Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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

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...

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Seeking Basic Financial Education

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...

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Don’t Blow Off These Four Year-End Money ‘Must-Dos’

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,...

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Fear of Success

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...

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The Conspiracy of The Rich by Robert Kiyosaki

I’ve just finished reading the soft cover version of Robert Kiyosaki’s latest book – authored interactively on the web – Conspiracy of the Rich. I had also read a number of earlier chapters as they were being written online here. Conspiracy of the Rich: The 8 New Rules of Money I’ve read a number of Kiyosaki’s books – including Rich Dad, Poor Dad and The Cashflow Quadrant – and he does an excellent job of making finance and investing matters understandable. In fact, perhaps like many people, after reading Rich Dad, Poor Dad I was shocked to discover my own house was not an asset! I also recall vividly how I wished I’d known this sort of information at a much younger age. Now Robert Kiyosaki has done it again – an easy-to-read book that I believe is essential reading for anyone seeking to get ahead financially in these difficult times. The book is subtitled “The 8 New Rules of Money” – and elaborating on those rules is what gives the book its structure. However, this book also breaks new ground by discussing the nature of money, its origins – and much to my surprise and pleasure, also covers the essential facts as to how this current recession developed and why it is not likely to go away in a hurry. You’ll also read about the origin of Federal Reserve, the nature of fiat money, fractional reserve banking and a host of other fundamental economics and money issues that Kiyosaki obviously has a good grip on. He states his mission in life is to bring sound financial education to the world, and finishes the book of with a list of things he would teach children at school – if he was running the school system. And just to give you a taste as to what this book is about, here are the topic headings of his suggested 15 Financial Lessons – which he believes to be essential to accelerating a person’s financial intelligence: 1. The History of Money 2. Understanding Your Financial Statement 3. The Difference Between an Asset and a Liability 4. The Difference Between Capital Gains and Cash Flow 5. The Difference Between Fundamental And Technical Investing 6. Measuring an Asset’s Strength 7. Know How to Choose Good People 8. Know What Asset is Best For You 9. Know When to Focus and When to Diversify 10. Minimise Risk 11. Know How to Minimise Taxes 12. The Difference Between Debt And Credibility 13. Know How to Use Derivatives 14. Know How Your Wealth is Stolen 15. Know How to Make Mistakes Hands up. Who learnt the above...

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Dan Schwabel interviews Robert Kiyosaki on Entrepreneurship

Dan Schwabel interviews Robert Kiyosaki on Entrepreneurship...

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Investment In Property Can Help You Retire

A lot of Americans aren’t going to have enough money to retire on. That is just a un happy reality of these times. Instead of bemoaning that reality (and the unfairness of it all) the best thing someone who hopes to have a healthy retirement can do is simply make sure they aren’t the typical American. We must take actions to assure they will have enough income to enjoy their life and pay their bills, as well as those increasing medical bills. The best way to avoid becoming one of these Americans who end up working at some remedial job through their so-called Golden Years, according to Robert Kiyosoki, author of the “Rich Dad Poor Dad” book series, is to buy investment property. Investing in real estate is a wonderful way for people to prepare for retirement because it supplies a great benefit called “passive income”. After someone has laid the ground work, passive income keeps coming in without a lot of effort. A laborer gets compensated only for the hours he puts in. A real estate investor, after setting up his system, gets paid for keeping it running. And keeping it running, if he been wise about it, will involve paying his team to do the job of inspecting them every now and then. A great thing about passive income (such as from investments) is, the more time the real estate investor holds them, the more ROI they should make for her, with less and less work on the investor’s part. It’s the closest thing to the “Holy Grail” of the world of money. It sounds attractive, but we shouldn’t just take the plunge. And even though it is completely learnable, there’s quite a bit to learn when one is thinking about buying investment property – things like comprehending P&L statements and real estate law. The biggest concept to learn, however, is one’s own limitations. The individual who understands where to find the knowledge he wants is far better off than the individual who remembers tons of facts and formulas around in her memory. In the book “Cash Flow Quadrant,” Robert Kiyosaki advises potential investors to increase their cashflow in addition to their knowledge. He writes of developing a business system that can be set up and left alone, freeing the investor to move to the next step instead of investing all her time working in her business. The next step involves continuing the real estate education and start to look around for specialists to employ and investment properties to buy. Robert Kiyosaki also talks about this change as transitioning from one part of the cash-flow-quadrant to the...

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Can We Afford It?

This may be a simple question for you to answer but it’s one that’s plagued me ever since I got married 22 years ago. The real difficulty answering this question came to light when my daughter and I bought tickets to see the Dodgers who will beat the Marlins this coming Saturday .  We aren’t big baseball fans….we don’t really care who wins…..but we have  fun when we go out to a game.  Usually, that’s only once a year at most. This ticket purchase expedition confirmed that either my memory is fading or ticket prices have skyrocketed.  I was shocked at how high the prices were for decent seats. In any event, when my daughter and I were looking for seats and she saw how high the prices were, she asked me if we could afford it. I must tell you that I was very happy that she even thought of asking this question. I was relieved knowing that I had raised, in effect, a ‘frugal Frankle”!  A “Mini Me” if you will…..   But I digress….. Truth be told, when my little darlin’ asked me this question, I really didn’t know how to anwer her. I explained that we had enough money to buy tickets to the game even though they were expensive – $65 each.  I explained that we had money to send her to college and we had the money for my wife and youngest daughter  to visit family overseas. But I went on to say that just because we had the money to do it, didn’t mean we could afford it. It was at this point that my daughter started rolling her eyes – wishing she were back home watching re-runs of “Law and Order”. Right or wrong, I saw this as a teachable moment so I forged ahead. I told her the amount of money we need to save in order for my wife and I to retire someday.  I told her how far along the path we were and what we needed to save each year in order to reach those goals. Given the recent drop in the market and how that’s impacted everyone’s income and savings…..my wife and I will both be working for quite a few years to come. So when she asked “can we afford those tickets” the answer seemed complicated to me. We had the cash to buy the tickets – we wouldn’t go in debt in order to see the Dodgers trounce their Floridian foes. But could we afford to spend $130 (plus parking and refreshments) for one night on entertainment?  Is it the best use of that money?  Wouldn’t it be better to use that money towards our bigger...

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Skills You Need To Learn In Your Job

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. Original...

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Look to your ‘heroes’ in your drive toward financial freedom

Everybody has a financial hero. It might be a wealthy uncle. Perhaps it is your parents who struggled mightily but managed to keep food on the table and provide for their family. We all have that person or persons we look up to when we think of wealth or money management. Here are a few of my financial heroes. My top financial heroes are my parents. They raised six boys while starting a company and managed to avoid going broke. It took a great deal of ingenuity and effort to win financially. We raised nearly two acres of gardens to feed the family. At the height of the summer vegetable production, we would can more than 100 quarts of green beans and freeze more than 200 bags of sweet corn in a single day. My dad took chances. Some worked out, and others did not. Yet we all learned from the less-successful attempts. Another financial hero is Dave Ramsey. Dave went bankrupt nearly 20 years ago and learned several key lessons as he walked out of his financial mess. He became so passionate about teaching others about these lessons that he wrote a book about it called “Financial Peace.” The message connected with so many people that he has now written several N.Y. Times bestsellers, has a TV show on Fox News and a radio show with millions of listeners. Dave was instrumental in being the catalyst for Jenn and I to pursue debt freedom. Bank Lady’s Dad is another financial hero. I was sitting in a bank one day waiting to speak to a personal banker, and there was quite a line waiting for the teller. A very old lady came in and was chatting with everyone. I heard her ask someone where they were from. She said, “Kenya.” The old lady said, “Well, Ken Ya help me? Ha. Ha. Ha!” She immediately followed that lovely joke with this statement, “Seriously, though. I’ve been there,” and proceeded to tell the story of how her father loaded the family on a boat when she was just 12 years old and took them on a trip around the world for nine months. Her father is one of my financial heroes; he left a legacy that had his little 12-year-old still talking about it at least 70 years later. I have many other financial heroes. Most of them have written books. David Chilton, author of “The Wealthy Barber,” heavily impacted me when I was 12. The book was written about how compound interest can seriously help me fund my dreams. Robert Kiyosaki, author of several books including my favorite, “The Cash...

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