How to Get Out of Bad Debt as a Business Owner and Become Wealthy as an Entrepreneur
Rich Mom, Poor Dad Notes. Reading Cashflow Quadrant by Robert Kiyosaki.
I've lived majority of my life under the principles of the poor dad.
I've spent the past 8 years re-wiring the way I was programmed by my parents to think about my core values and beliefs.
I wake up everyday and make the choice to be wealthy.
I'm aware of my influences and the habits I choose daily.
I focus on ways to leverage the digital marketplace to build assets via online entrepreneurship.
Your House is Not an Asset
I was taught by my parents that a house is equity or collateral to to do others things with.
Things like borrow against the house to get money for college tuition, home improvements.
It was something that gains value that you can leverage at a later date.
Robert Kiyosaki talks about the differences between assets and liabilities is that a house is NOT an asset.
It's a liability.
An asset is something that makes you money whether you work or not.
A liability is something that takes money whether you work or not.
Bankers will not ask you for your report card. They'll ask you for your financials.
Financial statements. You know how to read. But don't know how to rad a financial statement.
Bankers and creditors read financial statements.
Cashflow is KING!
If your house is taking money out of your pockets monthly, it's a liability.
It's not producing any cashflow.
Eliminate liabilities in your life.
What are liabilities in most peoples lives that they think are assets?
- Expensive Clothes
You can tell whether someone is rich or poor by their cashflow management. Is money coming into their accounts and flowing out as fast as it came in.
In other words, are they making over $400,000 a month and have $410,000 in expenses. Expenses such as a house, cars, jewelry, collectibles, expensive clothes.
This gives off the perception of wealth or riches but can easily be confusing if this were a doctor, lawyer, or white collar professional who you're looking to do business with.
This creates longterm cash liabilities which keeps you poor, while manifesting the perfect business model for banks and creditors.
A few weeks ago, I was on the phone talking to my brother and I was explaining to him that while I've never compared myself to others my age, I had recently found myself searching for the value of having no built up any supposed assets.
I'd always valued being able to keep a minimal lifestyle that allowed me to up and travel at a moments notice. Much of a hangover from my days in the Marine Corps where expeditious living was a requirement.
I'm attending Berkeley College to learn how to create, manage, and leverage businesses into assets.
Creating assets that continue to make money, even if I were to take a month or two off. They'd continue to run and operate the entire time.
Most people don't realize that the things they are referencing as assets (house, car) are actually liabilities if they did not work for 30 to 60 days.
Rich Mom says, "Assets feed you if you stop working, while liabilities take from you if you stop working."
The measure of wealth becomes the amount of days you can go without working.
Robert Kiyosaki asks, "How long can you survive without working? it's measured in time, days, years."
Cashflow will determine whether you are rich or poor.
The Cashflow Quadrant.
The 4 people who make up the world of business.
Poor dad teaches, go to school and get an education to get a well paying job. Time is money. Money is capped at number of hours you can physically maintain. Get something you can fall back on. You are an Employee.
Mom teaches if you really want to be rich become a doctor or lawyer. Ideas are minimal and focus on self. Small vision. The brains of your graduating class. Top performing people usually end up here. You loose money when go on vacation. You are a Specialist or Small Business. Self-Employed.
Rich Dad teaches, surround yourself with people who are smarter than you and stronger than you in places you are weak. Vision is huge expansion in large scale. An entrepreneur is Create a team who work for you to leverage a system that produces a return on investment multiplied. You are an Business Owner.
Money that works for you to create more money. You want money to come in and go out into an investment that makes more money. You are an Investor. You are not affected by a market that is up or a market that is down. You can make money in any market. You see opportunities where others see failure or defeat.
Employees and Self-Employed look for safety and security.
The asset column is your business.
Debt Vs. Equity has everything to do with retirement.
There's a HUGE difference between good debt and bad debt.
Most people leverage equity (there hard earned cash) to retire.
The welathy leverage debt (they borrow money) to retire.
Banks will not lend money for frivolous business.
Banks will lend money for mortgages.
The market has crashed...It always has and it always will. When it does. It is your opportunity to cash in.
Prepare for the market crash. Look forward to the Market adjustment. Look forward to the bear bull or whatever market.
I'm an athlete with business agility during a chaotic market.
My mother always tells me to get an education so that you can get or fall back on a high paying job.
My grandmother taught me it's not how much you make...it's how much you keep.
I take aways lessons in both.
Long term welath is less about how much you make and more about how much you keep.
All you need is three piggy banks, according to Kiyosaki.
One is for saving, one is for investing, and one is for tithing, as charity is also important.
The choice is for the next 90 days or for the remainder of my life...every single day I am going to be putting my money into one of these three categories, and these categories only.
The poor find weak and every excuse to break the bank and spend money.
It has to do with the habit. It has to be more important than anything else in your life.
$1 is all it takes to start. Grow to $10 per day. Only takes a few more zeros over time to grow it to $100 per day. Keep challenging yourself. $1000 per day. It's the habit over time that you will develop.
How much are you going to keep?
Before buying a property, Robert Kiyosaki analyzes 100 properties to 1 purchase. It takes him 100 houses before he finds a property to invest in.
Out of those hundred deals...you put a offer in on 10.
Out of the 10, 3 may get accepted.
if 6 were to be accepted...you offered to much money. negotiate DOWN!
If buying a business...100 to 1
If buying stock...100 to 1
Anyone can do this.
If Robert Kiyosaki goes on vacation, he visits brokerage offices and talks with other investors or agents in the area.
Always cultivate the habits of the wealthy and rich!