Notesale: Turn your study into money

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Rich Dad, Poor Dad
By Robert T
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0(9-9-2002)
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INTRODUCTION
There is a Need
Does school prepare children for the real world? "Study hard and get good
grades and you will find a high-paying job with great benefits," my parents used
to say
...

When T finally earned my diploma in 1976-graduating with honors, and near the
top of my class, in accounting from Florida State University-my parents had
realized their goal
...
In
accordance with the "Master Plan," I was hired by a "Big 8" accounting firm, and
I looked forward to a long career and retirement at an early age
...
We both came from hardworking families, of modest means but with strong work ethics
...
He was quickly recruited by a prestigious Washington, D
...
, law firm
that specialized in patent law, and his future seemed bright, career path welldefined and early retirement guaranteed
...
We both have changed positions several times-for all the
right reasons-but there are no pension plans vesting on our behalf
...

Michael and I have a wonderful marriage with three great children
...
We have

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spent a fortune making sure our children have received the best education
available
...

He was bored and tired of studying
...

Without thinking, I responded, "Because if you don't get good grades, you
won't get into college
...
"
"If you don't graduate from college, you won't get a good job," I
responded with a tinge of panic and motherly concern
...
We have had
this talk many times before
...
My words
of motherly wisdom were falling on deaf ears once again
...

"Mom," he began
...
"Get with the times! Look
around; the richest people didn't get rich because of their educations
...
Even Bill Gates, who dropped out of Harvard, founded
Microsoft; he is now the richest man in America, and he's still in his 30s
...
' "
There was a long silence between us
...
The world around us has
changed, but the advice hasn't
...

"Mom," he continued, "I don't want to work as hard as you and dad do
...
If I follow
your advice, I'll wind up like you, working harder and harder only to pay more
taxes and wind up in debt
...
I also know that college graduates today earn less
than you did when you graduated
...
They don't make nearly as much
money as they used to
...
I need new answers
...
He needed new answers, and so did I
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
No longer can I simply say to my children,
"Go to school, get good grades, and look for a safe, secure job
...

As a mother as well as an accountant, I have been concerned by the lack of
financial education our children receive in school
...
Simply put, without financial literacy and the knowledge of how
money works, they are not prepared to face the world that awaits them, a world
in which spending is emphasized over savings
...

One day last year, my husband called me from his office
...
"His name is Robert Kiyosaki
...
I think it's what you have been looking for
...
Because it was an educational game, I
also asked my 19-year-old daughter, who was a freshman at a local university, if
she would like to take part, and she agreed
...

Mike was right
...
But
it had a twist: It looked like a colorful Monopoly board with a giant welldressed rat in the middle
...
The object of the game was to get out of the inside
track-what Robert called the "Rat Race" and reach the outer track, or the "Fast
Track
...

Robert then defined the "Rat Race" for us
...
The child is born and goes to school
...
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who controls the past controls the future, who controls the present controls the past
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The child graduates, maybe goes on to graduate school and then
does exactly as programmed: looks for a safe, secure job or career
...
Generally, the child begins to make money, credit cards start to
arrive in mass, and the shopping begins, if it already hasn't
...
Life is wonderful now, because today, both men and women work
...
They feel successful, their future is bright, and they decide
to buy a house, a car, a television, take vacations and have children
...
The demand for cash is enormous
...
The raises come, and so does another child and the need for a bigger
house
...
They go
back to school to get more specialized skills so they can earn more money
...
Their incomes go up, but so does the tax bracket they're
in and the real estate taxes on their new large home, and their Social Security
taxes, and all the other taxes
...
They buy some mutual funds and buy groceries with their
credit card
...

"That happy couple, born 35 years ago, is now trapped in the Rat Race for
the rest of their working days
...

"Then, they advise their own children to `study hard, get good grades, and
find a safe job or career
...
The process
repeats into another hard-working generation
...
"
The only way to get out of the "Rat Race" is to prove your proficiency at
both accounting and investing, arguably two of the most difficult subjects to
master
...
The process was so well disguised that while we were diligently
working to get out of the "Rat Race," we quickly forgot we were learning
...
As an accountant, playing a game
that required an Income Statement and Balance Sheet was easy
...
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who controls the past controls the future, who controls the present controls the past
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I was the first person-and the only person in the entire test groupto get out of the "Rat Race" that day
...

At my table was a banker, a business owner and a computer programmer
...
I wondered how they managed
their own financial affairs in real life
...

After I was out of the "Rat Race," for the next two hours I watched my
daughter and these educated, affluent adults roll the dice and move their
markers
...
They had difficulty grasping the relationship between their Income
Statement and their Balance Sheet
...

I thought, how many millions of people are out there in the real world
struggling financially, only because they have never been taught these subjects?
Thank goodness they're having fun and are distracted by the desire to win
the game, I said to myself
...

The business owner at my table was not happy
...
"I
don't need to know this," he said out loud
...
"
To which Robert replied, "Have you ever noticed that there are a lot of
accountants who aren't rich? And bankers, and attorneys, and stockbrokers and
real estate brokers
...
Since our schools do not teach people what the
rich know, we take advice from these people
...
You look
to your left and you see your banker
...
"
The computer programmer was also unimpressed by the game: "I can buy
software to teach me this
...
"I studied this in school-the accounting
part, that is-but I never knew how to apply it to real life
...
I need
to get myself out of the `Rat Race
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who controls the past controls the future, who controls the present controls the past
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"I had fun
learning," she said
...
"
Then she added: "Now I know I can choose a profession for the work I want
to perform and not because of job security, benefits or howmuch I get paid
...
rather than study something because businesses are looking for certain
job skills
...
"
I was not able to stay and talk with Robert after we had played the game,
but we agreed to meet later to further discuss his project
...

My husband and I set up a dinner meeting with Robert and his wife within
the next week
...

We found out we had a lot in common
...
We talked about the changing
world
...
Would my children be required to pay for the retirement
of 75 million baby boomers? We wondered if people realize how risky it is to
depend on a
pension plan
...
A self-taught, self-made entrepreneur who
traveled the world putting investments together, Robert was able to retire at
the age of 47
...
He knows that the world has changed, but education has
not changed with it
...

"Today, the most dangerous advice you can give a child is `Go to school,
get good grades and look for a safe secure job,' " he likes to say
...
If you could see what is happening in Asia, Europe,
South America, you would be as concerned as I am
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It's just
too risky
...

"People like me play by a different set of rules from what you play by,"
he said
...
"Families are hurt
...
"
"Yes, but what happens to the company, in particular a public company on
the stock exchange?"
"The price of the stock usually goes up when the downsizing is announced,"
I said
...
"
"That's right," he said
...
That is what I mean by a different set of rules
...
"
Robert was describing not only the difference between an employee and
employer, but also the difference between controlling your own destiny and
giving up that control to someone else
...

"They just think it's not fair
...
"It is foolish to assume that the education the school
system provides will prepare your children for the world they will face upon
graduation
...
Different education
...
The different sets of rules
...
"And the 95
percent learns those rules at home and in school
...
' A child today needs a
more sophisticated education, and the current system is not delivering the goods
...
How can the education system teach a subject that it does not
know?"
So how does a parent teach their children, what the school does not? How
do you teach accounting to a child? Won't they get bored? And how do you teach
investing when as a parent you yourself are risk averse? Instead of teaching my

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children to simply play it safe, I decided it was best to teach them to play it
smart
...
"How can we make it easy for parents especially
when they don't understand it themselves?"
"I wrote a book on the subject, " he said
...
It's been there for years in random pieces
...
I began
writing it after my other book became a best seller, but I never finished the
new one
...
"
And in pieces it was
...
We
agreed to co-author Robert's book
...
He
said it would depend on the child
...
Education is the foundation of success, Robert said
...

What follows is the story of Robert's two dads, a rich one and a poor
one, that expounds on the skills he's developed over a lifetime
...
The book is
supported, edited and assembled by me
...
Although many of them challenge the very fundamentals of generally
accepted accounting principles, they provide a valuable insight into the way
true investors analyze their investment decisions
...
It has always been the
right thing to do
...
Having
been raised by two fathers, he had been taught to strive for two different goals
...
His rich dad advised him
to own the corporation
...
His educated dad encouraged Robert to be a
smart person
...

Having two dads caused many problems
...
By the time Robert was 16,

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the threat of "If you don't get good grades, you won't get a good job" had
little effect
...
In fact, if it had not been for a wise and persistent high school
guidance counselor, Robert might not have gone on to college
...
He
was eager to start building his assets, but finally agreed that the college
education would also be a benefit to him
...
Some parents are having a hard enough time
simply keeping their children in school
...
To encourage children to be
employees is to advise your children to pay more than their fair share of taxes
over a lifetime, with little or no promise of a pension
...
In fact, most families work from January
to mid-May for the government just to cover their taxes
...

Robert claims that the rich teach their children differently
...
These ideas may notbe the ideas
you choose to discuss with your children, but thank you for looking at them
...
In my opinion, as a mom and a CPA, the concept
of simply getting good grades and finding a good job is an old idea
...
We need new ideas
and different education
...

It is my hope as a mother that this book helps other parents
...
If today you are a gardener or a janitor or even unemployed, you have
the ability to educate yourself and teach those you love to take care of
themselves financially
...

Today we are facing global and technological changes as great or even
greater than those ever faced before
...
Who knows what
the future brings? But whatever happens, we have two fundamental choices: play
it safe or play it smart by preparing, getting educated and awakening your own
and your children's financial genius
...
lifebooks4all
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who controls the past controls the future, who controls the present controls the past
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richdadbooki
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Thank you
Rich Dad, Poor Dad

1
...
One was highly educated and
intelligent; he had a Ph
...
and completed four years of undergraduate work in
less than two years
...
The other father never finished the eighth grade
...

Both earned substantial incomes
...
The
other would become one of the richest men in Hawaii
...
The other left
bills to be paid
...
Both men offered me
advice, but they did not advise the same things
...

If I had had only one dad, I would have had to accept or reject his advice
...

Instead of simply accepting or rejecting one or the other, I found myself
thinking more, comparing and then choosing for myself
...
Both were just starting out on their careers, and both were struggling
with money and families
...

For example, one dad would say, "The love of money is the root of all
evil
...
"
As a young boy, having two strong fathers both influencing me was
difficult
...
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who controls the past controls the future, who controls the present controls the past
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The contrast in their points of view, particularly where money
was concerned, was so extreme that I grew curious and intrigued
...

Much of my private time was spent reflecting, asking myself questions such
as, "Why does he say that?" and then asking the same question of the other dad's
statement
...
I
agree with that
...
" Instead, having two dads whom I loved
forced me to think and ultimately choose a way of thinking for myself
...

One of the reasons the rich get richer, the poor get poorer, and the
middle class struggles in debt is because the subject of money is taught at home,
not in school
...
So what can a poor
parent tell their child about money? They simply say "Stay in school and study
hard
...
It was learned while the child was young
...
Schools focus on scholastic and
professional skills, but not on financial skills
...
Our staggering national debt is due in
large part to highly educated politicians and government officials making
financial decisions with little or no training on the subject of money
...
They
will be dependent on their families or the government for financial support
...
I had
to think about each dad's advice, and in doing so, I gained valuable
insight into the power and effect of one's thoughts on one's life
...
" The other dad
forbade those words to be used
...
One lets you off the hook, and the
other forces you to think
...
By
asking the question "How can I afford it?" your brain is put to work
...
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who controls the past controls the future, who controls the present controls the past
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He was fanatical about exercising your mind, the
most powerful computer in the world
...
The stronger it gets, the more money I can make
...

Although both dads worked hard, I noticed that one dad had a habit of
putting his brain to sleep when it came to money matters, and the other had a
habit of exercising his brain
...
It is not much different from a
person who goes to the gym to exercise on a regular basis versus someone who
sits on the couch watching television
...

Laziness decreases both health and wealth
...
One dad thought that the
rich should pay more in taxes to take care of those less fortunate
...
"
One dad recommended, "Study hard so you can find a good company to work
for
...
"
One dad said, "The reason I'm not rich is because I have you kids
...
"
One encouraged talking about money and business at the dinner ,table
...

One said, "When it comes to money, play it safe, don't take risks
...
"
One believed, "Our home is our largest investment and our greatest asset
...
"
Both dads paid their bills on time, yet one paid his bills first while the
other paid his bills last
...
He was always concerned about pay raises, retirement plans, medical
benefits, sick leave, vacation days and other perks
...
He loved the idea of
medical benefits and PX privileges the military provided its retirees
...
The idea of job
protection for life and job benefits seemed more important, at times, than the
job
...
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The other believed in total financial self-reliance
...
He was emphatic about being financially competent
...
The other simply created
investments
...
The other taught me how to write strong business and financial plans so I
could create jobs
...
I noticed that people really do
shape their life through their thoughts
...
" And that
prophesy became reality
...
He would say things like, "I'm a rich man, and rich people
don't do this
...
He would cover himself by saying,
"There is a difference between being poor and being broke
...
"
My poor dad would also say, "I'm not interested in money," or "Money
doesn't matter
...
"
The power of our thoughts may never be measured or appreciated, but it
became obvious to me as a young boy to be aware of my thoughts and how I
expressed myself
...
As a young boy, having two fathers, I
became acutely aware of being careful which thoughts I chose to adopt as my own
...
One wanted me to study
hard, earn a degree and get a good job to work for money
...
The other encouraged me to study to be rich, to understand
how money works and to learn how to have it work for me
...
In doing so, I chose not to listen to my poor dad, even though he was the
one with all the college degrees
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who controls the past controls the future, who controls the present controls the past
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Although I love many of his poems, my
favorite is The Road Not Taken
...
Oh,
I kept the first for another day! Yet knowing how way leads onto way, I doubted
if I should ever come back
...

Robert Frost(1916)
And that made all the difference
...
Choosing
not to listen to my highly educated dad's advice and attitude about money was a
painful decision, but it was a decision that shaped the rest of my life
...

My rich dad taught me over a period of 30 years, until I was age 39
...

Money is one form of power
...
Money comes and goes, but if you have the education about how money
works, you gain power over it and can begin building wealth
...

Because I was only 9 years old when I started, the lessons my rich dad
taught me were simple
...
This book is about those six lessons, put
as simply as possible as my rich dad put forth those lessons to me
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who controls the past controls the future, who controls the present controls the past
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Guideposts that will assist you and
your children to grow wealthier no matter what happens in a world of increasing
change and uncertainty
...
CHAPTER TWO
Lesson One: The Rich Don't Work For Money
"Dad, Can You Tell Me How to Get Rich?"
My dad put down the evening paper
...
He took three of his friends, but
Mike and I weren't invited
...
"
"They did?" my dad asked incredulously
...
" I replied in a hurt tone
...
I stood waiting for an answer
...
I was 9 years old
...
We were primarily
a sugar plantation town
...
After grade 6, their children were
generally sent off to private schools
...
Had I lived on the other side of the street,
I would have gone to a different school, with kids from families more like mine
...
There was no private school for them or for me
...
I could tell he was thinking
...
"If you want to be rich, you have to learn
to make money
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"Well, use your head, son," he said, smiling
...
"
A Partnership Is Formed
The next morning, I told my best friend, Mike, what my dad had said
...
Mike was
like me in that he was in this school by a twist of fate
...
We weren't really poor, but we felt as if we were because all the other
boys had new baseball gloves, ,,,y
new bicycles, new everything
...
:,
But that was about it
...
"
We wanted things, but there was not much work available for 9- , year-old boys
...

"I don't know," I said
...
We spent all morning coming up with ideas on how to 1'make money
...
It hurt a little, but that hurt was good, for it inspired us to keep
thinking of a way to make money
...
It was an idea Mike had gotten from a science book he
had read
...

For the next several weeks, Mike and I ran around our neighborhood,
knocking on doors and asking our neighbors if they would save their toothpaste
tubes for us
...
Some asked
us what we were doing
...
It's a business
secret
...
We had selected a
site next to her washing machine as the place we would stockpile our raw
materials
...

Finally my mom put her foot down
...
"What are you boys doing?" she
asked
...
Do something
with this mess or I'm going to throw it out
...
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who controls the past controls the future, who controls the present controls the past
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We informed her that we were waiting on a
couple of neighbors to finish using up their toothpaste so we could have their
tubes
...

The date to begin production was moved up
...
My first
partnership was already being threatened with an eviction notice from our
warehouse space by my own mom
...
I began to put together the production line
...
in the
driveway with a production line operating at full speed
...
On a long table were small milk cartons from school, and our
family's hibachi grill was glowing with red hot coals at maximum heat
...
As he and his friend
got closer, they saw a steel pot sitting on top of the coals, with the
toothpaste tubes being melted down
...
The tubes were made of lead
...

The milk cartons were filled with plaster-of-Paris
...
In my haste, I had
knocked the bag over, and the entire area look like it had been hit by a
snowstorm
...

My dad and his friend watched as we carefully poured the molten lead
through a small hole in the top of the plaster-of-Paris cube
...

I nodded without looking up
...

"What are you boys doing?" he asked with a cautious smile
...
We're going to be rich," I said
...
"We're partners
...

"Watch," I said
...
"
With a small hammer, I tapped at the seal that divided the cube in

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half
...
"
"Oh, my God!" my dad said
...
"
"That's right," Mike said
...
We're making
money
...
My dad smiled and shook
his head
...

He asked us to put everything down and sit with him on the front step of
our house
...

Our dreams were dashed
...

"Let them go," my dad's friend said
...
"
My dad glared at him
...
"But you boys have shown great
creativity and original thought
...
I'm really proud of you!"
Disappointed, Mike and I sat in silence for about twenty minutes before we
began cleaning up our mess
...
Sweeping the
powder up, I looked at Mike and said, "I guess Jimmy and his friends are right
...
"
My father was just leaving as I said that
...
"You're only
poor if you give up
...
Most
people only talk and dream of getting rich
...
I'm very
proud of the two of you
...

Keep going
...
"
Mike and I stood there in silence
...

"So how come you're not rich, dad?" I asked
...
Schoolteachers really don't think
about being rich
...
I wish I could help you, but I really
don't know how to make money
...

"I know," said my dad
...
Talk to your dad, Mike
...


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"Yeah, your dad," repeated my dad with a smile
...
He's told me several times that
your father is brilliant when it comes to making money
...
"Then how come we don't have a
nice car and a nice house like the rich kids at school?"
"A nice car and a nice house does not necessarily mean you're rich or you
know how to make money," my dad replied
...
He's not much different from me
...
The company buys the car for him
...
Your dad is different
Mike
...
"
With that, Mike and I got excited again
...
As we were cleaning, we
made plans on how and when to talk to Mike's dad
...
His father owned
warehouses, a construction company, a chain of stores, and three restaurants
...

Mike caught the bus home after we had finished cleaning up
...
Mike promised to call as soon as he had talked to his dad,
even if it was late
...
m
...
"Next Saturday
...
Mike's dad had
agreed to meet with Mike and me
...

The Lessons Begin:
"I'll pay you 10 cents an hour
...

Michael and I met with his dad that morning at 8 o'clock
...
His construction supervisor was
just leaving in his pickup truck as I walked up to his simple, small and tidy
home
...

"Dad's on the phone, and he said to wait on the back porch," Mike said as
he opened the door
...
There was a cheap mat just inside the door
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Although clean, it needed to be replaced
...
Sitting on the couch were two women, a little older than my mom
...
He wore khaki slacks and a khaki
shirt, neatly pressed but without starch, and polished work books
...
They smiled as Mike and
I walked past them, heading for the kitchen, which lead to the porch that
overlooked the back yard
...

"Who are those people?" I asked
...
The older man runs his warehouses, and the
women are the managers of the restaurants
...
His other
supervisor, who is building a track of houses, had already left before you got
here
...

"Not always, but quite often," said Mike, smiling as he pulled up a chair
to sit down next to me
...

"Oh, and what did he say to that?" I asked with cautious curiosity
...
"
"Oh," I said, rocking my chair back against the wall; I sat there
perched on two rear legs of the chair
...

"Do you know what the offer is?" I asked
...
"
Suddenly, Mike's dad burst through the rickety screen door and onto the
porch
...

"Ready boys?" Mike's dad asked as he pulled up a chair to sit down
with us
...

He was a big man, about 6 feet tall and 200 pounds
...
They sort of looked
alike, though not of the same ethnic makeup
...


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"Mike says you want to learn to make money? Is that correct, Robert?"
I nodded my head quickly, but with a little intimidation
...

"OK, here's my offer
...

You work for me, I'll teach you
...
I can
teach you faster if you work, and I'm wasting my time if you just want to sit
and listen, like you do in school
...
Take it or leave it
...
may I ask a question first?" I asked
...
Take it or leave it
...

If you can't make up you mind decisively, then you'll never learn to make money
anyway
...
Being able to know when to make quick
decisions is an important skill
...

School is beginning or it's over in ten seconds," Mike's dad said with a teasing
smile
...


`

"Take it," said Mike
...
"Mrs
...
After I'm
through with her, you ride with her to my superette and you can begin working
...
"
"But I have a softball game today," I said
...
"Take it or leave it," he
"I'll take it," I replied, choosing to work and learn instead of playing
softball
...
m
...

Martin
...
She always said that Mike and I
reminded her of her two sons who were grown and gone
...
She was a task master
...
It was
excruciatingly boring work
...
They were the early version of the 7-11 convenience
stores
...
The problem was, this was Hawaii before air
conditioning, and the stores could not close its doors because of the heat
...
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who controls the past controls the future, who controls the present controls the past
...
Every time a car drove by or pulled into the parking lot, dust would swirl
and settle in the store
...

For three weeks, Mike and I reported to Mrs
...
By noon, our work was over, and she dropped three little dimes in each of
our hands
...
Comic books cost 10 cents back then, so I usually spent my money on
comic books and went home
...
I had agreed to work
only because I wanted to learn to make money from Mike's dad, and now I was a
slave for 10 cents an hour
...

"I'm quitting," I told Mike at lunchtime
...

School was boring, and now I did not even have my Saturdays to look forward to
...

This time Mike smiled
...

"Dad said this would happen
...
"
"What?" I said indignantly
...
"Dad's kind of different
...
Your mom and dad lecture a lot
...
You just wait till this Saturday
...
you're ready
...
Dad will explain on Saturday
...
Even my real dad was angry
with him
...

My educated poor dad told me to demand what I deserve
...
My poor dad told me that if I did not get a raise, I was to quit
immediately
...

At 8 o'clock Saturday morning, I was going through the same rickety door
of Mike's house
...
lifebooks4all
...
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who controls the past controls the future, who controls the present controls the past
...
He turned
and disappeared into his little office next to a bedroom
...
Feeling awkward, I
cautiously sat down next to the same two women who where there four weeks
earlier
...

Forty-five minutes went by, and I was steaming
...
An older gentleman was in there for twenty
minutes and was also gone
...
I could hear him rustling around the office, talking on the phone, and
ignoring me
...

Finally, fifteen minutes later, at exactly 9 o'clock, rich dad walked out
of his office, said nothing, and signaled with his hand for me to enter his
dingy office
...

"Well, you're not keeping your end of the bargain," I blurted out nearly
in tears
...

"You said that you would teach me if I worked for you
...
I've worked hard
...
And
you don't keep your word
...
You are a crook like
everyone in town thinks you are
...
You want all the money and don't
take care of your employees
...
I'm
only a little boy, and I deserve to be treated better
...
It was like he was studying me
...
"In less than a month, you sound like most of my
employees
...
Not understanding what he was saying, I continued with my
grievance
...
Instead you want to torture me? That's cruel
...
"
"I am teaching you," rich dad said quietly
...
"You haven't even
talked to me once since I agreed to work for peanuts
...
Hah! I
should notify the government about you
...
My dad works for the government, you
know
...
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who controls the past controls the future, who controls the present controls the past
...
"Now you sound just like most of the people who used
to work for me
...
"
"So what do you have to say?" I demanded, feeling pretty brave for a
little kid
...
I've worked for you, and you have not kept your
word
...
"
"How do you know that I've not taught you anything?" asked rich dad calmly
...
I've worked for three weeks, and you
have not taught me anything," I said with a pout
...

"Well, yes," I replied
...
"But that is not
how life teaches you, and I would say that life is the best teacher of all
...
It just sort of pushes you around
...
There's something I want you to learn
...
"Life pushing
me around was life talking to me?" Now I knew I had to quit my job
...

"If you learn life's lessons, you will do well
...
People do two things
...
Others get angry and push back
...
They do not know it's life that's
pushing
...

"Life pushes all of us around
...
Others fight
...
They welcome life pushing them around
...
They learn and move on
...
"
Rich dad stood and shut the creaky old wooden window that needed repair
...
If you don't, you will spend your life blaming a job, low pay or your boss
for your problems
...
"
Rich dad looked over at me to see if I was still listening
...
We stared at each other, streams of communication going between us through
our eyes
...
I knew he
was right
...
I was fighting
...
"Or if you're the kind of person who has no guts, you
just give up every time life pushes you
...
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who controls the past controls the future, who controls the present controls the past
...
Then, you die a boring old man
...

You spent a life playing it safe, doing the right things
...
Deep down you were terrified of taking risks
...
Deep inside, you and only you will know you didn't go for it
...
"
Our eyes met again
...

"You've been pushing me around" I asked
...
"I would say that I just
gave you a taste of life
...
Even ready to
learn
...
I have more than 150 employees, and not one of them has asked me
what I know about money
...
So most will spend the best years of their lives working
for money, not really understanding what it is they are working for
...

"So when Mike told me about you wanting to learn how to make money, I
decided to design a course that was close to real life
...
So I decided to let life push
you around a bit so you could hear me
...
"
"So what is the lesson I learned from working for only 10 cents an hour?"
I asked
...
Finally, after his laughing
stopped, he said, "You'd best change your point of view
...
If you think I'm the problem, then you have to change
me
...
Most people want everyone else in the world to change
but themselves
...
"
"I don't understand," I said
...

"But you only pay me 10 cents
...


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...
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...

"That you're cheap," I said with a sly grin
...

"But you are
...
Keep the attitude
that I'm the problem and what choices do you have?"
"Well, if you don't pay me more or show me more respect and teach me, I'll
quit
...
"And that's exactly what most people do
...
In most
cases, it won't
...
"Just take this measly 10 cents
an hour and smile?"
Rich dad smiled
...
Just accept a paycheck
knowing that they and their family will struggle financially
...

Most just accept it, and some take a second job working harder, but again
accepting a small paycheck
...
I could sense it was a taste of life
...
"So what will solve the problem?"
"This," he said tapping me gently on the head
...
"
It was at that moment that rich dad shared the pivotal point of view that
separated him from his employees and my poor dad-and led him to eventually
become one of the richest men in Hawaii while my highly educated, but poor, dad
struggled financially all his life
...

Rich dad said over and over, this point of view, which I call Lesson No
...

"The poor and the middle class work for money
...
"
On that bright Saturday morning, I was learning a completely different
point of view from what I had been taught by my poor dad
...
Both dads encouraged me to study
...


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...
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...

My highly educated dad recommended that I do what he did
...
And make sure it has excellent benefits
...
These lessons I would
learn through life with his guidance, not because of a classroom
...
If you had not gotten angry and had gladly
accepted it, I would have to tell you that I could not teach you
...
Anger is a big part of that
formula, for passion is anger and love combined
...
So passion does not direct them:
Fear does
...

"Yes," said rich dad
...
I say the people exploit
themselves
...
"
"But don't you feel you should pay them more?" I asked
...
And besides, more money will not solve the problem
...
He makes a lot of money, and he still can't pay his bills
...
"
"So that's why the 10 cents an hour," I said, smiling
...
"
"That's right," smiled rich dad
...
Which he did
...

On top of that, he believes in working for money
...

"No, not really," said rich dad
...
That is a great place to learn to do that
...
But only if
you want to learn
...

"No," said rich dad
...
"
"I don't understand," I said with a frown
...
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...
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who controls the past controls the future, who controls the present controls the past
...
Just know that it's fear that keeps most
people working at a job
...
The fear of being
fired
...
The fear of
starting over
...
Most people become a slave to money
...
"
"Learning to have money work for you is a completely different course of
study?" I asked
...
"
We sat in silence on that beautiful Hawaiian Saturday morning
...
But far some
reason, I was now thankful I had decided to work for 10 cents an hour
...

"Ready to learn?" asked rich dad
...

"I have kept my promise
...
"At 9 years old, you've gotten a taste of what it feels like to work for
money
...
"
"I don't understand," I said
...

"If you choose to work for money, that is what life is like for many
people," said rich dad
...
Martin dropped three dimes in your hand
for three hours' work?"
"I felt like it wasn't enough
...
I was
disappointed," I said
...

Especially after all the tax and other deductions are taken out
...
"
"You mean most workers don't get paid everything?" I asked with amazement
...
"The government always takes its share
first
...
" I asked
...
"You're taxed when you earn
...
You're taxed when you save
...
"

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...
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...

"Why do people let the government do that to them?"
"The rich don't," said rich dad with a smile
...
I'll bet you that I earn more than your dad, yet he pays more in
taxes
...
As a 9-year-old boy, that made no sense to me
...
I guess he wanted me to listen instead of
jabber away at the mouth
...
I did not like what I had heard
...
Was that life pushing him around?
Rich dad rocked slowly and silently in his chair, just looking at me
...

I nodded my head slowly
...
Learning how to have money work for
you is a lifetime study
...
I already know that my study of money will continue over my
lifetime, simply because the more I Find out, the more I find out I need to know
...
They go to work, get their paycheck,
balance their checkbooks, and that's it
...
Then, they think that more money will solve the problem
...
"
"So my dad has tax problems because he doesn't understand money?" I asked,
confused
...
"Taxes are just one small section on learning how
to have money work for you
...
Most people don't
...
One day they
wake up with big money problems, and then they can't stop working
...
So do you still have the passion to learn?" asked rich dad
...

"Good," said rich dad
...
This time, I will pay you
nothing
...

"You heard me
...
You will work the same three hours every

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...
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...

Saturday, but this time you will not be paid 10 cents per hour
...
"
I couldn't believe what I was hearing
...
He's already working,
dusting and stacking canned goods for free
...
"
"That's not fair," I shouted
...
"
"You said you wanted to learn
...
Or like your dad, earning lots of money
only to be in debt up to his eyeballs, hoping more money will solve the problem
...

Or you can do what most people grow up to do
...
"
"But what do I do?" I asked
...
"Use this," he said
...
"
I stood there still not believing what a raw deal I had been handed
...

Rich dad tapped me on the head again and said, "Use this
...
"
LESSON #l: The Rich Don't Work For Money
I didn't tell my poor dad I wasn't being paid
...

For three more weeks, Mike and I worked for three hours, every Saturday,
for nothing
...
It was the
missed baseball games and not being able to afford to buy a few comic books that
got to me
...
We heard his truck pull up
in the parking lot and sputter when the engine was turned off
...
Martin with a hug
...

"Let's go for a walk boys
...
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...
Sitting down at a remote
picnic table, he handed Mike and me the ice-cream bars
...

I nodded in agreement
...

Mike and I looked at each other, shrugged our shoulders and shook our
heads in unison
...
You're staring at one of life's
biggest lessons
...
If you don't learn the lesson, you'll wind up like Mrs
...
They work very hard, for
little money, clinging to the illusion of job security, looking forward to a
three-week vacation each year and a skimpy pension after forty-five years of
work
...
"
"But these are good hard-working people
...

A smile came over rich dad's face
...
Martin is like a mother to me
...
I may
sound cruel because I'm doing my best to point something out to the two of you
...
Something most
people never have the benefit of seeing because their vision is too narrow
...
"
Mike and I sat there uncertain of his message
...

With a smile, rich dad said, "Doesn't that 25 cents an hour sound good?
Doesn't it make your heart beat a little faster
...
Twenty five cents an hour would
be big bucks to me
...

Now my heart was beginning to race
...
Take it
...
Still, I said
nothing
...
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who controls the past controls the future, who controls the present controls the past
...
"
My little 9-year-old brain and heart nearly exploded
...

I couldn't imagine earning that kind of money
...
" I wanted
the deal
...
On top of that, Jimmy and his rich friends
could never call me poor again
...

Maybe my brain had overheated and blown a fuse
...

The ice cream had melted and was running down my hand
...
Rich dad was looking at two boys staring back at him, eyes wide
open and brains empty
...
He knew that each human being has
a weak and needy part of their soul that can be bought
...
It was only a question of which one was
stronger
...
He tested souls every
time he interviewed someone for a job
...
"
Suddenly there was a silence from inside me
...
The
offer was too big and had gotten ridiculous
...
The temptation disappeared, and a calm set in
...
He looked back at me
...
The part of me that had no price took over
...

I knew Mike had gotten to that point also
...
"Most people have a price
...
First, the fear of being
without money motivates us to work hard, and then once we get that paycheck,
greed or desire starts us thinking about all the wonderful things money can buy
...
"
"What pattern?" I asked
...
Their lives are then run forever by two emotions, fear and greed
...

This is what I call the Rat Race
...


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...
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...

"Yes," said rich dad slowly
...
"
"And what is that way?" Mike asked
...

That is why I took away all forms of pay
...
"We're kind of tired of working hard, especially
for nothing
...

"We haven't been lying
...

"I did not say you were lying
...

"The truth about what?" I asked
...
"You don't have to say it to anyone
else
...
"
"You mean the people in this park, the people who work for you, Mrs
...

"I doubt it," said rich dad
...
Instead of confronting the fear, they react instead of think
...
"'Then, they get a few bucks in their hands, and again the emotion of joy
and desire and greed take over, and again they react, instead of think
...

"That's correct," said rich dad
...
They feel the fear, they
go to work, hoping that money will soothe the fear, but it doesn't
...
Fear has them in this trap of working,
earning money, working, earning money, hoping the fear will go away
...
For millions of people,
that old fear keeps them awake all night, causing a night of turmoil and worry
...
Money is running their lives, and they refuse to tell the
truth about that
...
"
Rich dad sat quietly, letting his words sink in
...
I just knew
that I often wondered why grownups hurried off to work
...


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...

Realizing we had absorbed as much as possible of what he was talking about,
rich dad said, "I want you boys to avoid that trap
...
Not just to be rich, because being rich does not solve the
problem
...

"No, it doesn't
...
Some
call it greed, but I prefer desire
...
So people also work for money because of
desire
...
But the joy that
money brings is often short lived, and they soon need more money for more joy,
more pleasure, more comfort, more security
...
But money cannot do
that
...

"Rich people included," said rich dad
...
They actually
think that money can eliminate that fear of not having money, of being poor, so
they amass tons of it only tofind out the fear gets worse
...
I have friends who keep working even though they have plenty
...
They're
terrified of losing all their money
...
That weak and needy part of their soul is actually screaming louder
...
They worry about what their friends would say if they lost all their money
...
"
"So is a poor man happier?" I asked
...
"The avoidance of money is just
as psychotic as being attached to money
...
The three of us watched him with great
interest, when before we probably would have just ignored him
...

Seeing the money, the derelict came over immediately, took the bill, thanked
rich dad profusely and hurried off ecstatic with his good fortune
...
"I've
met so many people who say, `Oh, I'm not interested in money
...
That's a denial of truth
...
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who controls the past controls the future, who controls the present controls the past
...
"
As I sat there listening to my rich dad, my mind was flashing back to the
countless times my own dad said, "I'm not interested in money
...
He also covered himself by always saying, "I work because I love my
job
...
"Not work for money until all traces of fear
and greed are gone?"
"No, that would be a waste of time," said rich dad
...
Make us real
...
Be
truthful about your emotions, and use your mind and emotions in your favor, not
against yourself
...

"Don't worry about what I just said
...
just be an observer, not a reactor, to your emotions
...
Your emotions are
your emotions, but you have got to learn to do your own thinking
...

"Sure," replied rich dad
...
Fear of not having money
generates that thought
...

"Sure they do," smiled rich dad
...
"
"I don't understand," said Mike
...
"If the fear of not having enough money
arises, instead of immediately running out to get a job so they can earn a few
bucks to kill the fear, they instead might ask themselves this question
...
' Especially when you look over a person's lifetime
...
"
"But my dad is always saying, `Stay in school, get good grades, so you can
find a safe, secure job
...

"Yes, I understand he says that," said rich dad, smiling
...
But people make that
recommendation primarily out of fear
...
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who controls the past controls the future, who controls the present controls the past
...
"He's terrified that you won't be able to earn money
and won't fit into society
...
He loves you and wants the best
for you
...
An education and a job are important
...
You see, that same fear that makes him get up in
the morning to earn a few bucks is the fear that is causing him to be so
fanatical about you going to school
...

"I want to teach you to master the power of money
...

And they don't teach that in school
...
"
It was finally making sense
...
To
...
Martin could not see, his employees could not see, or my dad for that
matter
...
My vision widened that day, and I could begin to see the trap
that lay ahead for most people
...
We just work at different
levels," said rich dad
...

The trap caused by those two emotions, fear and desire
...
That's what I want to teach you
...
That won't handle the fear or desire
...
"
"So how do we avoid the trap?" I asked
...
It's selfinflicted fear and
ignorance that keeps people trapped
...
I'll teach you how to stay out of the trap
...
My highly educated dad had a
great education and a great career
...
It became clear that I could learn different and important
things from two fathers
...
How does the
desire of money affect our thinking?" Mike asked
...

"By not giving in to your emotions, you were able to delay your reactions
and think
...
We will always have emotions of fear and

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...
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...

greed
...
Most people use fear and greed against themselves
...
Most people live their lives chasing paychecks,
pay raises and job security because of the emotions of desire and fear, not
really questioning where those emotion-driven thoughts are leading them
...
The donkey's owner may be going where
he wants to go, but the donkey is chasing an illusion
...
"
"You mean the moment I began to picture a new baseball glove, candy and
toys, that's like a carrot to a donkey?" Mike asked
...
And as you get older, your toys get more expensive
...
"Fear
pushes you out the door, and desire calls to you
...

That's the trap
...

"What intensifies fear and desire is ignorance
...
Money is the carrot,
the illusion
...
"
Rich dad went on to explain that a human's life is a struggle between
ignorance and illumination
...
That struggle is a moment-to-moment
decision-to learn to open or close one's mind
...
You go to school to learn a skill
or profession so as to be a contributing member of society
...
Schools train them so our culture can thrive and
flourish," said rich dad
...
"
There was a long silence
...
I did not comprehend
everything he said that day
...

"I've been a little cruel today," said rich dad
...
I
want you to always remember this talk
...
Martin
...
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who controls the past controls the future, who controls the present controls the past
...
Never forget, because your two
emotions, fear and desire, can lead you into life's biggest trap, if you're not
aware of them controlling your thinking
...
To work hard for money, thinking that
money will buy you things that will make you happy is also cruel
...

To live a life dictated by the size of a paycheck is not really a life
...
That's cruel, and
that's the trap I want you to avoid, if possible
...
Don't let that happen to you
...
"
A softball rolled under our table
...

"So what does ignorance have to do with greed and fear?" I asked
...
"Let me give you some examples
...
By raising his fees, it
makes health care more expensive for everyone
...

"Because the doctors raise their rates, the attorneys raise their rates
...
Soon, there will be such a horrifying
gap between the rich and the poor that chaos will break out and another great
civilization will collapse
...
America is on the same course, proving
once again that history repeats itself, because we do not learn from history
...

"Aren't prices supposed to go up?" I asked
...
Prices should
actually come down
...
Prices go up
because of greed and fear caused by ignorance
...
"
"But don't we have business schools?" Mike asked
...
"But all too often, business schools train employees
who are sophisticated bean counters
...
All they do is look at the numbers, fire people and kill the business
...
All they think about is cutting costs and

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...
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...

raising prices, which cause more problems
...
I wish
more people knew it, but it, too, is not the whole picture," added rich dad
angrily
...

"Yes," said rich dad
...
When you boys mastered your emotions, first by agreeing to work
for free, I knew there was hope
...
That's the first step
...

"Well, that's up to you to find out
...
That place where almost everyone else avoids
...
If you go with me,
you'll let go of the idea of working for money and instead learn to have money
work for you
...
What if we agree to learn from
you? What will we get?" I asked
...
"Freedom from the Tar
Baby
...

"Yes," said rich dad
...
Going
into our fear and confronting our greed, our weaknesses, our neediness is the
way out
...
"
"Choosing our thoughts?" Mike asked, puzzled
...
Choosing what we think rather than reacting to our emotions
...
Thinking would be
taking the time to ask yourself a question
...
Tar baby is in control
...
"
"And how do we do that?" Mike asked
...
I'll be teaching you to have a choice
of thoughts to consider, rather than knee-jerk reacting, like gulping down your
morning coffee and running out the door
...
Most people have only one problem in mind, and it's short

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...
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...

term
...
Money now runs their
lives
...
So they do as their
parents did, get up every day and go work for money
...
"
"Can you tell the difference between emotions thinking and the head
thinking?" Mike asked
...
I hear it all the time," said rich dad
...
' Or `The rich are crooks
...

I deserve this raise
...
' Or `I like this job because
it's secure
...
"
I must admit, it was a great lesson to be getting
...
It was a lesson that
served me well for life
...

As we headed back to the store, rich dad explained that the rich really
did "make money
...
He went on to explain that when Mike
and I were casting 5-cent pieces out of lead, thinking we were making money, we
were very close to thinking the way the rich think
...
It was legal for the government and banks to do it, but
not us
...

Rich dad went on to explain that the rich know that money is an illusion,
truly like the carrot for the donkey
...
Money is really made up
...
"In
fact," he said, "in many ways the donkey's carrot was more valuable than money
...
What concerned him was the rumor
that we would someday go off the gold standard and our dollars would no longer
be silver certificates
...
The poor, the
middle class and the ignorant will have their lives ruined simply because they
will continue to believe that money is real and that the company they work for,
or the government, will look after them
...


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...
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...

Seeing What Others Miss
As he climbed into his pickup truck, outside of his little convenience
store, he said, "Keep working boys, but the sooner you forget about needing a
paycheck, the easier your adult life will be
...
You will see things that other people never see
...
Most people never see these
opportunities because they're looking for money and security, so that's all they
get
...
The moment you do that, I'll teach you something else
...
You'll never, ever, touch that Tar
Baby
...

Martin
...

We spent the next week at school, thinking and talking
...

At the end of the second Saturday, I was again saying goodbye to Mrs
...
The hard thing
about not even getting 30 cents every Saturday was that I didn't have any money
to buy comic books
...
Martin was saying goodbye to Mike and me,
I saw something she was doing that I had never seen her do before
...

Mrs
...
She was
keeping the top half of the comic book cover and throwing the rest of the comic
book into a large brown cardboard box
...
I give the top half of the cover back
to the comic-book distributor for credit when he brings in the new comics
...
"
Mike and I waited for an hour
...
To which he replied, "You can have them if
you work for this store and do not resell them
...
Mike's mom had a spare room in the basement
that no one used
...
Soon our comic-book library was open to the public
...
She charged each child
10 cents admission to the library, which was open from 2:30 to 4:30 p
...
every

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day after school
...
It was a bargain for them since a comic
costs 10 cents each, and they could read five or six in two hours
...
She also kept the books, logging in how many kids
showed up each day, who they were, and any comments they might have
...
50 per week over a threemonth period
...

Mike and F kept our agreement by working in the store every Saturday and
collecting all the comic books from the different stores
...
We burned them once they got
too tattered
...

At an early age, we found out how hard it was to find good staff
...

Some bullies from another neighborhood pushed their way in and started it
...
So our comic-book business shut
down, and we stopped working on Saturdays at the convenience store
...
He was happy
because we had learned our first lesson so well
...
By not getting paid for our work at the store, we were forced to
use our imaginations to identify an opportunity to make money
...
The best part was that our business generated
money for us, even when we weren't physically there
...

Instead of paying us money, rich dad had given us so much more
...
CHAPTER THREE
Lesson Two:Why Teach Financial Literacy?
In 1990, my best friend, Mike, took over his father's empire and is, in
fact, doing a better job than his dad did
...
He and his wife are wealthier than you could imagine
...


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In 1994, I retired at the age of 47, and my wife, Kim, was 37
...
To my wife and me, it means that barring unforeseen
cataclysmic changes, we can work or not work, and our wealth grows automatically,
staying way ahead of inflation
...
The assets are large
enough to grow by themselves
...
You water it for years
and then one day it doesn't need you anymore
...
Then, the tree provides shade for your enjoyment
...

Whenever I speak to groups of people, they often ask what I would
recommend or what could they do? "How do they get started?" "Is there a good
book I would recommend?" "What should they do to prepare their children?" "What
is the secret to success?" "How do I make millions?" I am always reminded of
this article I was once given
...

THE RICHEST BUSINESSMEN
In 1923 a group of our greatest leaders and richest businessmen held a
meeting at the Edgewater Beach hotel in Chicago
...
, one of the world's largest
companies at that time; Leon Frazier, president of the Bank of International
Settlements; Richard Whitney, president of the New York Stock Exchange; Arthur
Cotton and Jesse Livermore, two of the biggest stock speculators; and Albert
Fall, a member of President Harding's cabinet
...
Schwab died penniless after living
for five years on borrowed money
...

Kreuger and Cotton also died broke
...
Whitney and Albert Fall
were just released from prison
...

I doubt if anyone can say what really happened to these men
...
The
point is this: Today we live in times of greater and faster change than these
men did
...
I am concerned that too many
people are focused too much on money and not their greatest wealth, which is
their education
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
If they think money
will solve problems, I am afraid those people will have a rough ride
...
Money without financial
intelligence is money soon gone
...
We have all heard stories of lottery winners who
are poor, then suddenly rich, then poor again
...
Or stories of professional athletes, who, at the age
of 24, are earning millions of dollars a year, and are sleeping under a bridge
by age 34
...
Today, he claims his
friends, attorney and accountant took his money, and now he works at a car wash
for minimum wage
...
He was fired from the car wash because he refused to take
off his championship ring as he was wiping off the cars, so his story made the
newspaper
...
He claims that if you take that away,
he'll crumble
...
It's
the Roaring '20s one more time
...

So when people ask, "Where do I get started?" or "Tell me how to get rich
quick," they often are greatly disappointed with my answer
...
"If you want to be
rich, you need to be financially literate
...
As I said,
my educated dad stressed the importance of reading books, while my rich dad
stressed the need to master financial literacy
...
If you are going to
build a home in the suburbs, all you need to do is pour a 6-inch slab of

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concrete
...

Our school system, having been created in the Agrarian Age, still believes
in homes with no foundation
...
So kids graduate
from school with virtually no financial foundation
...

Construction on the skyscraper begins
...
The
sleepless nights return
...

Now, accounting is possibly the most boring subject in the world
...
But if you want to be rich, long term, it could be
the most important subject
...
Teach it
first in pictures
...
Since we
were just kids, he created a simple way to teach us
...
Mike and I understood the simple drawings, the jargon,
the movement of money, and then in later years, rich dad began adding numbers
...
He has a billion-dollar empire to run
...
In the following pages, I offer to you the same simple line drawings
Mike's dad created for us
...

Rule One
...
If you want to be rich, this is all you need to know
...
1
...
This may sound absurdly simple, but most people have
no idea how profound this rule is
...


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"Rich people acquire assets
...

Here we were, nearly teenagers and waiting for the secret to getting rich, and
this was his answer
...

"What is an asset?" asked Mike
...
"Just let the idea sink in
...
It is simple; that is why the idea is missed
...

Rich dad nodded his head
...
"
"If it's that simple, how come everyone is not rich?" I asked
...
"Because people do not know the difference
between an asset and a liability
...
If it is that simple, if
it is that important, why would everyone not want to find out?"
It took our rich dad only a few minutes to explain what assets and
liabilities were
...
Why? Because
adults are smarter
...
They have been educated by
other educated professionals, such as bankers, accountants, real estate agents,
financial planners, and so forth
...
An intelligent adult often feels it is
demeaning to pay attention to simplistic definitions
...

So what causes the confusion? Or how could something so simple be so
screwed up? Why would someone buy an asset that was really a liability
...

We focus on the word "literacy" and not "financial literacy
...
In fact,
if you really want to be confused, look up the words "asset" and "liability" in
the dictionary
...
But we adults are often too proud
to admit that something does not make sense
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
And if you cannot read the numbers, you cannot tell an asset from a
hole in the ground
...
It's just like words
...

Many people read, but do not understand much
...
And we all have different abilities when it comes to reading
comprehension
...
It came with an
instruction book that explained how to program the VCR
...
I nearly went crazy trying to read
the manual
...
I could read the words, but I understood nothing
...
I get an "F" for comprehension
...

"If you want to be rich, you've got to read and understand numbers
...
And I also heard,
"The rich acquire assets and the poor and middle class acquire liabilities
...
Most
accountants and financial professionals do net agree with the definitions, but
these simple drawings were the start of strong financial foundations for two
young boys
...

"This is the Cash Flow pattern of an asset
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
It measures income and expenses
...
The bottom
diagram is the Balance Sheet
...
Many financial novices
don't know the relationship between the Income Statement and the Balance Sheet
...

The primary cause of financial struggle is simply not knowing the
difference between an asset and a liability
...
If you want a lesson in confusion, simply
look up the words "asset" and "liability" in the dictionary
...
You read the words in the definition, but
true comprehension is difficult
...
" Nice, simple and usable
...
"
+------------------------+
|Income

|

|------------------------| Expense

|

+-----|\-------------------+
|

\------------------------------>

---------------------------|--------+
|
|

Assets

|

Liabilities

|

|

|

|_________|____________|
Now that assets and liabilities have been defined through pictures, it may
be easier to understand my definitions in words
...

A liability is something that takes money out of my pocket
...
If you want to be rich, simply spend
your life buying assets
...
It's not knowing the difference that causes most of the
financial struggle in the real world
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
If people are having difficulties financially, there is something that
they cannot read, either in numbers or words
...
The
rich are rich because they are more literate in different areas than people who
struggle financially
...

The arrows in the diagrams represent the flow of cash, or "cash flow
...
Just as words alone mean little
...
In financial reporting, reading numbers is looking for the
plot, the story
...
In 80 percent of most
families, the financial story is a story of working hard in an effort to get
ahead
...
But because they spend their lives

buying liabilities instead of assets
...
Everyone has living
expenses, the need for food, shelter and clothing
...
It is the cash flow that tells the story
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...

The reason I started with the story of the richest men in America is to
illustrate the flaw in the thinking of so many people
...
That is why I cringe whenever 1 hear people ask me how
to get rich quicker
...
"
But more money will often not solve the problem; in fact, it may actually
accelerate the problem
...


Money

often puts a spotlight on what we do not know
...

accentuates the cash flow pattern running in your head
...
Thus, the saying, "A fool and his money is one big party,"
I have said many times that we go to school to gain scholastic skills and
professional skills, both important
...
In the 1960s, when I was in high school, if someone did
well in school academically, almost immediately people assumed this bright
student would go on to be a medical doctor
...


It was assumed
...

Today, doctors are facing financial challenges I would not wish on my
worst enemy; insurance companies taking control of the business, managed health
care, government intervention, and malpractice suits, to name a few
...


Simply because

that is where the fame, money and prestige is
...
They know that professional success is no
longer solely linked to academic success, as it once was
...
They work harder, but don't get ahead
...


It's called financial aptitude-what you do with the money

once you make it, how to keep people from taking it from you, how long you keep
it, and how hard that money works for you
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
A person can be
highly educated, professionally successful and financially illiterate
...

The story of bow the quest for a Financial Dream turns into a financial
nightmare
...

Recently married, the happy, highly educated young couple move in together, in
one of their cramped rented apartments
...

The problem is, the apartment is cramped
...
They now have two incomes, and they
begin to focus on their careers
...

As their incomes go up
...

The No
...
Many people think it's income
tax, but for most Americans their highest tax is Social Security
...
5 percent, but it's really 15 percent since the employer must match
the Social Security amount
...

On top of that, you still have to pay income tax on the amount deducted from
your wages for Social Security tax, income you never receive because it went
directly to Social Security through withholding
...


This is best demonstrated by going back to the young couple
...


Once in their house, they have a new tax, called property tax
...

Ail of a sudden, they wake up and their liabilities column is full of mortgage
debt and credit-card debt
...
A child comes along
...

The process repeats itself
...
They use it
...


A loan

company calls and says their greatest "asset," their home, has appreciated in
value
...
And besides, interest on
their home is a tax deduction
...
They breathe a sigh of relief
...


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They've now folded their consumer debt into their home mortgage
...


Their payments

It is the smart thing to

do
...
A chance to save some money
...
I'll just go look
...

I run into this young couple all the time
...
They come to one of my talks to hear what I have
to say
...

They don't even know that the trouble is really how they choose to spend
the money they do have, and that is the real cause of their financial struggle
...

More money seldom solves someone's money problems
...

"If you find you have dug yourself into a hole
...
"
As a child, my dad often told us that the Japanese were aware of three
powers; "The power of the sword, the jewel and the mirror
...
America has spent trillions of
dollars on weapons and, because of this, is the supreme military presence in the
world
...
There is some degree of truth to
the saying, "Remember the golden rule
...
"
The mirror symbolizes the power of self-knowledge
...

The poor and middle class all loo often allow the power of money to
control them
...
By not fully understanding nioney, the vast majority of
people allow the awesome power of money to control them
...

If they used the power of the mirror, they would have asked themselves,
"Does this make sense?" All too often, instead of trusting their inner wisdom,
that genius inside of them, most people go along with the crowd
...
They

conform rather than question
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
Ideas such as "diversify" or "your
home is an asset
...
"
for going into greater debt
...
" "Don't make mistakes
...
"
It is said that the fear of public speaking is a fear greater than death
for most people
...
The fear of being different
prevents most people from seeking new ways to solve their problems
...
And the main reason that most people say "Play it safe1' is out of
fear
...

It is that same fear, the fear of ostracism that causes people to conform
and not question commonly accepted opinions or popular trends
...
" "Get a bill consolidation loan and get out of debt
...
"

"It's a promotion
...
" "Save money
...
"

"Mutual funds are safe
...
"
Many great financial problems are caused by going along with the crowd and
trying to keep up with the Joneses
...

By the time Mike and I were 16 years old, we began to have problems in
school
...
We just began to separate from the crowd
...


Mike and I often spent

hours after work just sitting at a table with his dad while he held meetings
with his bankers, attorneys, accountants, brokers, investors, managers and
employees
...
They came at his
beck and call, and cringed when he did not approve of them
...


He was a man who

did his own thinking and detested the words, "We have to do it this way because
that's the way everyone else does it
...
" If you
wanted him to do something, just say, "I don't think
you can do it
...
Mike's dad was not school educated, but he

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was financially educated and successful as a result
...


He use to tell us over and

"An intelligent person hires people who are more intelligent than

they are
...

But because of this, both Mike and I just could not go along with the
standard dogma that our teachers preached, And that caused the problems
...
When we were told to
follow set procedures and not deviate from the rules, we could see how this
schooling process actually discouraged creativity
...

Occasionally Mike or I would ask our teachers how what we studied was
applicable, or we asked why we never studied money and how it worked
...

The more we knew about the power of money, the more distant we grew from
the teachers and our classmates
...
I often
wondered why
...
By the time I was 16, I

probably had a far better foundation with money than both my mom and dad
...


My dad talked to teachers
...
A
not-too-pleasant argument took place when I showed him why I thought a house was
not a good investment
...
One dad thought his house
was an asset, and the other dad thought it was a liability
...


I also showed him the ancillary expenses that went along with owning

the home
...

Today, I am still challenged on the idea of a house not being an asset
...
And owning your own home is better than nothing
...
If my wife and I were to buy a

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bigger, more flashy house we realize it would not be an asset, it would be a
liability, since it would take money out of
our pocket
...
I really do not expect most people to
agree with it because a nice home is an emotional thing
...


1 know from personal

experience that money has a way of making every decision emotional
...
When it comes to houses, I point out that most people work all their
lives paying for a home they never own
...

2
...
Even
after they pay off their mortgage
...
Property taxes
...
This was after they had retired, so the
increase put a strain on their retirement budget, and they felt forced to move
...


In 1997, I still have friends who

owe a million dollars for a home that will today sell for only $700,000
...
The greatest losses of all are those from missed opportunities
...
If a young couple
would put more money into their asset column early on, their later years would
get easier, especially as they prepared to send their children to college
...
All too
often, a house only serves as a vehicle for incurring a home-equity loan to pay
for mounting expenses
...
Loss of time, during which other assets could have grown in value
...
Loss of additional capital, which could have been invested instead of
paying for high-maintenance expenses related directly to the home
...
Loss of education
...
Because they have no
money to invest, they simply do not invest
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...


Most never become what the investment world calls a "sophisticated

investor
...
I
am not saying don't buy a house
...
When I want a bigger house, I first buy assets that
will generate the cash flow to pay for the house
...


His expenses seem to always keep up with his income,

never allowing him to invest in assets
...


The following

picture is worth a thousand words:
Educated Dad's Financial Statement
Income=Expense
Asset < Liability
My rich dad's personal financial statement, on the other hand, reflects
the results of a life dedicated to investing and minimizing liabilities:
Rich Dad's Financial Statement
Income > Expense
Asset > Liability
A review of my rich dad's financial statement is why the rich get richer
...
The asset column continues to grow and,
therefore, the income it produces grows with it
...

Their primary- income is through wages, and as their wages increase, so do their

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taxes
...
" They treat their home as their
primary asset, instead on investing in income-producing assets
...
This process of increased spending throws
families into greater debt and into more financial uncertainty, even though they
may be advancing in their jobs and receiving pay raises on a regular basis
...

The massive loss of jobs in the 1990s-the downsizing of businesses-has
brought to light how shaky the middle class really is financially
...
Social Security is
obviously in trouble and cannot be looked at as a source for retirement
...
The good thing today is that many of these
people have recognized these issues and have begun buying mutual funds
...
Today, there are more and more mutual funds being created to
answer the demand by the middle class
...
Average mutual
fund buyers are too busy working to pay taxes and mortgages, save for their
children's college and pay off credit cards
...
Also, because the mutual fund includes many different types of investments,
they feel their money is safer because ii is "diversified
...


Play it safe
...


The real tragedy is that the lack of early financial education is what
creates the risk faced by average middle class people
...


Their

balance sheets are not balanced
...
Typically, their only source of income is their
paycheck
...


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So when genuine "deals of a lifetime" come along, those same people cannot
take advantage of the opportunity
...

As I said at the start of this section, the most important rule is to know
the difference between an asset and a liability
...

That's the best way to get started on a path to becoming rich
...
Focus on keeping liabilities and expenses down
...

Soon, the asset base will be so deep that you can afford to look at more
speculative investments
...
Investments that for $5,000 are soon turned into $1 million or more
...
" The investment is not risky
...

Income = Work for Owner
Expense = Work for Government
Asset = (none)
Liability = Work for Bank
As an employee who is also a homeowner, your working efforts are generally
as follows:
1
...


Most people, working for a paycheck, are

making the owner, or the shareholders richer
...

2
...
The government takes its share from your
paycheck before you even see it
...

3
...
After taxes, your next largest expense is
usually your mortgage and credit card debt
...
You need to learn how to have
your increased efforts benefit you and your family directly
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...

As their assets grow, how do they measure the extent of their success?
When does someone realize that they are rich, that they have wealth? As well as
having my own definitions for assets and liabilities, I also have my own
definition for wealth
...


Some call him a quack, and others call him a living genius
...
But in the application, Fuller also said
something about wealth
...
or if I stopped working today, how long could
I survive?
Unlike net worth-the difference between your assets and liabilities, which
is often filled with a person's expensive junk and opinions of what things are
worth-this definition creates the possibility for developing a truly accurate
measurement
...

Although net worth often includes these non-cash-producing assets, like
stuff you bought that now sits in your garage, wealth measures how much money
your money is making and, therefore, your financial survivability
...

Let's use an example
...
And I have monthly expenses of 52,000
...
Using his definition,
how many days forward can I survive? And let's assume a 30-day month
...

When I have achieved $2,000 a month cash flow from my assets, then I will
be wealthy
...


I now have income generated from

assets each month that fully cover my monthly expenses
...
Take notice that it is at this point that I no longer am dependent on
my wages
...


If I quit my job today, I would be

able to cover my monthly expenses with the cash flow from my assets
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...


The more money that goes into my asset column,

the more my asset column grows
...
And as long as I keep my expenses less than the cash flow from these
assets, I will grow richer, with more and more income from sources other than my
physical labor
...

The actual definition of rich is in the eye of the beholder
...

Just remember this simple observation: The rich buy assets
...
The middle class buys liabilities they think are assets
...


4
...
A dear friend of mine, Keith
Cunningham, was a student in that MBA class
...


Ray graciously accepted
...

"Everyone laughed," said Keith
...
"
No one answered, so Ray asked the question again
...
"
Ray chuckled
...
" He paused and then
quickly said, 'ladies and gentlemen, I'm not in the hamburger business
...
"
Keith said that Ray spent a good amount of time explaining his viewpoint
...
He knew that the real estate and its location was the most

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significant factor in the success of each franchise
...

McDonald's today is the largest single owner of real estate in the world,
owning even more than the Catholic Church
...

Keith said it was one of the most important lessons in his life
...

The previous chapter ended with the diagrams illustrating that most people
work for everyone else but themselves
...

As a young boy, we did not have a McDonald's nearby
...


It is secret No
...


The secret is: "Mind your own business/' Financial struggle is often
directly the result of people working all their life for someone else
...

Again, a picture is worth a thousand words
...
Their lives will revolve around their
wages, or as described earlier, their income column
...
They study to become engineers, scientists, cooks,

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police officers, artists, writers and so on
...

There is a big difference between your profession and your business
...
"
Then I ask them if they own the bank? And they usually respond
...
"
In that instance, they have confused their profession with their business
...


Kroc was clear on the difference between his profession and his business
...


Me was a salesman
...

A problem with school is that you often become what you study
...


So if you

If you study the law, you become an

attorney, and a study of auto mechanics makes you a mechanic
...
They spend their lives minding someone else's business and making that
person rich
...

Your business revolves around your asset column, as opposed to your income
column
...
1 rule is to know the difference between an
asset and a liability, and to buy assets
...

That is why we hear so often: "I need a raise
...
"

"If only I had a

"I am going to go back to school to get more training so I can get

a better job
...
"

"I'm quitting in two weeks
...
"

I found a job that pays more
...

you are still not minding your own business
...

The primary reason the majority of the poor and middle class are fiscally
conservative-which means
...


They have to cling to their jobs
...

When downsizing became the "in" thing lo do, millions of workers

|

found out their largest so-called asset, their home, was eating them alive, j

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Their asset, called a house, still cost them money every month
...
The golf clubs in the garage that cost
$1,000 were not worth 51,000 anymore
...


Without job security, they had nothing to

What they thought were assets could not help them survive in a

time of financial crisis
...

worth'1 section
...

One day, to get a loan, my financial position did not look too good
...

But I was turned down for the loan because I had too much investment real
estate
...
They wanted to know why I did not have a normal job, with a
salary
...

Life is sometimes tough when you do not fit the "standard" profile
...


One of the main reasons net

worth is not accurate is simply because the moment you begin selling your assets,
you are taxed for any gains
...
To raise cash, they sell their assets
...
Or if there is a gain on the sale of the assets,
they are taxed on the gain
...
That is why I say someone's net worth is often "worth less" than
they think
...
Keep your daytime job, but start buying
real assets, not liabilities or personal effects that have no real value once
you get them home
...
It is not a true asset even if your banker
lets you list it as one
...

For adults, keep your expenses low, reduce your liabilities and diligently
build a base of solid assets
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...


Get them to start building a solid asset column before they leave

home, get married, buy a house, have kids and get stuck in a risky financial
position, clinging to a job and buying everything on credit
...

For most people, just as the last child leaves home, the parents realize
they have not adequately prepared for retirement and they begin to scramble to
put some money away
...

So what kind of assets am I suggesting that you or your children acquire?
In my world, real assets fall into several different categories:
1
...
I own them, but they are
managed or run by other people
...


It becomes my job
...
Stocks
...
Bonds
...
Mutual funds
...
Income-generating real estate
...
Notes (lOUs)
...
Royalties from intellectual property such as music, scripts, patents
...
And anything else that has value, produces income or appreciates and
has a ready market
...
My rich
dad, on the other hand, encouraged me to begin acquiring assets that I loved
...
" I collect real estate simply
because I love buildings and land
...


1 could look at

them all day long
...


For people who hate real estate, they

shouldn't buy it
...
The reason is that
I am an entrepreneur, not a corporate person
...
I worked in

large organizations, such as Standard Oil of California, the U
...
Marine Corps,
and Xerox Corp
...
I like starting companies,
not running them
...


Fortunes are made in

new-stock issues, and I love the game
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
But risk is always diminished if
you love what the investment is, understand it and know the game
...


My real

estate strategy, on the other hand, is to start small and keep trading the
properties up for bigger properties and, therefore, delaying paying taxes on the
gain
...
I generally hold real
estate less than seven years
...


I kept my daytime job, but I still minded my own business
...


I traded real estate and small stocks
...
The better I was at
understanding the accounting and cash management, the better I would be at
analyzing investments and eventually starting and building my own company
...

Knowing what I know about running a company, I would not wish that task on
anyone
...

companies fail in five years
...


So only if you really have

the desire to own your own company do I recommend it
...
When I say mind your own business, 1
mean to build and keep your asset column strong
...
Think of it this way, once a dollar goes into your asset
column, it becomes your employee
...


Keep your daytime job, be a great

hard-working employee, but keep building that asset column
...
An important
distinction is that rich people buy luxuries last, while the poor and middle
class tend to buy luxuries first
...
They look rich, but in reality they just get deeper in debt on credit
...


Then,

the income generated from the asset column bought their luxuries
...

A true luxury is a reward for investing in and developing a real asset
...
It did not take any extra work or risk on
her part because the apartment house bought the car
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...


But the

luxury, the Mercedes, was a true reward because she had proved she knew how to
grow her asset column
...


It means she used her financial intelligence to afford it
...
They may feel bored and just want a new toy
...

After you've taken the time and invested in and built your own business,
you are now ready to add the magic touch-the biggest secret of the rich
...
The reward at the end of the
road for diligently taking the time to mind your own business
...
CHAPTER FIVE
Lesson Four:The History of and The Power of Corporation
I remember in school being told the story of Robin Hood and his Merry Men
...
My rich dad did not
see Robin Hood as a hero
...

Robin Hood may be long gone, but his followers live on
...
"
It is this idea of Robin Hood, or taking from the rich to give to the poor
that has caused the most pain for the poor and the middle class
...
The real
reality is that the rich are not taxed
...

Again, to understand fully how things happen, we need to look at the
historical perspective
...
Although my
highly educated dad was an expert on the history of education, my rich dad
fashioned himself as an expert on the history of taxes
...
Occasionally there were temporary taxes levied in order to
pay for wars
...
" Taxes were levied in Britain for the fight against Napoleon from

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1799 to 1816, and in America taxes were levied to pay for the Civil War from
1861 to 1865
...
In 1913,
an income tax became permanent in the United States with the adoption of the
16th Amendment to the Constitution
...
It had
been the excessive tax on tea that led to the famous Tea Party in Boston Harbor,
an incident that helped ignite the Revolutionary War
...
;
What these historical dates fail to reveal is that both of these taxes
were initially levied against only the rich
...
He explained that the idea of taxes was made
popular, and accepted by the majority, by telling the poor and the middle class
that taxes were created only to punish the rich
...
Although it was intended to
punish the rich, in reality it wound up punishing the very people who voted for
it, the poor and middle class
...

"Your dad and I are exactly opposite
...
We get paid, and our success is measured on opposite behaviors
...
The more he spends and the more people
he hires, the larger his organization becomes
...


On the other hand, within my

organization, the fewer people I hire and the less money I spend, the more I am
respected by my investors
...
They have
different objectives from most business people
...
"
My educated dad sincerely believed that government should help
people
...
Kennedy and especially the idea of the Peace
Corps
...
He
always strived for additional grants and increases in his budget so he could
hire more people, both in his job with the Education Department and in the Peace
Corps
...

From the time I was about 10 years old, I would hear from my rich dad that
government workers were a pack of lazy thieves, and from my poor dad I would
hear how the rich were greedy crooks who should be made to pay more taxes
...
It was difficult to go to work for one of the biggest

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capitalists in town and come home to a father who was a prominent government
leader
...

Yet, when you study the history of taxes, an interesting perspective
emerges
...
The problem was that the government's appetite for
money was so great that taxes soon needed to be levied on the middle class, and
from there it kept "trickling down
...
They do not play by the
same set of rules
...
The rich created the
corporation as a vehicle to limit their risk to the assets of each voyage
...
The corporation
would then hire a crew to sail to the New World to look for treasures
...
The diagram
that follows shows how the corporate structure sits outside your personal income
statement and balance sheet
...

Having two fathers teaching me, one a socialist and the other a capitalist, I
quickly began to realize that the philosophy of the capitalist made more
financial sense to me
...
No matter what the "Take
from the rich" crowd came up with, the rich always found a way to outsmart them
...
The rich
outsmarted the intellectuals, solely because they understood the power of money,
a subject not taught in schools
...
Initially, people
were happy
...
It went to

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government workers in the form of jobs and pensions
...
The government became a large
pool of money, but the problem was the fiscal management of that money
...
In other words, the government policy, if you were a
government bureaucrat, was to avoid having excess money
...

You would certainly not be recognized for being efficient
...

As this cycle of growing government spending continued, the demand for
money increased and the "Tax the rich" idea was now being adjusted to include
lower-income levels, down to the very people who voted it in, the poor and the
middle class
...
They headed back to the protection of a corporation
...
But what many people who have never formed a corporation do
not know is that a corporation is not really a thing
...
It's not a big building with the name
of the corporation on it
...
A corporation
is merely a legal document that creates a legal body without a soul
...
Once again, the use of corporations became
popular-once the permanent income laws were passed- because the income-tax rate
of the corporation was less than the individual income-tax rates
...

This war between the haves and have-nots has been going on for hundreds of
years
...
The battle is waged
whenever and wherever laws are made
...
The problem
is, the people who lose are the uninformed
...
If they only understood the way the rich
play the game, they could play it too
...
This is why I cringe every time I hear a parent
advise their children to go to school, so they can find a safe, secure job
...

Average Americans today work five to six months for the government before
they make enough to cover their taxes
...
The

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harder you work, the more you pay the government
...

Every time people try to punish the rich, the rich don't simply
comply, they react
...

They do not just sit there and voluntarily pay more taxes
...
They hire smart attorneys j and accountants, and
persuade politicians to change laws or create legal loopholes
...

The Tax Code of the United States also allows other ways to save on taxes
...
For example, "1031"
is jargon for Section 1031 of the Internal Revenue Code, which allows a seller
to delay paying taxes on a piece of real estate; that is sold for a capital gain
through an exchange for a more expensive piece of real estate
...
As long as you
keep trading up in value, you I will not be taxed on the gains, until you
liquidate
...

The poor and middle class do not have the same resources
...
Today, I am constantly shocked at the number of people who pay more taxes,
or take fewer deductions, simply because they are afraid of the government
...


I

have had friends who have had their businesses shut down and destroyed, only to
find out it was a mistake on the part of the government
...
But
the price of working from January to mid-May is a high price to pay for that
intimidation
...
My rich dad didn't either
...

You may remember the first lesson I learned from my rich dad
...
I often
sat in his office waiting for him to "get to me
...

He wanted me to recognize his power and desire to have that power for myself one
day
...
And with money comes great power that requires the
right knowledge to keep it and make it multiply
...


Rich dad constantly reminded Mike and me that the

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biggest bully was not the boss or the supervisor, but the tax man
...

The first lesson of having money work for me, as opposed to working for
money, is really all about power
...
If your money works for you, you keep and control the power
...
You need to know
the law and how the system works
...

If you know what you're talking about, you have a fighting chance
...
It was less expensive
to pay them than pay the government
...
" He knew
the law because he was a law-abiding citizen
...


"If you know you're right, you're not afraid of

fighting back
...

My highly educated dad always encouraged me to seek a good job with a
strong corporation
...
" He didn't understand that, by relying solely on a paycheck
from a corporate employer, I would be a docile cow ready for milking
...
"Why not
own the ladder?" was all he said
...
It was an idea that seemed impossible, and intimidating
...

The point is, if not for my rich dad, I would have probably followed my
educated dad's advice
...

By the time I was 15 or 16, I knew I was not going to continue down the path my
educated dad was recommending
...

That decision changed my life
...
I was just out of the Marine Corps and working for Xerox
...
The deductions were so large, and the more I worked, the greater
the deductions
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...


It was flattering, but I could hear my rich dad asking me in my ear:

"Who are you working for? Who are you making rich?"
In 1974, while still an employee for Xerox, I formed my first corporation
and began "minding my own business
...
Those paychecks
with all the deductions made all the years of my rich dad's advice make total
sense
...

Many employers feel that advising their workers to mind their own business
is bad for business
...
But for me,
focusing on my own business, developing assets, made me a better employee
...
I came in early and worked diligently, amassing as much money as
possible so I could begin investing in real estate
...
The more I realized we were in the

beginning stages of a boom, the more Xerox machines I sold
...
It was inspiring
...
By 1978,I was consistently one of the top
five salespeople in sales, often No
...
I badly wanted out of the rat race
...
And the
money I was making in my asset column, in my own corporation, was money working
for me
...
My rich dad's advice made

much more sense
...
My fellow Xerox salespeople thought I was
spending my commissions
...
I was investing my commissions in assets
...


Each dollar in my asset

column was a great employee, working hard to make more employees and buy the
boss a new Porsche with before-tax dollars
...


The plan was working, and my Porsche was the proof
...
It was made
possible because of the strong financial knowledge I had acquired through these
lessons
...
I now teach others
through financial seminars in the hope that I may share my knowledge with them
...


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No
...
What I call financial literacy
...
The more money you are responsible for, the more
accuracy is required, or the house comes tumbling down
...
Financial literacy is the ability to read and understand
financial statements
...

No
...
What I call the science of money making money
...
This is the right brain side, or the creative
side
...
3 is understanding markets
...
There is
a need to know the "technical" aspects of the market, which is emotion driven;
the Tickle Me Elmo doll during Christmas 1996 is a case of a technical or
emotion-driven market
...
Does an investment make sense or does it not
make sense based on the current market conditions
...
They fail to see that kids know those subjects
intuitively
...
Most all
kids wanted one, and put it at the top of their Christmas list
...
A panic set in due to high demand and
lack of supply
...
The unlucky parents
who did not find a doll were forced to buy another toy for Christmas
...
The same thing
goes on in the stock, bond, real estate and baseball-card markets
...
4 is the law
...

An individual with the knowledge of the tax advantages and protection provided
by a corporation can get rich so much faster than someone who is an employee or
a small-business sole proprietor
...
The difference is profound when it comes to longterm wealth
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
Tax advantages: A corporation can do so many things that an individual
cannot
...
That is a whole area of
expertise that is so exciting, but not necessary to get into unless you have
sizable assets or a business
...
A
corporation earns, spends everything it can, and is taxed on anything that is
left
...
They're
easy to set up and are not expensive if you own investments that are producing
good cash flow
...
Car payments, insurance, repairs are company expenses
...
Most restaurant meals are partial
expenses
...

2
...
We live in a litigious society
...
The rich hide much of their wealth using vehicles
such as corporations and trusts to protect their assets from creditors
...
They
control everything, but own nothing
...
They learned it from the Robin Hood story
...

It is not the purpose of this book to go into the specifics of owning a
corporation
...
There are many books
written on the subject that will detail the benefits and even walk you
through the steps necessary to set up a corporation
...

and Grow Rich provides a wonderful insight into the power of personal
corporations
...
But I
would say it is the combination of the four technical skills listed above that
make up basic financial intelligence
...

In summary

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The Rich People With Corporations

The People Who Work for

Corporations
1
...
Spend

1
...
Pay Taxes

3
...
Spend

As part of your overall financial strategy, we strongly recommend owning
your own corporation wrapped around your assets
...
CHAPTER SIX
Lesson Five:The Rich Invent Money
Last night, I took a break from writing and watched a TV program on the
history of a young man named Alexander Graham Bell
...
Needing a bigger company, he then went to the giant at that time,
Western Union, and asked them if they would buy his patent and his tiny company
...
The president of Western Union scoffed
at him and turned him down, saying the price was ridiculous
...

A multi-billion-dollar industry emerged, and AT&T was born
...
On the news was a story of another downsizing at a local company
...
A
terminated manager of about 45 years of age had his wife and two babies at the
plant and was begging the guards to let him talk to the owners to ask if they
would reconsider his termination
...
The camera focused in on his pleading for all the world to see
...

I have been teaching professionally since 1984
...
It is also a disturbing profession, for I have
taught thousands of individuals and I see one thing in common in all of us,
myself included
...
Yet, the one thing that holds all of us back is some degree of self-doubt
...
Some are more affected than others
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
In the real world outside of
academics, something more than just grades is required
...
" This factor, whatever it is labeled, ultimately
decides one's future much more than school grades
...

There is also the flip side of that character: people who could get down on
their knees and beg if necessary
...


One is

not better than the other
...


It broke my heart to see

students know the answers, yet lack the courage to act on the answer
...

In my personal experience, your financial genius requires both technical
knowledge as well as courage
...

In my classes I strongly urge students to learn to take

• risks, to be

bold, to let their genius convert that fear into power and brilliance
...
I have come to realize that for most people,
when it comes to the subject of money, they would rather play it safe
...
"
There are huge changes up head
...
There will be a hundred people like Bill Gates and hugely
successful companies like Microsoft created every year, all over the world
...

So why bother developing your financial IQ? No one can answer that but you
...


I do it because it is the most exciting

time to be alive
...


I'd

rather be excited about making millions than worrying about not getting a raise
...
Generations from now, people will look back at this period of time and
remark at what an exciting era it must have been
...
It was full of turmoil and it was exciting
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
And if you don't, this period of time will be a frightening one
...

Land was wealth 300 years ago
...
Then, it was factories and production, and America rose to dominance
...
Today, it is information
...
The problem is, information
flies all around the world at the speed of light
...
The changes will
be faster and more dramatic
...
There also will be those who are left behind
...
They want things to be the way they were; they
resist change
...
Sadly they fail to realize
that they might be the problem
...


It is a

liability simply because they fail to realize that while that idea or way of
doing something was an asset yesterday, yesterday is gone
...
A friend had brought someone along to attend the
class
...
Her friend
thought the class might help
...
In playing the
game, they learn about the interaction of the income statement with the balance
sheet
...
Once you accomplish this, you are able to get out of the "Rat
Race" and out onto the "Fast Track"
...
This woman missed a valuable opportunity to learn something
...
At first she was
happy
...
" Then, as her friend tried to explain how the

numbers worked on her income statement and balance sheet, she got frustrated
because she "had never liked math
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...


Suddenly, when she realized how the numbers worked,

it dawned on her that her boat was eating her alive
...
It was a horrible game for her
...
She
had come to the class to learn about investing and did not like the idea that it
took so long to play a silly game
...
With that suggestion, the woman demanded her
money back
...
Her money was promptly refunded and she left
...
In school, most teachers lecture
...

In 1984,I began teaching via games and simulations
...
Most importantly, a game reflects back on one's behavior
...


Instead of the teacher lecturing you, the game

is feeding back a personalized lecture, custom made just for you
...
She
said her friend was fine and had calmed down
...

Although she and her husband did not own a boat, they did own
everything else imaginable
...
There was virtually
nothing for them to split
...

She realized that her anger at doing the numbers-the income statement and
balance sheet-came from her embarrassment of not understanding them
...
She maintained the house and did the
entertaining, and he handled the finances
...
She was angry
at herself for not being more aware of where the money was going, as well as for
not knowing about the other woman
...
We could learn a lot if we tuned in more
...
My wife

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gently smiled and poked me in the stomach to inform me that the pants had not
shrunk, something else had expanded me!
The game CASHFLOW was designed to give every player personal feedback
...
If you draw the boat card and it puts you into
debt, the question is, "Now what can you do?" How many different financial
options can you come up with? That is the purpose of the game: to teach players
to think and create new and various financial options
...
The people who
get out of the "Rat Race" in the game the quickest are the people who understand
numbers and have creative financial minds
...


People who take the longest are people who are not familiar with

numbers and often do not understand the power of investing
...

There have been people playing CASHFLOW who gain lots of money in the game,
but they don't know what to do with it
...
Everyone else seems to be getting ahead of them,
even though they have money
...
There are a lot of
people who have a lot of money and do not get ahead financially
...
CHAPTER SEVEN
Lesson Six:Work to Learn -

Don't Work for Money

In 1995,1 granted an interview with a newspaper in Singapore
...
We sat
in the lobby of a luxurious hotel, sipping coffee and discussing the purpose of
my visit to Singapore
...
He was
speaking on motivation, and I was speaking on "The Secrets of the Rich
...
I
had seen some of the articles she had written for the paper, and I was impressed
...
Her articles held a reader's interest
...


"What holds you back from

achieving your dream?"
"My work does not seem to go anywhere," she said quietly
...


So I keep my job with the

paper
...
Do you have any suggestions?"

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...

"Yes, I do," I said brightly
...
He runs sales-training courses for many of
the top corporations here in Singapore, and I think attending one of his courses
would greatly enhance your career
...


"Are you saying I should go to school to learn to sell?"

I nodded
...


"What is wrong with that?" I was now backpeddling
...
In my
attempt to be helpful, I found myself defending my suggestion
...
Why would I go to school
to learn to be a salesperson? I am a professional
...
I hate
salespeople
...
So tell me why| I should study sales?" She
was now packing her briefcase forcibly
...

On the coffee table sat a copy of an earlier best-selling book I wrote
...
| "Do
you see this?" I said pointing to her notes
...


"What," she said, confused
...


On her pad she had written

"Robert Kiyosaki, best-selling author
...
"
Her eyes widened immediately
...
You are a great writer
...

You have a master's degree
...
'"
Anger flared from her eyes
...
People like you have no business writing
...
It is not fair
...

At least she gave me a fair and favorable write-up the next morning
...
We
meet them every day
...

A few days ago, my car was not running well
...
He knew what was wrong by
simply listening to the engine
...


The sad truth is, great talent is not enough
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
I heard the
other day that less than 5 percent of Americans earn more than $100,000 a year
...

A business consultant who specializes in the medical trade was telling me how
many doctors, dentists and chiropractors struggle financially
...
It was this
business consultant who gave me the phrase, "They are one skill away from great
wealth
...
I have mentioned
before that financial intelligence is a synergy of accounting, investing,
marketing and law
...
When it comes to money, the only skill most people know is to
work hard
...
If she diligently learned the skills of sales and marketing, her
income would jump dramatically
...
Then, instead of working at the
newspaper, I would seek a job at an advertising agency
...
She also would spend time learning public relations, an
important skill
...
Then, at
night and on weekends, she could be writing her great novel
...
Then, in a short while, she
could be a "best-selling author
...
I told the publisher that with a title like that, I would sell two
books: one to my family and one to my best friend
...
The obnoxious title If You Want To Be Rich and Happy, Don't
Go to School? was chosen because we knew it would get tons of publicity
...


Otherwise, why would I continue

to press for changing our antiquated educational system? So I chose a title that
would get me on more TV and radio shows, simply because I was willing to be
controversial
...

When I graduated from the U
...
Merchant Marine Academy in 1969, my
educated dad was happy
...
I was a third mate, and the pay was low compared with my

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classmates, but it was OK for a first real job after college
...
I had five months of vacation
...

I had a great career ahead of me, yet I resigned after six months with the
company and joined the Marine Corps to learn how to fly
...
Rich dad congratulated me
...
" That is, in order to make more money or get promoted, you need
to "specialize
...
The same is true for accountants,
architects, lawyers, pilots and others
...
That is why he was thrilled
when he eventually achieved his doctorate
...

Rich dad encouraged me to do exactly the opposite
...
That is why for years I worked in
different areas of his companies
...
Although I would probably never have been an accountant, he wanted
me to learn via "osmosis
...
I also worked as a bus boy and construction
worker, as well as in sales, reservations and marketing
...
That is why he insisted we sit in on the meetings with his bankers,
lawyers, accountants and brokers
...

When I quit my high-paying job with Standard Oil, my educated dad had a
heart-to-heart with me
...
He could not understand my decision

to resign from a career that offered high pay, great benefits, lots of time off,
and opportunity for promotion
...
My logic did not fit his
logic
...

Job security meant everything to my educated dad
...

Educated dad thought I went to school to learn to be a ship's officer
...
So as a
student, I made cargo runs, navigating large freighters, oil tankers and
passenger ships to the Far East and the South Pacific
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
While most of my classmates,
including Mike, were partying at their fraternity houses, I was studying trade,
people, business styles and cultures in Japan, Taiwan, Thailand, Singapore, Hong
Kong, Vietnam, Korea, Tahiti, Samoa and the Philippines
...
I grew up rapidly
...
I told him I wanted to learn to fly, but really I wanted to learn
to lead troops
...
He had spent three years in the Army; my educated
dad was draft-exempt
...
"Leadership is what you need to learn next," he said
...
"
Returning from Vietnam in 1973,1 resigned my commission, even though I
loved flying
...
I joined it for one reason, and it
was not for the benefits
...
Xerox has one of the best sales-training
programs in America
...
My educated dad was ashamed
...


I worked with Xerox

for four years until I overcame my fear of knocking on doors and being rejected
...

In 1977,1 formed my first company
...


So I now had to learn to form them and put them together
...

formal education was complete, and it was time to test my wings
...
Rich dad
thought it best to go broke before 30
...
On the eve of my 30th birthday, my first shipment
left

,,
Korea for New York
...
And as my rich dad encouraged

me to do, I keep seeking the emerging nations
...
There is an old cliche that
goes, "Job is an acronym for 'Just Over Broke
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
Because school does not think
financial intelligence is an intelligence, most workers "live within their
means
...

There is another horrible management theory that goes, "Workers work hard
enough to not be fired, and owners pay just enough so that workers won't quit
...

The net result is that most workers never get ahead
...
" Most workers focus on working for pay and
benefits that reward them in the short term, but is often disastrous in the long
...
Look down the road at what ; skills they want to
acquire before choosing a specific profession and before getting trapped in the
"Rat Race
...

Their little furry legs are spinning furiously, the wheel is turning furiously,
but come tomorrow morning, they'll still be in the same cage: great job
...
Probably the most memorable is "Show me the money
...
It comes from the scene where Tom Cruise is
leaving the firm
...
Only one
woman speaks up and says, "I'd like to but I'm due for a promotion in three
months
...

It is the type of statement that people use to keep themselves
busy working away to pay bills
...
So he would go
back to school to earn more qualifications so he could get another raise, but
again, it would be another disappointment
...
What does the future hold?
Cyril Brickfield, the former executive director of The American
Association of Retired People, reports that "private pensions are in a state of
chaos
...
That

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alone should be of great concern
...
"
In his book The Retirement Myth, Craig S
...

When I asked her what people who don't have corner offices will be able to
expect in the way of pension income, she said with a confident smile:

"The

Silver Bullet
...
'" Karpel goes
on to explain the difference between the old Defined Benefit retirement plans
and the new 401K plans which are riskier
...
And that is just for retirement
...

In his 1995 book, he indicates that nursing-home fees run from $30,000 to
$125,000 per year
...

Already, many hospitals in countries with socialized medicine need to make
tough decisions such as "Who will live and who will die?" They make those
decisions purely on how much money they have and how old the patients are
...

The older poor patient gets put to the back of the line
...

So I wonder, are workers looking into the future or just until their next
paycheck, never questioning where they are headed?
When I speak to adults who want to earn more money, I always recommend the
same thing
...
Instead of simply
working for the money and security, which I admit are important, I suggest they
take a second job that will teach them a second skill
...
Some of these companies have excellent training
programs that help people get over their fear of failure and rejection, which
are the main reasons people /j are unsuccessful
...

When I offer this suggestion, I often hear in response, "Oh that is too
much hassle," or "I only want to do what I am interested in
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
"
Unfortunately, there is some truth to the old statement "You can't teach
an old dog new tricks
...

But for those of you who might be on the fence when it comes to the idea
of working to learn something new, I offer this word of encouragement: Life is
much like going to the gym
...


Once you

get past that, it's easy
...
After the workout is
over, I am always glad I talked myself into going
...
Labor unions are designed to protect specialists
...
He told me that it was the hardest job he
ever held
...
He was successful
...

Personally, I take no sides because I can see the need for and the
benefits of both sides
...
For example, had I continued on with my
flying career, I would have sought a company that had a strong pilots union
...
If I were pushed out of that industry, my life's skills would not
be as valuable to another industry
...
The skills do not
necessarily transfer from industry to industry, because the skills the pilots
are paid for in the airline industry are not as important in, say, the school
system
...
With all the changes in medicine,
many medical specialists are needing to conform to medical organizations such as
HMO's
...
Today in America, the
teachers union is the largest and the richest labor union of all
...
Teachers need

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the protection of their union because their skills are also of limited value to
an industry outside of education
...
" It's the smart thing to do
...
I then
ask, "So if most of you can cook a better hamburger, how come McDonald's makes
more money than you?"
The answer is obvious: McDonald's is excellent at business systems
...

A friend of mine in Hawaii is a great artist
...
One day his mother's attorney called to tell him that she had left him
$35,000
...


Immediately, he saw an opportunity to increase

his business by using some of this money to advertise
...
The ad ran for three months
...
He now wants to sue the magazine for
misrepresentation
...
When I asked him what he learned, his only reply
was that "advertising salespeople are crooks
...
His reply,
"I don't have the time, and I don't want to waste my money
...
All too often, they're •
poor or struggle financially or earn less than they are capable of, not

f

because of what they know but because of what they do not know
...
Maybe McDonald's does not make the best
hamburger, but they are the best at

f selling and delivering a basic average

burger
...
That was his view on how to be paid more
...

Educated dad then took up the cause of the teachers union, campaigning for
further protection and benefits for I these highly skilled and educated
professionals
...
He never

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understood that the more specialized you become, the more you are trapped and
dependent on that specialty
...
Many corporations do
the same thing
...


So these bright

young employees do not specialize in one department; they are moved from
department to department to learn all the aspects of business systems
...


By doing so, their

children gain an overall knowledge of the operations of the business and how the
various departments interrelate
...
Today, it is considered smart
...
" In the short term, it may earn you less
...

The main management skills needed for success are:
1
...
The management of systems (including yourself and time with family)
...
The management of people
...
It is the ability to sell--therefore, to communicate to another human
being, be it a customer, employee, boss, spouse or child-that is the base skill
of personal success
...
It is a skill that I work on
constantly, attending courses or buying educational tapes to expand my knowledge
...
He also became more trapped the more specialized he got
...
Soon after he was locked
out of government work, he found out how vulnerable he really was professionally
...

Their once high-paying position is gone, and they have limited skills to fall
back on
...
He realized how much a union would have benefited him
...
He
encouraged us to work with people smarter than we were and to bring smart people

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together to work as a team
...

Today, I meet ex-schoolteachers earning hundreds of thousands of dollars a
year
...
They can teach as well as sell and market
...
The skills
of selling and marketing are difficult for most people primarily due to their
fear of rejection
...
Just as I advised that newspaper
writer who wanted to become a "best-selling author," I advise anyone else today
...


I

have friends who are geniuses, but they cannot communicate effectively with
other human beings and, as a result, their earnings are pitiful
...
Even if they earn nothing, their
communication skills will improve
...

In addition to being good learners, sellers and marketers, we need to be
good teachers as well as good students
...
In cases of financial or professional struggle,
there is often a lack of giving and receiving
...

Both of my dads were generous men
...

Teaching was one of their ways of giving
...
One glaring difference was in the giving of money
...
He gave to his church, to charities, to his foundation
...
Giving money is the secret to
most great wealthy families
...
These are organizations designed
to take their wealth and increase it, as well as give it away in perpetuity
...
"
The problem was, there was never any extra
...
" Instead, he believed in "Receive and then you give
...


One part of me is a hard-core

capitalist who loves the game of money making money
...
I personally hold the archaic educational
system primarily responsible for this growing gap
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
CHAPTER EIGHT
Overcoming Obstacles
Once people have studied and become financially literate, they may still
face roadblocks to becoming financially independent
...

Asset columns that could produce large sums of cash flow
...
The five reasons are:
1
...

2
...

3
...

4
...

5
...

Reason No
...
Overcoming the fear of losing money
...
And in all my years, I have never met a rich
person who has never lost money
...
investing, that is
...
Everyone has it
...
But it's
not fear that is the problem
...
It's how you handle
losing
...


That goes for anything in life, not just money
...

It's OK to be fearful
...
You
can still be rich
...

My friend's wife is an emergency room nurse
...
When I mention investing, she runs'j away
...


I pass out
...


"Some

people are terrified of snakes
...

Both are phobias," he would say
...
start early
...
J If you
start young, it's easy to be rich
...
A
staggering difference
...
The purchase of Manhattan Island is said to be one of the greatest

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...

bargains of all time
...
Yet,
if that $24 had been invested, at 8 percent annually, that $24 would have been
worth more than $28 trillion by 1995, Manhattan could be repurchased with money
left over to buy much of L
...
, especially at 1995's real estate prices
...
He has been there 25 years
...
It is invested mostly in high-growth mutual funds, which he
will convert to bonds and government securities
...


So it can be done, even if you hate losing or hate risk
...

But what if you don't have much time left or would like to retire early?
How do you handle the fear of losing money?
My poor dad did nothing
...

My rich dad, on the other hand, recommended that I think like a Texan
...


"I

"In Texas, everything is bigger
...
And when they lose, it's spectacular
...

"That's not what I'm saying
...
Show me a happy loser,
and I'll show you a loser," said rich dad
...
It's how they handle life
...
Not like most of the people around here, living like roaches when it comes
to money
...
Whimpering
when the grocery clerk short changes them a quarter
...

"What I like best is the Texas attitude
...
Texans have a saying, "If you're going to go broke, go
big
...
Most people around
here are so afraid of losing, they don't have a duplex to go broke with
...


"People are so

afraid of losing that they lose" were his words
...
"
In my own life, I've noticed that winning usually follows losing
...
I've never met a

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...

golfer who has never lost a golf ball
...
And I've never met someone rich who
has never lost money
...


Another saying

in Texas is, "Everyone wants to go to Heaven, but no one wants to die
...


So they never

get to Heaven
...
"If
you really want to learn the attitude of how to handle risk, losing and failure,
go to San Antonio and visit the Alamo
...
They chose to die instead of surrendering
...
They
got their butts kicked
...
They lost
...
He always told us this story when f he
was about to go into a big deal and he was nervous
...


Every

time he was afraid of making a mistake, or losing money, he told us this story
...
Rich dad

I knew that failure would only make him

stronger and smarter
...
He would take a loss and make it a win
...
It gave him the courage to cross the
line when others backed out
...
They took a
great failure and turned it into a tourist destination that makes them
millions
...
They get inspired by them
...
Failure inspires Texans to ' become winners
...
It j is the formula for all
winners
...

I remember falling off only made me more determined to learn to ride
...

I also said that I have never met a golfer who has never lost a ball
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
That's what makes them better
...
For losers, losing defeats them
...
Rockefeller, "I always tried to turn every disaster ' into
an opportunity
...
Many people say that Pearl
Harbor was an American mistake
...
From the movie
Tora, Tora, Tom, a somber Japanese admiral says to his cheering subordinates, "I
am afraid we have awakened a sleeping giant
...
It turned one of America's greatest losses into the reason to win
...

Failure inspires winners
...
It is the biggest
secret of winners
...
The greatest secret

of winners is that failure inspires winning; thus, they're not afraid of losing
...
" People
like Fran Tarkenton are not afraid of losing because they know who they are
...
There is a big difference between hating losing and being afraid to lose
...
They go broke over a
duplex
...
They buy big houses
and big cars, but not big investments
...
They
don't play to win
...
Most have lots of cash in CDs, low-yield bonds, mutual
funds that can be traded within a mutual-fund family, and a few individual
stocks
...
But it is not a winning portfolio
...

Don't get me wrong
...
Because a safe portfolio is a
lot better than no portfolio
...
But playing it safe and going "balanced" on your investment portfolio is
not the way successful investors play the game
...
" If you look at
anyone successful, at the start they were not balanced
...
They stay in one spot
...

Just look at how you make progress walking
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
He was focused
...
He was focused
...
George Soros is focused
...
He focused them and blew through the
weak spots in the German line
...

If you have any desire of being rich, you must focus
...
Do not do what poor and middle class people do: put their
few eggs in many baskets
...
If losing makes you weak, play it safe
...
If you're over 25 years old and are terrified of
taking risks, don't change
...


Start accumulating

your nest egg early because it will take time
...
If failure makes
you weak or causes you to throw temper tantrums-like spoiled brats who call an
attorney to file a lawsuit every time something does not go their way-then play
it safe
...
Or buy bonds or mutual funds
...

I say all this, mentioning Texas and Fran Tarkenton, because stacking the
asset column is easy
...
It doesn't take much
education
...
But staking the asset column 'J is a highattitude game
...

Losers avoid failing
...
'' Just remember the
Alamo
...
2
...
"The sky is falling
...
" Most of us know the story of "Chicken Little," who ran around warning
the barnyard of impending doom
...
But we all
have a "Chicken Little" inside each of us
...
We all get
a little chicken when fear and doubt cloud our thoughts
...


"I'm not smart
...
" "So '$ and

so is better than me
...
We play the
...


"What if the economy crashes right after I invest?" Or "What if I

lose control and I can't pay the money back?" "What if things don't go as I
planned?" Or we have friends or loved ones who will remind us of our
shortcomings regardless of whether we ask
...
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...
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who controls the past controls the future, who controls the present controls the past
...
You don't know what you're talking about
...
A horrible feeling
builds in our stomach
...
We fail to move forward
...
We watch life passing by as
we sit immobilized with a cold knot in our body
...

Peter Lynch of Fidelity Magellan mutual fund fame refers to warnings about
the sky falling as "noise," and we all hear it
...
Often
from friends, family, co-workers and the media
...
If they had
invested that money wisely in the market, instead of building a fallout shelter,
they'd probably be financially independent today
...
A person dies from rare hamburger meat in Washington State
and the Arizona Health Department orders restaurants to have all beef cooked
well-done
...
The ad runs in February
...

Most people are poor because when it comes to investing, the world is
filled with Chicken Littles running around yelling, "The sky is falling
...
" And Chicken Littles are effective because everyone of us is a
little chicken
...

In 1992, a friend named Richard came from Boston to visit my wife and me
in Phoenix
...
The prices of real estate in Phoenix were depressed
...

My wife and I are not real estate agents
...
After
identifying a unit in a resort community, we called an agent who sold it to him
that afternoon
...

Similar units were going for $65,000
...
Excited, he bought
it and returned to Boston
...
I
called immediately to find out why
...
He was paying too much
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
Richard said "no
...

The real estate market in Phoenix turned, and by 1994, that little unit
was renting for $1,000 a month-$2,500 in the peak winter months
...
All Richard had to put down was $5,000 and he would have
had a start at getting out of the rat race
...

And the bargains in Phoenix are still here; you just have to look a lot harder
...


It's called "buyer's remorse,"

and it affects all of us
...
The little 1 chicken
won, and a chance at freedom was lost
...
I earn 16 percent per year on my money, which
certainly beats the 5 percent the bank offers
...
The
formula they're bought on makes them safe
...
So I look
at them as 2 to 7-year CDs
...

They tell me why I should not do it
...
They've never
done it, and they're telling someone who's doing it why they shouldn't
...
Doubt is expensive
...
The real world is simply waiting for you to get rich
...
As I said, getting out of the rat race is
technically easy
...

"Cynics never win," said rich dad
...
Cynics criticize, and winners analyze" was another of his favorite
sayings
...

Analysis allowed winners to see that critics were blind, and to see
opportunities that everyone else missed
...

Real estate is a powerful investment tool for anyone seeking financial
independence or freedom
...
Yet, every time I
mention real estate as a vehicle, I often hear, "I don't want to fix toilets
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
" That's what my rich dad would say is the
cynic talking
...
Someone who lets their doubts and fears close their mind instead
of open their eyes
...
I talk about freedom from the rat race, and they focus on
toilets
...
They criticize
instead of analyze
...

Because I, too, do not want to fix toilets, I shop hard for a property
manager who does fix toilets
...
But more importantly a great
property manager allows me to buy a lot more real estate since I don't have to
fix toilets
...
Finding
a good manager is more important to me than the real estate
...

That is what rich dad meant by " 'I don't wants' hold the key to your
success
...
The people who
continue to say "I don't want to fix toilets" often deny themselves the use of
this powerful investment vehicle
...

In the stock market, I often hear people say, "I don't want to lose
money
...
Instead of analyzing,
they close their minds to another powerful investment vehicle, the stock market
...
He looked up and saw that the price of oil was going up
...
" To him, the sky is always going to fall, and
it usually does, on him
...
Statistics I had never seen before,
even though I already owned a substantial share block of an existing oil company
...
My broker was
excited about this new company, and I bought 15,000 shares for 65 cents per
share
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
Again, the
"Chicken Little" worried and complained
...
And the price of gas will continue to
go up if what my friend says is true
...
If most
people understood how a "stop" worked in stock-market investing, there would be
more people -investing to win instead of investing not to lose
...
It's a
great tool for those who are terrified of losing
...
Chicken Little
has taken over their brain and is yelling, "The sky is falling and toilets are
breaking
...
They
may never get what they want in life
...


"Just do what

Colonel Sanders did
...
It wasn't enough
...
He was turned down 1,009 times before
someone said "yes
...


"He was a brave

and tenacious man," rich dad said of Harlan Sanders
...

Sanders did to his little chicken
...

Reason No
...
Laziness
...
We have all
heard stories of a businessman who works hard to earn money
...
He spends long hours at the office
and brings work home on weekends
...
His
wife has left with the kids
...
Dismayed, his
performance at work slips and he loses his job
...

And there are people too busy to take care of their health
...
They're busy, and they stay busy as a way of avoiding something they do
not want to face
...


Deep down they know
...


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...
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...

If they aren't busy at work or with the kids, they're often busy watching
TV, fishing, playing golf or shopping
...


That's the most common form of laziness
...

So what is the cure for laziness? The answer is a little greed
...
"Greedy
people are bad people," my mom use to say
...
So to keep that
emotion of desire under control, often parents found ways of suppressing that
desire with guilt
...
Don't you know you have brothers and
sisters?" was one of my mom's favorites
...


"Do you think we're made of money?

Do you think money

grows on trees? We're not rich people, you know
...

Or the reverse guilt-trip was the "I'm sacrificing my life to buy this for
you
...
" I have a neighbor who is stone broke, but can't park his car in his garage
...
Those spoiled brats get everything
they ask for
...
He has nothing set aside for their college or his retirement, but his
kids have every toy ever made
...


"I'm doing it for the kids," he said with

great sacrifice
...
"
In my real home, that's all I heard
...
It didn't have to think anymore
...
Forced it to think and search for answers
...

And the human spirit knew it
...


"The human spirit is very, very, powerful," he

"It knows it can do anything
...
Your spirit is angry, and your
lazy mind must defend its lie
...
Let's go to
the gym and work out
...
I worked really
hard today
...


Let's

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get out there and get rich
...


Besides it's too much bother
...
I might lose money
...


I've got too much to do at work anyway
...
My
boss wants it finished by the morning
...
A helplessness that leads to '
despondency and often depression
...
"How can I afford
it?" opens up possibilities, excitement and dreams
...

Thus, he rarely gave Mike or me anything
...
It was
not the goal but the process of attaining the goal we desired that he wanted us
to learn
...
It's an old conditioning from their childhood
...
Most have been
conditioned subconsciously to say, "You can't have that," or

;

"You'll never afford that
...


"How can I

afford to never work again?" And my mind began to kick out answers and solutions
...
"
Or "Stop thinking only about yourself
...

So how do you beat laziness? The answer is a little greed
...
Our world progresses because we all
desire a better life
...
We go to school and study hard because we want something better
...

It's the best cure for laziness
...
But
just remember what Michael Douglas said in the movie Wall Street
...
" Rich dad said it differently: "Guilt is worse than greed
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
" And to me, Eleanor Roosevelt said it
best: "Do what you feel in your heart to be right-for you'll be criticized
anyway
...
"
Reason No
...
Habits
...
After seeing the movie Conan, starring Arnold Schwarzenegger, a
friend said, "I'd love to have a body like Schwarzenegger
...

"I even heard he was really puny and skinny at one time," another friend
added
...


"I heard he has a habit of

working out almost every day in the gym
...
"
"Nah," said the group cynic
...
Besides,

let's stop talking about Arnold and get some beers
...
I remember asking my
rich dad about the habits of the rich
...

"When does your dad pay his bills?" rich dad asked
...

"Does he have anything left over?" he asked
...

"That's the main reason he struggles," said rich dad
...
"
"Your dad pays everyone else first
...
"
"Which he usually doesn't," I said
...

time
...


"I firmly believe in paying my bills on

Before I pay even the government
...
"What do you
do then?"
"The same," said rich dad
...
Even if I'm short

of money
...
"
"But," I said
...


"Look, I did not say not to pay
...
"
"But," I replied
...
The question is 'Why,'" rich dad said
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
"You wouldn't say anything if you didn't pay
yourself
...
The
pressure to pay becomes my motivation
...
That pressure made me work harder, forced me to think,
and all in all made me smarter and more active when it comes to money
...
"
"So it is the fear of the government or other people you owe money I to
that motivates you?"
"That's right," said rich dad
...
So are bill collectors in general
...
They pay them and never pay themselves
...


"I see that ad for weightlifting and bodybuilding lessons in

the comic books all the time
...
I decided to
use the fear of the bully to make me stronger
...
Forcing myself
to think about how to make extra money is like going to the gym and working out
with weights
...

Now, I'm not afraid of those bullies
...


"So if I pay myself first, I get

financially stronger, mentally and fiscally
...

"And if I pay myself last, or not at all, I get weaker
...
Just because I don't have good money habits
...


"Just like the 96-pound weakling
...
5
...
Arrogance is ego plus ignorance
...
What I don't know loses me money
...
Because when I'm arrogant, I truly believe that
what I don't know is not important," rich dad would often tell me
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
It often happens when I am discussing financial statements with
accountants or even other investors
...
It is clear to me
that they don't know what they're talking about
...

There are many people in the world of money, finances and investments who
have absolutely no idea what they're talking about
...

When you know you are ignorant in a subject, start educating yourself by
finding an expert in the field or find a book on the subject
...
CHAPTER NINE
Getting Started
I wish I could say acquiring wealth was easy for me, but it wasn't
...
It really is easy to find great
deals
...
It's just like riding a bike
...
But when it comes to money, it's the determination to get
through the wobbling that's a personal thing
...
I believe that each of us has a financial genius within us
...
It
lies asleep because our culture has educated us into believing that the love of
money is the root of all evil
...
It
taught us not to worry about our financial future, our company or the government
would take care of us when our working days are over
...
The
message is still to work hard, earn money and spend it, and when we run short,
we can always borrow more
...
If you are
not one of the masses, I offer you the following ten steps to awaken your
financial genius
...


If

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you want to follow some of them, great
...
Your
financial genius is smart enough to develop its own list
...
He replied, "There is gold everywhere
...
"
And I would say that is true
...


Even looking in the same neighborhood
...

I offer you the following ten steps as a process to develop your God-given
powers
...

1
...


If you ask

most people if they would like to be rich or financially free, they would say
"yes
...
The road seems too long with too many hills to
climb
...
I once met a young woman who had dreams of swimming for the U
...
The reality was, she had to get up every morning at 4 a
...
to swim for
three hours before going to school
...


She had to study and keep her grades up, just like everyone

else
...
It's love
that gets me over the hurdles and sacrifices
...
" When
people ask me what my reason for wanting to be rich is, it is a combination of
deep emotional "wants" and "don't wants
...
First the "don't wants," for they create the "wants
...


I don't want what my parents aspired for, which

was job security and a house in the suburbs
...
I

hated that my dad always missed my football games because he was so busy working
on his career
...
He could not even pass
on what he worked so hard for when he died
...
They work
hard and pass it on to their children
...


I want to be free to travel the world and live in the

lifestyle I love
...
I want to simply be free
...


I want money to work for me
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
What are yours? If they are
not strong enough, then the reality of the road ahead may be greater than your
reasons
...
I wanted to be
free by age 40, but it took me until I was 4? with many learning experiences
along the way
...
It wasn't, but it wasn't hard
either
...

IF YOU DO NOT HAVE A STRONG REASON, THERE IS NO SENSE READING FURTHER
...

2
...
That is the main reason people
want to live in a free country
...

Financially, with every dollar we get in our hands, we hold the power to
choose our future to be rich, poor or middle class
...


Our spending habits reflect

Poor people simply have poor spending habits
...

Nobody told me Monopoly was only for kids, so I just kept playing the game as an
adult
...


So a long time ago, as a little boy, I chose to be rich,

and I knew that all I had to do was learn to acquire assets, real assets
...
Many rich families lose their assets in the next generation
simply because there was no one trained to be a good steward over their assets
...
For 90 percent of the population, being
rich is "too much of a hassle
...
"
still young
...
" Or "I don't have to worry, I'm

Or "When I make some money, then I'll think about my future
...
" The problem with those statements is
they rob the person who chooses to
think such thoughts of two things: one is time, which is your most
precious asset, and two is learning
...
But that is a choice we all make daily, the choice of
what we do with our time, our money and what we put in our heads
...
All of us have choice
...


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INVEST FIRST IN EDUCATION:

In reality, the only real asset you have is

your mind, the most powerful tool we have dominion over
...
You can watch MTV all day, or read golf magazines, or go to
ceramics class or a class on financial planning
...
Most people simply
buy investments rather than
first invest in learning about investing
...
The thieves took her TV and VCR and left all the books she reads
...
Again, 90 percent of the population buys TV sets
and only about 10 percent buy books on business or tapes on investments
...
I like it when they are at least two
days long because I like to immerse myself in a subject
...
I spent $385 and that course has made me at least $2
million, if not more
...
I don't have to
work for the rest of my life because of that one course
...

I love audio tapes
...
I was listening to a
tape by Peter Lynch, and he said something I completely disagreed with
...
Possibly more
...
It was
like magic
...
I gained tremendous depth and insight into the vast
resources of his education and experience
...
I have two thoughts
instead of one
...
Today, I often say, "How would Peter Lynch do this, or Donald Trump
or Warren Buffett or George Soros?" The only way I can access their vast mental
power is to be humble enough to read or listen to what they have to say
...
You see, if you learn something new, you are then required to
make mistakes in order to fully understand what you have learned
...
Arrogant
people rarely read or buy tapes
...


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There are so many "intelligent" people who argue or defend when a new idea
clashes with the way they think
...
Each of us knows people who are
highly educated, or believe they are smart, but their balance sheet paints a
different picture
...
Listening is more important
than talking
...
Too many people think with their mouth instead of listening to
absorb new ideas and possibilities
...

I take a long view on my wealth
...
I may go in and
out of stocks, but I am long on education
...
I am always shocked at people who buy stocks or
real estate, but never invest in their greatest asset, their mind
...

3
...
First of all, I do
not choose my friends by their financial statements
...
The point is I learn from all of them, and I consciously make the effort
to learn from them
...
But I was not after their money; I was seeking their knowledge
...

But there is one distinction that I would like to point out
...
And I do not mean brag
...


So I learn from them, and they learn from me
...
They often think it rude or unintellectual
...
I find out what not to do
...
The three of them report the same phenomenon: Their friends who
have no money have never come to them to ask them how they did it
...
a loan, or 2
...

A WARNING: Don't listen to poor or frightened people
...


When it

comes to money, especially investments, "The sky is always falling
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
The problem is, people listen to them,
but people who blindly accept doom-and-gloom information are also "Chicken
Littles
...
"
If you watch CNBC, which is a goldmine of investment information, they
often have a panel of so-called "experts
...
If you're smart, you
listen to both
...

Unfortunately, most poor people listen to "Chicken Little
...
A few years ago, a friend told me he was excited because he found a
6 percent certificate of deposit
...
The next day he sent me an article about why my investment was
dangerous
...

I would say that one of the hardest things about wealth building is to be
true to yourself and be willing to not go along with the crowd
...
If a
great deal is on the front page, it's too late in most instances
...
As we used to say as surfers: "There is always another wave
...

Smart investors don't time markets
...
Why this is hard for most
investors is because buying what is not popular is frightening to them
...
Or their greed gets them in
when wise investors have already taken their profits and moved on
...
They know their profits are
made when they buy, not when they sell
...
As I said, they do
not time the market
...

It's all "insider trading
...
But either way,
it's insider trading
...
It's made on information
...
I'm not
saying do it illegally, but the sooner you know, the better your chances are for

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profits with minimal risk
...
And that is financial
intelligence
...
MASTER A FORMULA AND THEN LEARN A NEW ONE: The power of learning
quickly
...
The same is true for making money
...
"
Most of us have heard the saying "You are what you eat
...
I say, "You become what you study
...
For example, if you study cooking,
you then tend to cook
...
If you don't want to be a cook anymore,
then you need to study something else
...
After

studying teaching, you often become a teacher
...
Choose what you study
carefully
...
And that is, work for money
...
That is the basic formula, or recipe
...

Years ago, when I was 26,1 took a weekend class called "How to Buy Real
Estate Foreclosures
...
The next trick was to have the
discipline to actually put into action what I had learned
...
For three years, while working for Xerox, I spent my spare time
learning to master the art of buying foreclosures
...

So after I mastered that formula, I went in search of other formulas
...

I have attended classes designed for only derivative traders, also a class
for commodity option traders and a class for Chaologists
...
Yet, I learned a lot that made my stock and real estate investing
more meaningful and lucrative
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
They are
great places to start
...
That is why, on a fairly regular
basis, I make more in a day than many people will make in their lifetime
...
In today's fast-changing world, it's not so much what
you know anymore that counts, because often what you know is old
...
That skill is priceless
...
Working hard for money is an
old formula born in the day of cave men
...
PAY YOURSELF FIRST: The power of self-discipline
...
You might first want to join the
Marine Corps or some religious order so you can get control of yourself
...
It is the lack of selfdiscipline that causes most lottery winners to go broke soon after winning
millions
...

It is difficult to say which of the ten steps is the most important
...
I would venture to say that it is the lack of
personal self-discipline that is the No
...

Simply put, people who have low self-esteem and low tolerance for
financial pressure can never, and I mean never, be rich
...
" The
world pushes people around not because other people are bullies, but because the
individual lacks internal control and discipline
...

In the entrepreneur classes I teach, I constantly remind people to not
focus on their product, service or widget, but to focus on developing management
skills
...


Management of cash flow
...


Management of people
...
Management of personal time
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
The three matter in the way you live your life as an individual,
or as part of a family, a business, a charitable organization, a city or a
nation
...
I do
not take the saying "pay yourself first" lightly
...
Millions of copies have been sold
...

As I said, financial literacy allows one to read numbers, and numbers tell the
story
...

A picture is worth a thousand words
...

People who pay themselves first
+------------------------+
Job--------------->|Income
^

|----

|-------------------------

|

| Expense

\

|

|

|

+------------------------+

\

|

+--------------------------------------<

----\-----|------------------------+
|

Assets

|

|

Liabilities

|

|

|

|_________|____________|
Someone who pays everyone else first- Often there is nothing left
+------------------------+
Job--------------->|Income

|

|------------------------| Expense

| ----> Nothing left!

+------------------------+
-----------------------------------+
|

Assets

|

Liabilities

|

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|

|

|

|_________|____________|
Study the diagrams and notice if you can pick up some distinctions
...
Most people
look at the numbers and miss the story
...

Do you see it? The diagram above reflects the actions of an individual who
chooses to pay himself first
...
Although millions of people have
read Classen's book and understand the words "pay yourself first," in reality
they pay themselves last
...
And I can hear all the "responsible" people who pay their
bills on time
...
All I am
saying is do what the book says, which is "pay yourself first
...
Not the one that follows
...
" The
reason is that these financial professionals actually do what the masses do,
which is pay themselves last
...

There have been months in my life, when for whatever reason, cash flow was
far less than my bills
...
My accountant and bookkeeper
screamed in panic
...
"

"They're going to come after you
...
" "They'll cut off the

electricity
...

"Why?" you ask
...
The power of self-discipline and the power of internal fortitude
...
As my rich dad taught me the first month I worked
for him, most people allow the world to push them around
...
" So you pay and not pay yourself
...
" Your real estate agent tells you to "go aheadthe government allows you a tax deduction on your home
...
Having the guts to go against the tide and get rich
...


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I am not saying be irresponsible
...
The reason I
minimize my income is because I don't want to pay it to the government
...
If I work for
money, the government takes it
...
I don't like consumer debt
...
They're called tenants
...
1 in paying yourself first is don't get into debt in the first place
...

Secondly, when I occasionally come up short, I still pay myself first
...
I like it when they get tough
...
They inspire me to i go out and create
more money
...

I generally pay them right away anyway
...
We
just don't cave into the pressure and spend our savings or liquidate stocks to
pay for consumer debt
...

So the answer is:
1
...


Keep

your expenses low
...
Then, buy the big house or nice car
...

2
...


Use the pressure to inspire your financial genius to

come up with new ways of making more money and then pay your bills
...
; : So many times I have gotten into financial hot water, and used
my brain to create more income, while staunchly defending the assets in my asset
column
...

Poor people have poor habits
...
" The rich know that savings are only used to create more
money, not to pay bills
...


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If you do not like financial pressure, then find a formula that works for
you
...


But this violates the "pay yourself first" rule
...
It
doesn't mean pay yourself first and starve
...
If you
call on your financial genius, you can have all the goodies of life, get rich
and pay bills, without sacrificing the good life
...

6
...
I often see people
posting a sign in front of their house that says, "For Sale by Owner
...
"
My rich dad taught me to take the opposite tack
...
Today, I have expensive
attorneys, accountants, real estate brokers and stockbrokers
...
And the more money they make, the more money I make
...
Information is priceless
...
I
have several brokers who are willing to do that for me
...

What I pay a broker is tiny in comparison with what kind of money I can
make because of the information they provide
...


I love it when my real estate

Because it usually means I made a

lot of money
...

A broker is your eyes and ears to the market
...
I'd rather play golf
...
Why would I want to save a few bucks when I could use that time to make
more money or spend it with those I love? What I find funny is that so many poor
and middle class people insist on tipping restaurant help 15 to 20 percent even
for bad service and complain about paying a broker 3 to 7 percent
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
That is not
financially intelligent
...
Unfortunately, most brokers are only
salespeople
...

They sell, but they themselves own little or no real estate
...
And that is true for stock, bond, mutual fund and insurance brokers
who call themselves financial planners
...
Just remember the old saying, "Never ask an
encyclopedia salesperson if you need an encyclopedia
...
And that
applies to my tax attorney as well as my accountant
...
Her profession is accounting, but her business is real
estate
...
I switched because we did not love the same business
...
Many brokers will
...
Just be
fair, and most of them will be fair to you
...

As I said earlier, one of the management skills is the management of
people
...
Many middle managers
remain middle managers, failing to get promoted because they know how to work
with people below them, but not with people above them
...

That is why companies have a board of directors
...
And
that is financial intelligence
...
BE AN "INDIAN GIVER": This is the power of getting something for
nothing
...
For example, if a settler was
cold, the Indian would give the person a blanket
...

The Indians also got upset when they realized the settlers did not want to
give it back
...
A simple cultural
misunderstanding
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
The sophisticated investor's first question is, "How fast do I get my
money back?" They also want to know what they get for free, also called a piece
of the action
...

For example, I found a small condominium, a few blocks from where I live,
that was in foreclosure
...
They realized I was serious
...
My investment company uses this as a vacation
rental in the winter months, when the "snowbirds" come to Arizona, and rent it
for $2,500 a month for four months out of the year
...
I had my money back in about three
years
...

The same is done with stocks
...


I will move my money in for a week to a month while

the stock moves up
...
So my money goes in, and then it comes out, and I own
an asset that was technically free
...


But I only play with money I

can afford to lose
...
But I
limit my losses to only the money I have in at that time
...
And in the
long run, savings are better than no savings
...

They used to hand out toasters, but they rarely do that these days
...
A condominium, a mini-storage, a piece of free land, a house, stock shares,
office building
...
There are
books devoted entirely to this subject that I will not get into here
...


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So wise investors must look at more than ROI; it's the assets you get for
free once you get your money back
...


:

8
...
A friend's child has been
developing a nasty habit of burning a hole in his pocket
...
The excuse, "All his friends' parents gave their kids cars
...
That was when his father called
me
...


"It might relieve the pressure in the short term,

but what have you taught him in the long term? Can you use this desire to own a
car and inspire your son to learn something?" Suddenly the lights went on, and
he hurried home
...


"Does your son have his new

car?" I asked
...
But I went and handed him $3,000 for the car
...
" "Well, that's generous of you," I
said
...
The money came with a hitch
...
"
"So what was the hitch?" I asked
...
We played it and had
a long discussion about the wise use of money
...
"
"Then what?" I asked
...
He could use it to buy and sell stocks, find his own stockbroker, and once
he had made $6,000 with the $3,000, the money would be his for the car, and the
$3,000 would go into his college fund
...

"Well, he got lucky early in his trading, but lost all he gained a few
days later
...
Today, I would say he is down $2,000,
but his interest is up
...
He reads the Wall Street Journal voraciously, watching
for indicators, and he watches CNBC instead of MTV
...
He knows that if he loses that money,

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he walks for two more years
...
He even seems
uninterested in getting a car because he's found a game that is more fun
...

"We'll cross that bridge when we get to it
...
And
besides, that is the best $3,000 I've ever spent on his education
...
I think he's stopped the burning of holes in his pockets
...
For while the
process of developing cash flow from an asset column in theory is easy, it is
the mental fortitude of directing money that is hard
...
Because of weak mental fortitude, that money flows into the
paths of least resistance
...

I gave this numerical example of financial intelligence, in this case the
ability to direct money to make more money
...
In fact, many would have created I greater
debt by making a down payment on a new car, refrigerator, TV, VCR or a holiday
...
4 would have
increased it to $20,000 or into the millions
...
It is my
opinion that it is also important to learn how to have money work for you
...
The difference is, some people
buy their luxuries on credit
...
When I
wanted to buy a Porsche, the easy road would have been to call my banker and get
a loan
...

As a habit, I used my desire to consume to inspire and motivate my
financial genius to invest
...


One is easier in the short term, but

harder in the long term
...
Remember, the easy road often becomes hard, and the hard road
often becomes easy
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
Money is a powerful force
...


If your financial intelligence is low, money will

run all over you
...


If money is smarter than you,

you will work for it all your life
...
Then money will
do as it is told
...


Instead of being a slave to it, you will be

the master of it
...

9
...
When I was a kid, I greatly
admired Willie Mays, Hank Aaron, Yogi Berra
...
As a kid
playing Little League, I wanted to be just like them
...
I wanted to know everything about them
...
I wanted to know everything because I wanted to be just like
them
...
I was Yogi or Hank
...
We lose our heroes
...

Today, I watch young kids playing basketball near my home
...

Copying or emulating heroes is true power learning
...
J
...

There is more than just a courtroom trial
...

Someone people grew up with, looked up to, and wanted to be like
...

I have new heroes as I grow older
...
I copy their swings and do my best to
read everything I can about them
...
In my older years, I
know their stats just like I knew the ERAs and RBI of my baseball heroes
...
I read Peter Lynch's book to understand how he chooses
stocks
...

Just as I was not me when I was up to bat, when I'm in the market or I'm
negotiating a deal, I am subconsciously acting with the bravado of Trump
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...


By

having heroes, we tap into a tremendous source of raw genius
...
Heroes make things look easy
...
"If
they can do it, so can I
...
Instead
find heroes who make it look easy
...
TEACH AND YOU SHALL RECEIVE: The power of giving
...
My rich dad taught me a lesson I have carried all my life, and
that was the necessity of being charitable or giving
...


As I said,

he usually said that he would give when he had some extra money
...

My rich dad gave money as well as education
...

"If you want something, you first need to give," he would always say
...

If I could leave one single idea with you, it is that idea
...
That is true for money, a smile, love, friendship
...
I just trust that the principle of reciprocity

it is true, and I give

what I want
...
I
want sales, so I help someone else sell something, and sales come to me
...
I heard a saying years ago that went, "God does not need to receive, but
humans need to give
...
" He would explain that if a person was rich, that person was providing
something that other people wanted
...
And when I
gave, it always came back
...
" And when it comes to money, love,
happiness, sales and contacts, all one needs to remember is first to give what

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you want and it will come back in droves
...
Whenever I feel that people aren't smiling at me, I simply
begin smiling and saying hello, and like magic, there are suddenly more smiling
people around me
...

So that's why I say, "Teach and you shall receive
...
If you want to
learn about money, teach it to someone else
...

There are times when I have given and nothing has come back or what I have
received is not what I wanted
...

My dad taught teachers, and he became a master teacher
...
In retrospect, it was
their generosity with what they knew that made them smarter
...
You can get there on your own, but
it's easier with the help of the powers that be
...


10
...
They see them more as
philosophies than actions
...
There are many people who want to do, instead of think,
and then there are people who think but do not do
...
I
love new ideas and I love action
...

• Stop doing what you're doing
...
The definition of insanity is doing the
same thing and expecting a different result
...

• Look for new ideas
...
I call them formulas
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
For example, it was in the bookstore
that I found the book The 16 Percent Solution, by Joel Moskowitz
...

TAKE ACTION! The next Thursday, I did exactly as the book said
...
I have also done that with finding real estate bargains in attorneys'
offices and in banks
...
My neighbor told me why 16
percent would not work
...


• Find someone who has done what you want to do
...
Ask
them for tips, for little tricks of the trade
...
I found out that she, too, invested in the tax liens
...
She was thrilled to tell me everything
she knew and how to do it
...
By the next day, I found two great properties with her help and have
been accruing interest at 16 percent ever since
...

• Take classes and buy tapes
...
Many are for free or a small fee
...
I am wealthy and free from needing a
job simply because of the courses I took
...

• Make lots of offers
...
If you don't know what the "right
offer" is, neither do I
...
They make
the offers
...

A friend wanted me to show her how to buy apartment houses
...


Four

were dogs, but two were good
...


She and the agent nearly had heart attacks
...

looking for a better deal
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...
Well, you don't know what the right price is until you
have a second party who wants to deal
...


It is rare

that a seller will actually ask a price that is less than something is worth
...
People who are not investors have no idea
what it feels like to be trying to sell something
...
I would have welcomed anything
...
They could have offered me ten pigs and I would have
been happy
...
I would
have countered, maybe for a pig farm in exchange
...

The game of buying and selling is fun
...
It's fun and only a
game
...
Someone might say "yes
...
In real estate, I make an
offer with the words "subject to approval of business partner
...
Most people do not know my partner is my cat
...
I make this absurd statement to illustrate how absurdly easy and simple the
game is
...

Finding a good deal, the right business, the right people, the right
investors, or whatever is just like dating
...
I know single people who sit at home and wait for the phone to ring, but
unless you're Cindy Crawford or Tom Cruise, I think you'd best go to the market,
even if it's only the supermarket
...

• Jog, walk or drive a certain area once a month for ten minutes
...
I will jog a
certain neighborhood for a year
...
For there to be
profit in a deal, there must be two elements: a bargain and change
...


So when I jog, I jog a neighborhood I might like to invest in
...
I notice real
estate signs that are up for a long time
...
I watch for moving trucks, going in or out
...
I talk to the postal carriers
...


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I find a bad area, especially an area that the news has scared everyone
away from
...
I talk to retailers, especially new ones, and find out
why they're moving in
...

• As for stocks, I like Peter Lynch's book Beating the Street for his
formula for selecting stocks that grow in value
...
The process is always the same
...
When the supermarket has a sale on,
say, toilet paper, the consumer runs in and stocks up
...

When the supermarket raises its prices, the consumer shops elsewhere
...

• Look in the right places
...

I bought the identical condo next door to his for $50,000
...
I told him that his profit is made when you buy,
not when you sell
...
I shopped at the foreclosure department of a bank
...
My neighbor thought that the $500 for a real estate
investment class was too expensive
...


So he waits for the price to go up
...
A friend was looking for a certain piece of land
...
I found a large piece of land larger than what
my friend wanted to buy, tied it up with an option, called my friend and he
wanted a piece of it
...
I
kept the remaining land as mine for free
...
Most people look for what they can afford, so they look too
small
...


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Small thinkers don't get the big breaks
...

Retailers love giving volume discounts, simply because most business
people love big spenders
...


When my company was in the market for computers, I called several friends and
asked them if they were ready to buy also
...
I have done the same
with stocks
...

• Learn from history
...

everything in his 60s
...

• Action always beats inaction
...
The important words being "done" and "do"
...
Act now!

EPILOGUE
How To Pay for a Child's College Education for $7000
As the book draws to a close and approaches publication, I would like to
share a final thought with you
...
Without financial training, we all too often use the
standard formulas to get through life, such as to work hard, save, borrow and
pay excessive taxes
...

I use the following story as a final example of a financial problem that
confronts many young families today
...

A friend of mine was griping one day about how hard it was to save money
for his four children's college education
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...


He estimated he

needed $400,000 to get four children through college
...

The year was 1991, and the real estate market in Phoenix was terrible
...
I suggested to my classmate that he buy a house
with some of the money in his mutual fund
...
His primary concern was that he did not have the
credit with the bank to buy another house, since he was so over-extended
...

We looked for a house for two weeks, a house that would fit all the
criteria we were looking for
...
Finally, we found a 3 bedroom 2 bath home in a prime
neighborhood
...

He wanted $102,000, but we offered only $79,000
...

The home had on it what is called a non-qualifying loan, which means even a bum
without a job could buy it without a banker's approval
...
As soon as the owner moved, my friend put
the house up for rent
...

His plan was to keep the house for 12 years and let the mortgage get paid
down faster, by applying the extra $125 to the principle each month
...

He could also sell the house if it had appreciated in value
...

Again, he asked me what I thought, and I naturally said sell, on a 1031 taxdeferred exchange
...
I called another friend
in Austin, Texas who then moved this tax deferred money into a mini-storage
facility
...
In 1996, the mini-warehouse sold and he
received a check for nearly $330,000 as proceeds from the sale which was again
rolled into a new project that would now throw off over $3,000 a month in income,

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again, going into the college mutual fund
...
His children will be able to afford the education
that they want and he will then use the underlying asset, wrapped in his C
Corporation, to pay for his retirement
...

Thank you for reading this book
...
Today, we need greater financial
intelligence to simply survive
...
It does not mean that
they're not intelligent
...

Money is only an idea
...


Every self-made person started small with an idea, then turned it into something
big
...
It takes only a few dollars to start and
grow it into something big
...
Too often I have seen unsophisticated investors put their large
nest egg into one deal and lose most of it rapidly
...

Education and wisdom about money are important
...
Practice
...


Start early
...


I turned $5,000 cash into a $1 million

dollar asset producing $5,000 a month cash flow in less than six years
...
I encourage you to learn because it's not that hard
...

I think I have made my message clear
...
Money is only an idea
...
The title is not Work Hard and Grow Rich
...
Today,
don't play it safe, play it smart
...
It is up
to you to do what you please with both
...
Spend it
foolishly, you choose to be poor
...
Invest it in your mind and learn how to acquire assets and you will be

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choosing wealth as your goal and your future
...

Every day with every dollar, you decide to be rich, poor or middle class
...
No one else will
...

We wish you great wealth and much happiness with this fabulous gift called
life
...
Kiyosaki
"The main reason people struggle financially is because they spent years
in school but learned nothing about money
...
but never learn to have money work for them
...

Born and raised in Hawaii, Robert is fourth-generation Japanese American
...
His father was the head of
education for the State of Hawaii
...
S
...

Returning from the war, Robert's business career began
...
He and his products
were featured in Runner's World, Gentleman's Quarterly, Success Magazine,
Newsweek, and even Playboy
...

Retiring at age 47, Robert does what he enjoys most
...

Concerned about the growing gap between the haves and have nots, Robert created
the board game CASHFLOW, which teaches the game of money, here before only known
by the rich
...
He has shared the speaking
stage with such greats as Og Mandino, Zig Ziglar, and Anthony Robbins
...
lifebooks4all
...
com

who controls the past controls the future, who controls the present controls the past
...


"Take responsibility for your finances or take

orders all your life
...
" Robert
holds classes that last from 1 hour to 3 days teaching people about the secrets
of the rich
...
And that message is, Awaken The
Financial Genius that lies within you
...

This is what world famous speaker and author Anthony Robbins says about
Robert's work
...
I salute his efforts and recommend him highly
...


About the Authors-Sharon L
...

She graduated with honors from Florida State University with a degree in
accounting
...

Her focus quickly changed to education as she watched her own three
children grow
...
They would rather watch TV
...
Today, she remains a pioneer in
developing new technologies to bring the book back into
children's lives
...
She
became a vocal activist in the areas of mathematics, computers, reading and
writing education
...
We must teach our young

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people the skills, both scholastic and financial, that they will need not only
to survive, but to flourish, in the world they face
...




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