Archive for September, 2010

See Robert Kiyosaki and his advisors live in Scottsdale, Arizona either in person or live streaming on October 14th!

Scheduling would not permit me to attend the live event, but I just signed up for live streaming.  Both the live event, and streaming are EXTREMELY reasonable in price.

Check out the link below!

Financial education through the Rich Dad message continues to inspire throughout Europe!  Ron Salvador recently lead this CASHFLOW event in Gdańsk, Poland.  Please enjoy the pics below!

Thanks Ron and Michał!

Pictures courtesy of Michał Stencel in Koscierzyna, Poland

Ron Salvador is leading CASHFLOW Club Leader training on his European tour, most recently in Warsaw, Poland!  Feel free to check out the pics below, courtesy of Piotr J. Kober who is a CASHFLOW Club Leader in Warsaw, Poland.

Ron, thanks for our training session in March and you are a continuing inspiration for our club in Portland, OR!

Yesterday and today could both be categorized as “one of those days.”  Yesterday, I tried to pay the electric bill online, and to my surprise found that my online account seemed to no longer exist.   After waiting on hold for an extended time was able to recreate the account.  Then, went to pay the bill, and this account didn’t seem to want to accept my credit card.  I had to call the company that they use for payments, and they told me I had to call my the financial institution, as the problem supposedly was on their end.  Lord knows how much time was spent, but for a $60 payment, I had to get off this crazy train.

On this same day, a membership site that I canceled well within the specified notice still ended up billing me for the next cycle for $27.  I called and e-mailed, and am still waiting for confirmation of a refund this morning.

Today, I was charged twice as much as I anticipated from another monthly service.  Because I did not read the fine print, they said there is nothing they can do, and is non-refundable due to their policy.  But, they encouraged me to enjoy the service that I paid for during the allotted amount of time of the coming billing cycle.

I could go on, but I think you get the message about the kind of days these have been.  Have you ever had those days that seem to suck the life out of you?

One of the benefits of regularly attending a CASHFLOW Club, is that meetings are structured to have the opposite effect as described above.  It is meant to recharge with positive energy, in searching for solutions throughout the game, and mutual support through positive reinforcement.

Yesterday, I lead a CASHFLOW game, and was very inspired by the “lights that came on” when a player internalized a concept learned from playing the game, and group discussion at the end.  It brightened my entire day!

I am also a martial artist, and one of the rules that we honor is when you salute into the training area, you leave whatever problems outside the door, and come in with a fresh perspective.  If a person would like to re-engage with those problems at the end of the session when they salute out of the training floor, the choice is available.  But, frequently what happens is that after the training session, one has either gained new perspective or the negative energy has been dissipated to a more manageable level through letting go for that short time.  The community of people of like mind and seeking positive solutions in a CASHFLOW Club can be invaluable, and very similar to the policy of “saluting in” as described above.

If you would like more information regarding attending our club, or any other Rich Dad CASHFLOW Club, feel free to e-mail us at the contact information listed in our “About” page.  Enjoy!

Students played CASHFLOW 101 for the first time at Everest College in Portland, Oregon!  Everyone had a great time today, feel free to check out the pics below.  Thanks for a great job playing the game to the students, and to all for stopping by the website.  Enjoy!

John, a truck driver and his wife Sandra who is a part-time nurse have 2 young children.  Between the mortgage, car payments, daycare since they both work, credit card debt, and other miscellaneous costs, monthly expenses are about $3500.  They had been able to keep up with the payments, and had $5000 in savings.

After 15 years of working for the company, John was then notified that they were downsizing, and he had 2 weeks notice.  He was devastated because of the state of the economy, jobs being so scarce, and that he was the main wage earner for the family.  He had been investing in his 401(k), but in following the popular advice of keeping all of his money in the account even when the mutual funds were plummeting, he lost everything.

Two months went by, and still could not find work.  Even with unemployment checks coming in, savings were almost gone.  Their home equity line of credit was maxed out, and his bank would not lend any more.  He was looking at having to sell the house or face foreclosure.  But, nobody was buying real estate, because the banks just were not lending with the state of the economy.  How did everything that seemed like it was going so well, get so bad?  What went wrong?

How would this situation have been different if they had passive income coming in every month from positive cash flowing rental property, or a side business?

Can anyone learn to invest?  Will you invest differently at 47 than at 18 years old?  If you invest primarily for cash flow rather than capital gains (buy low and sell high), the strategy will be the same for both age groups.  The only difference will be the one that starts at 18 years old will have the advantage of time.

When investing for cash flow, money comes in every month from acquired assets.  Remember, from the previous post, assets put money in your pocket.  Liabilities take money from your pocket.

There are many ways to get started in acquiring and creating assets.  Information products sold on the internet are extremely cost-effective to create, and can provide passive income.  For example, if you write an eBook, it costs nothing but your time, and can bring infinite returns if a proper marketing strategy is used.

Other examples of assets you can create utilizing the internet are becoming an affiliate marketer (where you sell other people’s products for commission), writing a song, patents, trademarks, membership websites, recurring commissions from products, and drop-ship e-commerce.

Another business with low start-up cost is network marketing.  The main strategy is to get a strong down-line that are selling for you, and you are providing good up-line support.

Real estate investing can be an excellent choice as well, though proper training is recommended.  As you saw from the last post, one major advantage is that passive income from real estate, if done strategically, can be taxed at 0 %, legally!

The investment plan is this.  Whatever money you invest in your assets, including further return on the investment, you re-invest, no exceptions.  This is where time becomes your friend rather than your enemy.  The more money you make from assets, the more there is to re-invest in new assets.

At 58, 18, or any age, there is no reason not to start.  With discipline and dedication, one can begin the path of attaining passive income within a short amount of time.

What is the effect of having one’s monthly passive income exceed their monthly expenses?

The question to a child seems innocent enough, right?  Firefighter, policeman, airline pilot, doctor, lawyer are all answers that could come up.  Investor, business owner – maybe not so common!

Where the problem lies is in the expectation of the answer.  So often, the answer involves only being an employee.  It is very commendable to be an employee and part of a team.  The question is whether that is the only choice, and the early imprinting regarding the child’s influence.

“The CASHFLOW Quadrant”, by Robert Kiyosaki offers further distinction in how one earns revenue, and also suggests that these distinctions can be combined.

Robert defines these areas into four quadrants, and also how each pays tax expenses.  The left side of the Quadrant, he describes as E (Employee) and S (Self-employed); and, the right side as B (Big Business) and I (Investor).

On the left side, the E and S will end up paying about 50% or more in taxes when all is said and done.  E’s are the hard-working folks working for companies or the state.  S’s are specialists like doctors, lawyers, and, solo businesses.

On the right side of the quadrant are B’s which are bigger businesses owners utilizing teams, and I’s which are investors.  Typically, B’s leverage other people’s time; and, I’s leverage other people’s money.  The tax for portfolio income like stocks, and capital gains is about 20%.  The tax for an investor including real estate is 0%, no tax if done strategically (and legally!)

In their purest form, each quadrant can be characterized by certain ways of thinking.  E’s are often looking for a safe, secure job with benefits.  S’s are often solo types that might include the dialog, “If you want it done right, do it yourself.”  S’s are also often required to be the smartest in the room.  This is the basis for which they are often contracted for work.

B’s are looking for people that are smarter than they are in various areas to include in a team.  Again, they are seeking to leverage other people’s talents and time spent.  I’s will put their money to work by investing in businesses and real estate, so that they don’t have to spend time working for money.

What we suggest in playing the CASHFLOW GAME is that the quadrants can be combined, as well as the reasons for inclusion in each quadrant.  For example, I can start investing and seeking passive income while I am an employee, say as a fireman, and am interested in rental properties.  Let’s say I am just starting and I have one rental property where the mortgage is $1000 for a 2 bedroom / 1 bath.  I charge $1400 for the rental property, hire a property manager, and still have money left over every month.  The money after expenses is cash flowing in every month whether I work or not at my job.  I can then take out another mortgage from that property, and re-invest that money into another rental property on a 1031 Exchange within the tax deadline required and continue this cycle so that I never pay any taxes – legally.

After I receive enough passive income to meet my monthly expenses, I can choose to work or not for my own reasons.  I believe in the cause of saving lives as a fireman, so I continue to work because I love my work.  But, I am not dependant on the income to meet expenses.

Below are four videos where Robert Kiyosaki explains further the points described above, as well as other related definitions.

In the first video below, he defines the CASHFLOW Quadrant.

In this video, Robert explains tax expense in relation to each quadrant.

In this next video, Robert very clearly defines what he considers the difference between an asset and a liability. This distinction is absolutely imperative to understanding Robert’s approach and path to financial freedom.

This last video explains the difference between what Robert calls “Good Debt” and “Bad Debt.” Good debt is debt that makes you richer, and bad debt makes your poor.

An example of good debt is where you have a positive cash flowing rental property as described above. Bad debt examples include things like credit card debt paying off items that do not produce positive cash flow like big screen televisions and stereos, or car payments. Buying some of these toys described as bad debt can be ok, but one might consider being sure that there is enough positive cash flow (passive income) to cover those expenses.

What answers will you encourage a child to answer when asked what they want to be when they grow up?

September 2010
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