I was had an opportunity to purchase a valuable piece of property with a dilapidated home. I was unable to buy the property at the time due to lack of real estate knowledge. Today I drive by the site which now has a million dollar home on it. I do not discouraged by the "if only", I simply remind myself to never make the same mistake ever again. Financial education is priceless.
A number of years ago while teaching a religious philosophy class around laws of abundance and finance I was made aware of a book called 'Voluntary Simplicity.' The title alone reminds us of the basics and what is truly important in life. I feel the financial education being discussed and the spiraling debt being discussed may bring us back to the basics and a re-evaluating of the basic truths in life.
I have gone through situations where I have lost everything and started over. I have been fortunate to land on my feet despite not fully understanding the financial world around me. I remember being told by people with lots of money that much of the wealth was 'just on paper' and was not real. In understanding that and knowing the difference between paper numbers and real wealth . . . illuminates the wisdom of what you are presenting.
I am a firm believer in you get what you work for. As a business owner, I have faced many ups and downs. There have been times where I ate nothing but Ramen Noodles for two weeks. Never once did I ask for a bailout. I struggled on and got what I worked for. I think bailing those out who do not deserve it is wrong. As a general rule I think bailing out is wrong. These people cannot afford the homes they are in. They still wont be able to afford it after the fact of them being bailed out. They made a poor decision of buying a home they could not afford. Why should everyone else be responsible for their actions? You cannot help the poor by giving them handouts.
It causes dependancy. What is to keep them from doing it again? We are creating a nation of dependancy, which to be is un-American. What happened to pride? Work ethic? Where are all the tough guys that wouldn't take a bailout if you forced them to?
I have a great friend who works in the welfare system. He watches day in and day out as people take advantage of it. People driving up in Mercedes asking for money to pay for their light bill. Its pathetic. Your point about losing is a lesson. Thats incredible advice. The greatest lessons I have learned have stemmed from my biggest mistakes. They have only made me stronger and more profitable.
Although it's hard to say exactly, I'm sure Branson is worth billions today. I was just going by the clip and didn't think, it's no doubt a bit dated but we have plenty of coverage in the press about Branson..
This goes back to the fact that a crisis can be an opportunity. As many are no doubt aware, this is illustrated in the Chinese character for crisis.
In the book Do What You Love, The Money Will Follow the author relates a story about a woman who had a therapist who was a bit of a maverick, and she was sent on an exercise with no money except change to make a phone call to contact him. By surviving she found herself to be a lot more resourceful than she realized.
Likewise in this clip (link below) of The Paradox of Extended Childhood by John Taylor Gatto, he relates a story about Richard Branson where when he was 7 years old, on a drive with his mother, miles from home she suddenly asked him if he could find his way home alone. He thought he could, and she promptly stopped the car and let him out. Branson, who is worth hundreds of millions today attributes that lesson with his unlimited self confidence today.
I completely agree that we should not be bailing out people facing foreclosure. I am one of the people that have already been through this. I had a business that I used the equity in my home to fund. It sounded like a good idea at the time and it was the money I needed. Well the business went under and now I have a mortgage that is 5 times what it should be. This is not the banks fault as many are claiming. It is solely my responsibility and it was my decision to take out that loan. Why should any one else have to come to my rescue or pay for my mistakes. In the end I lost everything and I mean everything to pay back my debts. Yet it was the most important lesson in life and how to do business in the future. Bailing me out would only tell me that I had done nothing wrong and I would go out and do the same thing over and over again!!! As Robert says history will keep repeating itself unless we change.
What happens to the stock market when the currency's value becomes zero? Does the dollar get replaced with another currency at a more accurate value? This is vague. Can you clarify it for the reader. Or is it hard to predicate? THank you. I believe the book is invaluable.
I have been reading some of the comments posted and I must admit that many of them are disturbing. Pure capitalism does not exist. Pure Communism does not exist. In our so called capitalistic society, the playing field is not level due to the historical crimes committed against the Natives, Africans, and others who helped to build our country. In fact, capitalism by it's very nature is based on Jungle mentality-the strong prays on the weak. Free enterprise has proven to be the most effective way to create wealth but it must be checked by regulation and histories victims must be given special consideration to help to level the playing field for all. Also, we must never forget that some aspects of Socialism are very desireable such as Public Education, a strong and defensive Military, and Affordable Healthcare.
I am glad to see that Mr. Kiyosaki saw his losses as lessons and hope that those whose homes are in foreclosure see their situation the same way. I too have simpathy for these people, especially if it truely was not their fault for the situation they're in. However, bailing everyone out is not a good economic decision because it continues to push the common poor man's thought process of "spreading the wealth". Not only will it get these people out of their situation, but it will not teach them how to get rid of bad debt or avoid the situation in the future. They may end up in a similar situation or worse later just like someone who pays off a credit card only to charge it back up again.
I also feel for the people facing foreclosure, however I don't agree that they should be allowed to lose their homes. The small time borrowers are not the problem. Since the banks hold the mortgages that these borrowers are saddled with, they will directly benefit from the bailout of these individual homeowners. If these homeowners are in danger of losing their homes, we can be assured that they have and are learning their lessons. Home foreclosure probably signals other financial and personal problems as well.
I think anyone who suffered a financial debacle in thier personal lives should just take thier lumps. Go on the internet to Amazon.com, type in the words financial eduacation, and hit enter. Find a good five to ten books to read from credible sources and learn how money works. People that got themselves into these situations are just mindless, lazy, or they have been living in a cave. Whatever. Pfft!
I agree with that thinking. There was a Foreclosure Auction held at the Javits Center in NYC this year and outside the building there were people protesting the investors and bidders. Why!? The protestors would be better off going inside and educating themselves and make a bid of their own (after driving by the property first, of course). I have had family that were in preforeclosure and were also foreclosed upon, after the anger you realize who was at fault(my family). They didn't read the ARM contracts at the time and after they did they slapped their foreheads and said "If I'd only read it then" An important lesson learned. Keep up the book chapters Mr. K. they are awesome.
MC in NJ.
If we are to hold steady to the foundation of our country's principles (life, liberty, and the pursuit of happiness) we must understand that in a Capitalistic free market society there will be some losses and some gains. The true test is how we react to a situation of loss. Our charactor is tested during challenging times, and it is during these times where winners will emerge and losers will be exposed. Ignorance of the law doesnt give a criminal a free pass and neither should financial ignorance. We must educate ourselves to become impowered. Knowlegde is POWER. Also if we stop chasing the wind (money) and start chasing the truth (dwelling in love) we will gain a deeper understanding of how to use money, which is only a tool, to aid in the creation of true wealth.
The bank should have never lent out such unrealistic amounts, and inquired the borrowers income statement and balance sheet. The borrower in turn should have known their financial position.
I learned lessons early in life as well about living below your means and the lesson of money. In college the credit card companies are everywhere and I was suckered into the ploy. I learned I could juggle cards, but then promptly learned that I was getting behind. Unlike my sister, I made it a point to not tell my parents about my troubles, because I made that bed. I ate noodles and cheese for an entire year to save money to get out of debt. I didn't have a lot to lose as far as possessions, but I learned about life then.
Another question I have is who is the rich? That is a relative term. Robert is rich by some standards, I am rich by comparison to my employees, so who is the rich that is going to get richer?
The difference between you who had an entrepreneural spirit and financial education and those who are not enlightened is that when they lose they don't know how to replenish. The results are starting to manifest itself through increase in crime rate, suicide and homicide. As a mental health counselor to the disenlightened, I realize there has to be a paradigm shift in thinking before change can come. You and your wife's books are a start in that shift for many.
I think everyone needs to learn to avoid extravagance and living outside their means. If that lesson requires them to lose their homes, so be it.
I once lived in a tent for 3 weeks because I had no where to live and I hadn't organized my life properly. It was a very sobering experience and a bargain in the end.
People can only truly learn about bad debt when they start to lose their possessions and that's when they are ready to be financially educated.
It appears that I am the contra voice in this discussion. With the government busy bailing out large companies it seems rather Draconian to penalize the average homebuyer. Even more important is the question of predatory loans. Many individuals counted on the government to keep the field level and they didn't. This is the same as saying to a crime victim, you deserved what happened, and there is nothing we can do about it.
One last thought, foreclosures are a hidden form of wealth distribution, because the market knows that real estate values will rise pushing the total value of the transfer even higher. There is an industry built up around buying foreclosed property where the properties are either resold for a profit or held for the inevitable increase in value.
One of the reasons we are in this mess is people seem, in general to feel they are not responsable for their own mistakes. Instead of using the formula, make a mistake, accept responsability, learn and continue without repeating same mistake, many are using the formula: Make mistakes, blame others out of ignorance, get mad, repeat mistake.
Lack of understanding of the mistakes made and repeated for years is contributing to the problems. Us common folk just never learned about monopoly money system in time.......I see a major downside still to come.
While in college, I used to look for short cuts to learn, then made a big mistake and go caught cheating on two tests within a week senior year. Graduation in jeporday...greatest single lesson of my life because I only blamed myself and the poor choice. Lesson learned, NOT repeated and learning became a mission. Avoid past mistakes. I still repeat mistakes at times, though now each repeat is more painful and I seek to eliminate it.
I agree that bailing out people will not help them in the long run. In the short run it may save them from losing their home and their possessions but will not provide them with the skills and knowledge they need to prevent future financial devastation in their lives. Having said that, what will happen to society if we now have huge numbers of people without homes, without credit and without a paycheck, many whom are heading towards bankruptcy? How do we deal with this inevitable problem? What are the short term answers to this? Consider the tent city in Sacremento California. Will these tent cities become the way our society deals with personal economic chaos and strife?
Obviously if we're not going to bail out people we need a support systsem in place to help individuals bail themselves out. I am referring to teaching people how to correct these mistakes and to prevent them from happening again. Financial literacy is the key but won't happen overnight. We need a network of organizations that can teach people the basics starting with budgeting and repair of credit, various ways to build income streams--give them a business/investing education. It's the only way.
I don't think they should be bailed out either - they made the decision to get into debt and no one 'made' them do it. Just because poisonous fruit looks good - does not mean you should eat it. Every decision we make has a consequence. If we continue to teach people that they can keep making poor decisions and that there is always a way out, then they will not learn. I had to declare bankruptcy once, it was hard and painful, but I learned from it and appreciate the decisions I make. Let them lose and learn.
I agree completely. After taking your Rich Dad Real Estate Coaching course, I invested in my first property. It was a good deal--or so it seemed. Just about the time my first tenants had to be evicted, the housing market locked up. Ouch. But your advice stuck with me. Every time you solve a money problem, you increase your ability to solve bigger ones. I still have that property even though I am under water and in negative cash flow. Why? Because I refuse to blame others, I have grown and am more excited than ever about real estate investing. I thank my lucky stars that my first deal was a "problem" deal.
I'm totally agree with you, I'm from Spain (living there too), and nobody seem learn nothing about this situation. Everybody is waiting our governments bail them out. Nobody assume his responsibilities (like have more than 75% of two wage -in an average family- in debt -one or more houses, two or more cars, etc.), and the government messages is "don't fear, we are here for pay all your debts" (which is false, only politics propaganda). Meanwhile we are walking to 20% unemployed ratio, 25% of them without unemployment benefit. The point is nobody learn nothing because they are longtime alienate by poor education, poor enterprise spirit an non existing financial education.
I'm 35 years old and only begin mi financial educations few years ago by myself, because I suffered our education system. Only a beginner in this subjects, but not in the above situation of mi compatriots (I like think is because, in any way, I take correct choices).
Is an honor to read you and have this way to share thoughts. Thanks for your work and your books. Sorry for mi english.
And the same goes for GM and AIG. We just have to wear the pain of killing those suckers and cleaning out the system. We can only avoid reality for so long, ultimately the pain will be felt ... maybe much much worse later on.
I am age 71 and the worst crises in my life have taught me the most important things. Although it was horrible at the time, I would not give up those experiences today because of the benefits. They changed me and contributed something valuable to my life. Also, if we don´t learn important lessons any other way, consequences teach us what nothing else will. Usually it is damaging to people to rescue them from well-earned consequences. I see parents do this with their adult children and I always feel sad for the children of such foolish parents.
I was had an opportunity to purchase a valuable piece of property with a dilapidated home. I was unable to buy the property at the time due to lack of real estate knowledge. Today I drive by the site which now has a million dollar home on it. I do not discouraged by the "if only", I simply remind myself to never make the same mistake ever again. Financial education is priceless.
Dr. Rod
A number of years ago while teaching a religious philosophy class around laws of abundance and finance I was made aware of a book called 'Voluntary Simplicity.' The title alone reminds us of the basics and what is truly important in life. I feel the financial education being discussed and the spiraling debt being discussed may bring us back to the basics and a re-evaluating of the basic truths in life.
I have gone through situations where I have lost everything and started over. I have been fortunate to land on my feet despite not fully understanding the financial world around me. I remember being told by people with lots of money that much of the wealth was 'just on paper' and was not real. In understanding that and knowing the difference between paper numbers and real wealth . . . illuminates the wisdom of what you are presenting.
I am a firm believer in you get what you work for. As a business owner, I have faced many ups and downs. There have been times where I ate nothing but Ramen Noodles for two weeks. Never once did I ask for a bailout. I struggled on and got what I worked for. I think bailing those out who do not deserve it is wrong. As a general rule I think bailing out is wrong. These people cannot afford the homes they are in. They still wont be able to afford it after the fact of them being bailed out. They made a poor decision of buying a home they could not afford. Why should everyone else be responsible for their actions? You cannot help the poor by giving them handouts.
It causes dependancy. What is to keep them from doing it again? We are creating a nation of dependancy, which to be is un-American. What happened to pride? Work ethic? Where are all the tough guys that wouldn't take a bailout if you forced them to?
I have a great friend who works in the welfare system. He watches day in and day out as people take advantage of it. People driving up in Mercedes asking for money to pay for their light bill. Its pathetic. Your point about losing is a lesson. Thats incredible advice. The greatest lessons I have learned have stemmed from my biggest mistakes. They have only made me stronger and more profitable.
Although it's hard to say exactly, I'm sure Branson is worth billions today. I was just going by the clip and didn't think, it's no doubt a bit dated but we have plenty of coverage in the press about Branson..
This goes back to the fact that a crisis can be an opportunity. As many are no doubt aware, this is illustrated in the Chinese character for crisis.
In the book Do What You Love, The Money Will Follow the author relates a story about a woman who had a therapist who was a bit of a maverick, and she was sent on an exercise with no money except change to make a phone call to contact him. By surviving she found herself to be a lot more resourceful than she realized.
Likewise in this clip (link below) of The Paradox of Extended Childhood by John Taylor Gatto, he relates a story about Richard Branson where when he was 7 years old, on a drive with his mother, miles from home she suddenly asked him if he could find his way home alone. He thought he could, and she promptly stopped the car and let him out. Branson, who is worth hundreds of millions today attributes that lesson with his unlimited self confidence today.
http://johntaylorgatto.com/multimedia/jtgsound_paradox.htm
Essentially, we are conditioned to be fearful and believe we helpless, to be dependent on the authorities to save us.
I completely agree that we should not be bailing out people facing foreclosure. I am one of the people that have already been through this. I had a business that I used the equity in my home to fund. It sounded like a good idea at the time and it was the money I needed. Well the business went under and now I have a mortgage that is 5 times what it should be. This is not the banks fault as many are claiming. It is solely my responsibility and it was my decision to take out that loan. Why should any one else have to come to my rescue or pay for my mistakes. In the end I lost everything and I mean everything to pay back my debts. Yet it was the most important lesson in life and how to do business in the future. Bailing me out would only tell me that I had done nothing wrong and I would go out and do the same thing over and over again!!! As Robert says history will keep repeating itself unless we change.
What happens to the stock market when the currency's value becomes zero? Does the dollar get replaced with another currency at a more accurate value? This is vague. Can you clarify it for the reader. Or is it hard to predicate? THank you. I believe the book is invaluable.
I have been reading some of the comments posted and I must admit that many of them are disturbing. Pure capitalism does not exist. Pure Communism does not exist. In our so called capitalistic society, the playing field is not level due to the historical crimes committed against the Natives, Africans, and others who helped to build our country. In fact, capitalism by it's very nature is based on Jungle mentality-the strong prays on the weak. Free enterprise has proven to be the most effective way to create wealth but it must be checked by regulation and histories victims must be given special consideration to help to level the playing field for all. Also, we must never forget that some aspects of Socialism are very desireable such as Public Education, a strong and defensive Military, and Affordable Healthcare.
I am glad to see that Mr. Kiyosaki saw his losses as lessons and hope that those whose homes are in foreclosure see their situation the same way. I too have simpathy for these people, especially if it truely was not their fault for the situation they're in. However, bailing everyone out is not a good economic decision because it continues to push the common poor man's thought process of "spreading the wealth". Not only will it get these people out of their situation, but it will not teach them how to get rid of bad debt or avoid the situation in the future. They may end up in a similar situation or worse later just like someone who pays off a credit card only to charge it back up again.
I also feel for the people facing foreclosure, however I don't agree that they should be allowed to lose their homes. The small time borrowers are not the problem. Since the banks hold the mortgages that these borrowers are saddled with, they will directly benefit from the bailout of these individual homeowners. If these homeowners are in danger of losing their homes, we can be assured that they have and are learning their lessons. Home foreclosure probably signals other financial and personal problems as well.
I think anyone who suffered a financial debacle in thier personal lives should just take thier lumps. Go on the internet to Amazon.com, type in the words financial eduacation, and hit enter. Find a good five to ten books to read from credible sources and learn how money works. People that got themselves into these situations are just mindless, lazy, or they have been living in a cave. Whatever. Pfft!
I agree with that thinking. There was a Foreclosure Auction held at the Javits Center in NYC this year and outside the building there were people protesting the investors and bidders. Why!? The protestors would be better off going inside and educating themselves and make a bid of their own (after driving by the property first, of course). I have had family that were in preforeclosure and were also foreclosed upon, after the anger you realize who was at fault(my family). They didn't read the ARM contracts at the time and after they did they slapped their foreheads and said "If I'd only read it then" An important lesson learned. Keep up the book chapters Mr. K. they are awesome.
MC in NJ.
If we are to hold steady to the foundation of our country's principles (life, liberty, and the pursuit of happiness) we must understand that in a Capitalistic free market society there will be some losses and some gains. The true test is how we react to a situation of loss. Our charactor is tested during challenging times, and it is during these times where winners will emerge and losers will be exposed. Ignorance of the law doesnt give a criminal a free pass and neither should financial ignorance. We must educate ourselves to become impowered. Knowlegde is POWER. Also if we stop chasing the wind (money) and start chasing the truth (dwelling in love) we will gain a deeper understanding of how to use money, which is only a tool, to aid in the creation of true wealth.
The bank should have never lent out such unrealistic amounts, and inquired the borrowers income statement and balance sheet. The borrower in turn should have known their financial position.
I learned lessons early in life as well about living below your means and the lesson of money. In college the credit card companies are everywhere and I was suckered into the ploy. I learned I could juggle cards, but then promptly learned that I was getting behind. Unlike my sister, I made it a point to not tell my parents about my troubles, because I made that bed. I ate noodles and cheese for an entire year to save money to get out of debt. I didn't have a lot to lose as far as possessions, but I learned about life then.
Another question I have is who is the rich? That is a relative term. Robert is rich by some standards, I am rich by comparison to my employees, so who is the rich that is going to get richer?
The difference between you who had an entrepreneural spirit and financial education and those who are not enlightened is that when they lose they don't know how to replenish. The results are starting to manifest itself through increase in crime rate, suicide and homicide. As a mental health counselor to the disenlightened, I realize there has to be a paradigm shift in thinking before change can come. You and your wife's books are a start in that shift for many.
I believe at this stage there are no real solutions to the problems we are facing. Yet bail outs may make people feel a bit better.
I think it would be better to bail out the average person than citi group.
I believe at this stage there are no real solutions to the problems we are facing. Yet bail outs may make people feel a bit better.
I think it would be better to bail out the average person than citi group.
I think everyone needs to learn to avoid extravagance and living outside their means. If that lesson requires them to lose their homes, so be it.
I once lived in a tent for 3 weeks because I had no where to live and I hadn't organized my life properly. It was a very sobering experience and a bargain in the end.
People can only truly learn about bad debt when they start to lose their possessions and that's when they are ready to be financially educated.
It appears that I am the contra voice in this discussion. With the government busy bailing out large companies it seems rather Draconian to penalize the average homebuyer. Even more important is the question of predatory loans. Many individuals counted on the government to keep the field level and they didn't. This is the same as saying to a crime victim, you deserved what happened, and there is nothing we can do about it.
One last thought, foreclosures are a hidden form of wealth distribution, because the market knows that real estate values will rise pushing the total value of the transfer even higher. There is an industry built up around buying foreclosed property where the properties are either resold for a profit or held for the inevitable increase in value.
One of the reasons we are in this mess is people seem, in general to feel they are not responsable for their own mistakes. Instead of using the formula, make a mistake, accept responsability, learn and continue without repeating same mistake, many are using the formula: Make mistakes, blame others out of ignorance, get mad, repeat mistake.
Lack of understanding of the mistakes made and repeated for years is contributing to the problems. Us common folk just never learned about monopoly money system in time.......I see a major downside still to come.
While in college, I used to look for short cuts to learn, then made a big mistake and go caught cheating on two tests within a week senior year. Graduation in jeporday...greatest single lesson of my life because I only blamed myself and the poor choice. Lesson learned, NOT repeated and learning became a mission. Avoid past mistakes. I still repeat mistakes at times, though now each repeat is more painful and I seek to eliminate it.
Hi Robert,
I agree that bailing out people will not help them in the long run. In the short run it may save them from losing their home and their possessions but will not provide them with the skills and knowledge they need to prevent future financial devastation in their lives. Having said that, what will happen to society if we now have huge numbers of people without homes, without credit and without a paycheck, many whom are heading towards bankruptcy? How do we deal with this inevitable problem? What are the short term answers to this? Consider the tent city in Sacremento California. Will these tent cities become the way our society deals with personal economic chaos and strife?
Obviously if we're not going to bail out people we need a support systsem in place to help individuals bail themselves out. I am referring to teaching people how to correct these mistakes and to prevent them from happening again. Financial literacy is the key but won't happen overnight. We need a network of organizations that can teach people the basics starting with budgeting and repair of credit, various ways to build income streams--give them a business/investing education. It's the only way.
I don't think they should be bailed out either - they made the decision to get into debt and no one 'made' them do it. Just because poisonous fruit looks good - does not mean you should eat it. Every decision we make has a consequence. If we continue to teach people that they can keep making poor decisions and that there is always a way out, then they will not learn. I had to declare bankruptcy once, it was hard and painful, but I learned from it and appreciate the decisions I make. Let them lose and learn.
Robert,
I agree completely. After taking your Rich Dad Real Estate Coaching course, I invested in my first property. It was a good deal--or so it seemed. Just about the time my first tenants had to be evicted, the housing market locked up. Ouch. But your advice stuck with me. Every time you solve a money problem, you increase your ability to solve bigger ones. I still have that property even though I am under water and in negative cash flow. Why? Because I refuse to blame others, I have grown and am more excited than ever about real estate investing. I thank my lucky stars that my first deal was a "problem" deal.
Terry
Hello Mr. Kiyosaki,
I'm totally agree with you, I'm from Spain (living there too), and nobody seem learn nothing about this situation. Everybody is waiting our governments bail them out. Nobody assume his responsibilities (like have more than 75% of two wage -in an average family- in debt -one or more houses, two or more cars, etc.), and the government messages is "don't fear, we are here for pay all your debts" (which is false, only politics propaganda). Meanwhile we are walking to 20% unemployed ratio, 25% of them without unemployment benefit. The point is nobody learn nothing because they are longtime alienate by poor education, poor enterprise spirit an non existing financial education.
I'm 35 years old and only begin mi financial educations few years ago by myself, because I suffered our education system. Only a beginner in this subjects, but not in the above situation of mi compatriots (I like think is because, in any way, I take correct choices).
Is an honor to read you and have this way to share thoughts. Thanks for your work and your books. Sorry for mi english.
And the same goes for GM and AIG. We just have to wear the pain of killing those suckers and cleaning out the system. We can only avoid reality for so long, ultimately the pain will be felt ... maybe much much worse later on.
I am age 71 and the worst crises in my life have taught me the most important things. Although it was horrible at the time, I would not give up those experiences today because of the benefits. They changed me and contributed something valuable to my life. Also, if we don´t learn important lessons any other way, consequences teach us what nothing else will. Usually it is damaging to people to rescue them from well-earned consequences. I see parents do this with their adult children and I always feel sad for the children of such foolish parents.