Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki


Robert Kiyosaki & Joe Aldeguer

World renowned author and Real Estate investor, Robert Kiyosaki, talks to Joe Aldeguer about his insights and strategies in investing into Real Estate. Share and...

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20 Lazy Ways to Save Money

While the media can’t decide if the recession is nearing its end or not, we do know that there hasn’t been a tremendous surge in wages, job creation or the stock market. Consequently, most of us are staying pretty conservative on our spending. Here are a few relatively simple ways to keep an eye on your pennies while you’re waiting for that brighter economic future to arrive. 1. Schedule automatic payments. Have (at least) your fixed monthly bills paid automatically to avoid missing a payment and having to fork over extra money for late fees and/or interest. You can set up auto pay features through your bank’s online bill paying service or by arranging it directly with the company or service provider. 2. Eat your groceries. Did you know that Americans regularly throw away nearly 15% of the food they buy at the grocery store each year? That can add up to hundreds or, depending on your supermarket budget, thousands of dollars each year. Save money by actually eating what you buy. Not sure how? Bypass the bookstore and borrow a cookbook from the library! 3. Bundle services. If you’re paying different vendors for similar services you may be overpaying. Call your communications providers to see what price you’ll be quoted if you switch and bundle your internet, phone and cable TV services. 4. Pay off credit card. If you’re not paying off your credit card balance each month you’re paying interest and, for most Americans, it’s a pretty steep rate. Pay it off and you could save a tidy sum by eliminating your interest charges. 5. Mark your calendar. Whenever you rent something – library books, videos, etc. – mark it on your calendar and save money by avoiding those quickly mounting late fees. Many stores and libraries also now offer email reminders to help the constantly harried so sign up for the extra help! 6. File your taxes on time. Or if you need to file an extension at least pay what you owe on the due date. You’ll avoid annoying notices from the IRS and, more importantly, save on penalties, fees and interest. 7. Roll it over. If you’re switching jobs and you can’t leave your 401(k) invested with your current company, roll your 401(k) into either your new employer’s 401(k) or an IRA within the 60-day window instead of withdrawing the money. By doing so you’ll keep the money invested –  and earning interest – and avoid those nasty taxes as well as the additional 10% penalty. 8. Switch credit cards. If you’re carrying a balance on a high interest rate credit card check out other card issuers to see if you could transfer your balance to one with a lower interest rate and...

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Learning good saving habits early in your career

Question: My 21-year-old daughter makes $80,000 a year working at a large firm. She has very low expenses, so I’d like to see her sock away a huge amount of money. I told her that if you get used to spending a lot each month on “fun” stuff, it will be much harder to save down the road. I’d also like to see her bypass the high-end investment firms in favor of less expensive alternatives. What do you suggest? –Tom F., Chatham, Illinois Answer: I’m with you, Dad. I think it’s a great idea to encourage the habit of saving regularly early in one’s career (or life, for that matter) so that it becomes almost second nature. But let’s not overdo it. As Cyndi Lauper once famously put it, girls just wanna have fun. (Boys too, I might add.) Nor does having a good time necessarily make you some sort of financial reprobate. I’m not sure how much you have in mind when you say you want your daughter to sock away a “huge” amount of money, but you don’t want her setting a goal that’s so high that saving becomes a privation and unsustainable. She would be making the same mistake as people looking to control their weight who go on a crash diet. Your aim here, therefore, should be to get your daughter to think of saving as a natural part of life, a regular expense you must budget for just like any other (which, in fact, it is, as I explained in a column about how to live within your means and lead a financially responsible life. So, how can one inculcate the savings habit in a way that avoids dealing with firms that charge onerous commissions and fees? Well, the first thing you can do is to encourage your daughter to sign up for her 401(k) plan, assuming her company offers one (as most large firms do). You might suggest that she contribute at least enough to get the full employer match. If doing that doesn’t bring the combined contribution from her and her company to 10% of her salary, then she should kick in whatever it takes to hit that goal, which is a decent starting point for someone her age. I can’t guarantee that her 401(k) plan’s expenses will be lower than those she’ll encounter at outside investment firms. But unless your daughter finds that, after evaluating her 401(k) plan, it is truly horrendous, it’s highly unlikely that she would be better off forgoing the tax savings, convenience and other benefits of a 401(k) to save outside the plan. In addition to her...

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Economic Collapse: Robert Kiyosaki Says The Worst To Come: Depression Or HyperInflation

We are either going into a Depression or Hyperinflation. The Dollar will be coming down and things will get tough. [carousel keywords="silver bullion"] Share and...

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Five Secrets Your Bank Doesn’t Want You to Know

Laura Rowley Banks are squeezing customers with historically high fees and penalties, from overdraft charges to account service fees to new surcharges on foreign debit transactions. But the pressures that have prompted the fee war with consumers started well before the financial meltdown, according to Jo Preuninger, a former management consultant who spent more than a decade in the consumer banking arena. I asked Preuninger for a little history, as well as some of the tricks of the trade that banks would prefer to keep secret. Secret #1: For many banks, the most profitable customers aren’t the mass affluent — they’re “Joe Lunchbox.” In 1999, the Gramm-Leach-Bliley Act allowed banks, insurers and securities firms to merge, breaking down barriers that had been in place since the 1930s. Following the new law, “if you took all the (deposit) checks written for $10,000 and above, most were written to institutions such as Charles Schwab, Fidelity or Merrill Lynch,” says Preuninger. “They took the best customers. The banks were becoming more like Laundromats, where you put money in for a short period because you still needed to pay with a check or (get cash).” At the same time, loans provided little profit as interest rates remained relatively low, prompting banks to seek consistent, non-interest income. “The focus was on how banks could not only identify fees they could charge, it was how to do a better job of collecting their fees,” says Preuninger. Middle-income customers presented the greatest potential to harvest fees. “There’s certainly a customer segment that could be called ‘Joe Lunchbox,’ who expect to be nickeled and dimed,” says Preuninger. “They are managing money from paycheck to paycheck. It’s someone who would prefer to pay an overdraft fee to get their mortgage covered rather than get hit by a mortgage provider with a late fee and a ding on their credit score.” Last year, overdraft and insufficient-funds charges totaled nearly $35 billion and comprised about 90 percent of banks’ consumer-fee income, according to a study by the consulting firm Bretton Woods Inc. Three-quarters of banks automatically enroll consumers in their “overdraft protection” programs without formal permission, and more than half of banks manipulate the order in which checks are cleared to trigger multiple overdraft fees, according to a Federal Deposit Insurance Corporation study. “They are going to try to turn the best profit they can, which is why they post in the most attractive way they can while avoiding and minimizing legal exposure,” says Preuninger. Someone who overdraws a checking account a few times a year should choose a bank with a program that makes it easy (and free) to...

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Four Ways to Weather an Economic Storm

~ Andrew Beattie Economic conditions can be as temperamental as the weather. In this article we’ll look at some simple steps that can help keep the financial boat afloat during an economic tempest. Batten Down the Hatches Warren Buffet derides management that embarks on cost cutting, as good management shouldn’t need to be prompted to control costs – that should be second nature. People are less strict with their personal finances than Buffet is on management, but a downturn quickly provides the motivation needed for cost consciousness. There is always room for cutting frivolous expenses, or at least substituting them with cheaper alternatives. This applies to everything from the morning coffee to landscaping the backyard. Set in Stores Even if you have creditors banging on your door and ringing you at work, your first priority should be building or augmenting your emergency fund. When money is consistently flowing out of your bank account leaving a near-zero balance, there is no cushion for unexpected and unavoidable expenses – like a root canal or a new radiator. This forces people to take on yet more debt to make ends meet, and the outflow of cash worsens until it seems like they are working just to satisfy their creditors. The better alternative is to make minimum payments on your debt while building a cushion of at least one month’s wages, but preferably 3-6 months. The larger the emergency fund, the more secure you’ll be mentally and financially. With three or more months in reserve, it takes a pretty big emergency to shake things up. Building the fund should take precedence over investment as well as debt payments. Any automatic investment plan should be put temporarily on hold and that money funneled towards the emergency fund to help speed up the building. It may feel like you’re dodging creditors and robbing from your golden years, but with a proper emergency fund, you’ll be in a better situation to consistently make payments on your debts and regularly invest no matter what happens in the future. Patch the Hull When the general market is choppy, there is almost daily coverage of where the hot money is going. Investors rush out of cash and into bonds; out of bonds and into stocks; out of stocks and back into cash and bonds, and on and on. Rather than getting caught up in the stutter-step of fast money, most people would benefit far more from paying down existing debt than finding safe havens to park idle funds. If you are holding debt during a downturn, paying it back is one of the few places where you can put...

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Robert Kiyosaki’s Cash Flow Book Review: Why Network Marketing

Robert Kiyosaki is a master when it comes to explaining things in simple terms. This is a review on the book Cash Flow Quadrant. I learned 3 major things from reading this book. The biggest is the importance of leveraging a system.   Share and...

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Couples Quiz: What’s Your Financial Compatibility

Couples frequently avoid talking about money before marriage. That’s unfortunate, because sharing perspectives about money can help couples resolve the financial issues that doom many marriages. The following financial compatibility quiz can help couples planning to tie the knot discuss financial issues. Answer “true” or “false” to each of the following statements. 1.      We are aware of and comfortable with each other’s money personalities. 2.      We have discussed our short- and long-term financial goals. 3.      My spouse and I are well versed in personal finance. 4.      My spouse and I have discussed a plan to structure our finances. 5.      We have planned for the impact that marriage will have on our taxes. 6.      We have decided how to divide up the money management tasks. 7.      We understand the importance of establishing a realistic budget. 8.      I know my future spouse’s investment personality and risk tolerance. 9.      I know how much debt my spouse is bringing into our marriage. 10.     We have made a commitment to discuss money regularly. Answering “true” to eight or more statements indicates that you and your spouse are on your way to a stable financial future. However, it’s still a good idea to continue to communicate and work together. If you answered “true” to between five and seven of the above statements, you and your spouse need to devote more time to planning your financial future together. With a little luck, you can achieve financial compatibility.  If you answered true to fewer than five questions, don’t call off the wedding yet. Instead, make a sincere commitment to discuss these issues and consider meeting with an experienced financial planner who can help you start your marriage on firm financial footing.  Read on to learn more about the importance of each question. We are aware of and comfortable with each other’s money personalities. Some of us grew up in families where parents watched every dime; in other families money flowed easily. Some people measure self worth in terms of money and possessions. Some people are natural spenders; others are savers. Understanding your future spouse’s background and values can help avert problems down the road.   We have discussed our short- and long-term financial goals. Setting financial goals helps you develop priorities and define the type of lifestyle you will lead. Break down your goals into manageable pieces. If you want to buy a house in five years, determine how much you need to save monthly to meet the down payment. My spouse and I are well versed in personal finance. Parents and schools rarely provide training in personal finance. Work together to develop your financial knowledge and...

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How Deep Must You Dig to Pay the Mortgage?

Jack M. Guttentag As the unemployment rate rises, more mortgage borrowers must choose between default and making the payment out of savings. That can be an agonizing decision. See the letter below: “I was laid off recently but am reasonably hopeful of finding another position soon… We have stayed current by drawing down our IRAs, but there is only about $4,000 left, enough to cover us for one more month…Our family is counseling us to keep the $4K left in our IRAs and not make the next monthly mortgage payments. Do you agree?” Not making the payment will hurt your credit, but if the choice is between missing the payment this month and missing it next month, I would miss it this month and keep the cash. I would only use the rest of your cash to make the payment if you manage to get a job before 30 days after the payment due date. In that event, you have a reasonable hope of being able to work your way out of the jam you are in, so using your remaining money to save your credit makes sense. This question is heavily value-laden, which is why I answered it in terms of what I would do, which is not necessarily what someone else with different values might elect to do. Some, especially investors, could take the position that a borrower is morally obliged to make the payment if there is any possible way to do it. This is a defensible argument, but it assumes that the borrower’s only duty is to the investor. The borrower in question has a family to consider as well. The issue of a borrower’s obligation to continue making payments out of savings after their income-generating capacity has been impaired arises in connection with the government’s Home Affordability Modification Program. See another letter from a reader: “I have applied to have my loan modified, and am in process of filling out the financial questionnaire that my servicer sent me. It asks for the amounts in my bank accounts. Although my income has dropped, I have enough money in the bank to cover the mortgage payment for three years. Should I take it out, and where should I put it?” To be eligible to have your payment reduced under this program, you must document not only that your income is insufficient to meet the payment but also that you do not have “sufficient liquid assets” to make the payment. I have scrutinized the specs for this program issued by Treasury, and could not find a definition of either “sufficient” or “liquid assets.” It is a thorny...

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Banks Get Picky in Doling Out Credit Cards

When Edward Miller recently applied for a Charles Schwab Corp. credit card, a company representative asked him to fax in copies of his bank-account statements to verify his net worth. It was “a bit of a hassle,” says the 64-year-old retired economics and finance professor from Bethesda, Md. He complied and was eventually approved for the card with a $5,000 limit. After years of mailing cards out to just about anybody, banks are suddenly freezing out all but the most creditworthy customers. Those who do get cards have to jump through more hoops, such as sending in copies of their pay stubs. And they’re being hit with higher rates and fees. Banks always tighten credit standards in an economic slowdown. But the recently passed Credit Card Act of 2009 is forcing the industry to rewrite the play book it has used for years. The new legislation aims to limit fluctuating interest rates, ban some controversial practices and arm consumers with more information on their debts. Banks have until February 2010 to comply with the act’s key provisions, although some parts of the law have earlier deadlines. Beginning in August, for example, issuers have to mail bills at least 21 days before the due date and provide at least 45 days’ notice before changing any significant terms on a card. The result: Many banks are tightening things up now before many of the restrictions go into effect. For consumers, the tougher underwriting standards by banks may seem like a pendulum shift back to an earlier era when credit cards sported annual fees and double-digit interest rates. In recent years, issuers cast as wide a net as possible by offering credit to millions of customers, knowing they could always raise rates on those who turned out to be bad bets. That pricing flexibility helped firms rapidly expand their operations, as those with less-than-stellar credit many of whom carried a balance or paid late fees and penalty rates generated millions of dollars in revenue. Now, the industry is scrambling to figure out who its new profitable customer is. “Without the ability to reprice customers, raise fees or rates, the old profitability calculation won’t apply,” says Alan Mattei, managing director at Novantas LLC, a bank consulting firm. In recent months, banks including Bank of America Corp., Citigroup Inc. and J.P. Morgan Chase & Co., have raised interest rates and fees, switched customers with fixed rates to variable ones, and dropped credit lines and closed accounts. Credit Suisse Group’s Moshe Orenbuch expects credit-card balances could shrink by 10% to 15% through 2012 as banks drop their teaser-rate offers and cut back on offering credit...

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