in your pocket is an asset; and The power of cash flow. It’s a short and very insightful video.  Enjoy! See original here: Your House Is Not An...

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Getting A Millionaire?s Mindset

Let’s face it; we all don’t make millions of dollars a year, and the odds are that most of us won’t receive a large windfall inheritance either. However, that doesn’t mean that we can’t build sizeable wealth – it’ll just take some time. If you’re young, time is on your side and retiring a millionaire is achievable. Read on for some tips on how to increase your savings and work toward this goal. Stop Senseless Spending Unfortunately, people have a habit of spending their hard-earned cash on goods and services that they don’t need. Even relatively small expenses, such as indulging in a gourmet coffee from a premium coffee shop every morning, can really add up – and decrease the amount of money you can save. Larger expenses on luxury items also prevent many people from putting money into savings each month. That said, it’s important to realize that it’s usually not just one item or one habit that must be cut out in order to accumulate sizable wealth (although it may be). Usually, in order to become wealthy one must adopt a disciplined lifestyle and budget. This means that people who are looking to build their nest eggs need to make sacrifices somewhere – this may mean eating out less frequently, using public transportation to get to work and/or cutting back on extra, unnecessary expenses. This doesn’t mean that you shouldn’t go out and have fun, but you should try to do things in moderation – and set a budget if you hope to save money. Fortunately, particularly if you start saving young, saving up a sizeable nest egg only requires a few minor (and relatively painless) adjustments to your spending habits. Fund Retirement Plans ASAP When individuals earn money, their first responsibility is to pay current expenses such as the rent or mortgage expenses, food and other necessities. Once these expenses have been covered, the next step should be to fund a retirement plan or some other tax-advantaged vehicle. Unfortunately, retirement planning is an afterthought for many young people. Here’s why it shouldn’t be: funding a 401(k) and/or a IRA early on in life means you can contribute less money overall and actually end up with significantly more in the end than someone who put in much more money but started later. How much difference will funding a vehicle such as a Roth IRA early on in life make? If you’re 23 years old and deposit $3,000 per year (that’s only $250 each month!) in a Roth IRA earning and 8% average annual return, you will have saved $985,749 by the time you are 65 years old...

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Rich Dad’s 8 Core Values for Success

Robert Kiyosaki, author of the best-selling Rich Dad, Poor Dad series, shares tips for getting ahead in business. Find equal opportunities. Don’t be a victim of the survival-of-the-fittest technique. Make yourself marketable. Get a life-changing business education. Feed your mental, emotional, physical and spiritual needs. No, this doesn’t necessarily mean sitting in a college classroom. Get an education from life. Latch onto friends who will pull you up, not push you down. Protect yourself from negative influences. Find value in your network. The more people you can meet in business, the better. Develop your most important business skill. Communicate, communicate and communicate. Be a leader. Influence others by being a great teacher. Don’t work just for money. Work to build wealth, not money. Invest. Live your dreams. First of all, make sure you have dreams. Then make them a reality. You can be a successful businessperson and still make your dreams come...

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