Wisdom of Rich Dad

January has almost come and gone. The good times over Christmas are but a distant memory as you slump back into work & plough through that pile of paperwork on your desk. Your resolutions, that seemed so realistic 1 month ago, are starting to crumble, and yes, that credit card bill from the holiday season is about to hit the floor.It’s the same every year. We over-spend at Christmas and then for the rest of the year, we try to get out of debt. It never happens though. Each year we just add to last years mounting debt, until one day…BOOM! Our debt explodes into an uncontrollable mess. Creditors here, there & everywhere. Bills & late repayment fees left, right & centre.

So for 2008, let’s do something different. Lets actually get out of debt, and more importantly, stay out of debt. How? Read on…

The options available to individuals wanting to become debt free are many. Whatever your circumstances, there is likely a solution out there to suit.

Professional help

You could opt for a debt solutions company, who offer solutions such as:

Debt management – An informal agreement where a debt management company will negotiate with your creditors to reduce your monthly payments. They may even be able to get any interest & charges frozen on your accounts.

Debt consolidation – A method of replacing multiple debts with one loan. Your debts are easier to manage and you can often get a better rate.

IVA – An IVA is a legally binding agreement between you and your creditors. If you qualify for an IVA, you can write off all the debt you can’t afford.

These options are all effective. You can avoid the hassle of dealing with debt yourself & if you are willing to search for the right company, you can find ones who offer debt management and IVAs fee-free.

Self help

Of course, there are other options. If you feel confident negotiating with creditors yourself, you can achieve much the same as a debt management company.

Depending on your level of debt, you may benefit from simply transferring the balance of your high interest credit cards onto interest free ones. You can often get great deals allowing you to pay no interest, sometimes for over a year, on the balance you transfer. This means all of the money you pay onto the card goes to paying off your debts, instead of just paying the interest.

The solution you choose is completely dependant on your circumstances and what is best for you. The key is recognising the debt problem and addressing it.

Staying out of debt

Ultimately, if you want to get of debt, you need to stop spending more than you are earning. It sounds simple, but it is a fact that people miss. The solutions above will only work if you stop spending more than you earn. If you simply transfer your debts onto interest free credit cards or negotiate reduced payments to your creditors & then continue building up debts with other creditors, you will never get out of debt. You will get caught in the debt spiral that will eventually end in bankruptcy.

Kelly Ritchie of Rich Dad Franchise giving his thoughts of what’s coming in 2008.

Most people think that wealth comes from having money and knowing what to do with it. But this is not true. True wealth comes from knowing how to turn nothing into assets and income.

Creating wealth is about Dreams, Drive and Dollars – in that order. It’s not about how much money you have and it’s not about what you know. In fact, according to Robert Kiyosaki, the author of Rich Dad Poor Dad, there are five factors and the first three are the most important.

They are:

• Dream;
• Dedication;
• Drive;
• Data;
• Dollars.

Most people focus on the last two – data and dollars.

They think that if they study accountancy and get knowledge and get a big loan from a bank that they will make money. What wealthy people advise is that you focus on the first three Ds that give you the data and the dollars you need to become wealthy.

If you have a big enough dream to get you out of bed in the morning;  if you are totally dedicated to making your dream happen no matter what people say and no matter how many setbacks you may have at first.  And if you have the drive to keep going until you win, you will find the right data or information that you need as well as the money you need to become wealthy.

While money and the right know-how are important, if you are starting with nothing, it just takes getting out there and staying out there and doing it until you succeed.

 

THE 90/ 10 RIDDLE

Wealth starts with a plan. “Oh we all know that,” you are thinking. But not the plan that I am thinking about! The plan I’m thinking about is the one Kiyosaki calls the 90/10 Riddle.

With this plan you fill your asset column without buying any assets. This is how Bill Gates of Microsoft became the wealthiest person in the world. He didn’t do it by looking for a job and saving a few dollars each month.  He did it by developing a great idea and turning it into money. He didn’t earn money to buy assets; he discovered how to create assets without money. The way to create assets without money is by thinking.

STOP FOLLOWING THE PACK

Do you want to be one of the 90% of people who only have access to 10% of the available money? Or do you want to be one of the 10% of people who share 90% of the available money?

If you want to get into the 90/ 10 club you need to think outside the box. You need to stop following the pack and start to think in new ways, find new ideas for creating different types of assets in the assets column without buying them. One way of doing this is through Multi-Level or Network Marketing (MLM).

But be careful – there are good and bad MLM companies. Check them out carefully before you get involved.   A dynamic website is another way of building an asset without money.

But all these methods need three things: Dreams, Dedication and Drive.
You can become wealthy if:

• You are prepared to do things that you may not wish to do at first; such as reading and getting out of your comfort zone and learning to follow and practice what wealthy people do.

• You have the patience to read and learn and try out the new ideas, no matter how long it may take you.

Kiyosaki says there are no poor people; only people who have not become financially literate and developed the ability to create assets out of nothing. Wealthy people are simply poor people who learned how to join the 90/ 10 club – and so can you.

Look… just because you don’t like your job is not a strong enough reason to become an entrepreneur. Being an entrepreneur is hard work. Although I do believe everyone can become an entrepreneur, I encourage everyone to do it if you feel that is your calling, but entrepreneurship is not for everyone.

 

Robert Kiyosaki put it the best:

Becoming an entrepreneur begins with a shift of philosophy and the shift looks like this…

1. From a desire for security to a desire for freedom

2. From a desire for steady paycheck to the desire for great wealth

3. From seeing value in dependence to seeing value in independence

4. To make my own rules rather than obey someone else’s rules

5. A desire to give orders rather than take orders

6. A willingness to be fully responsible rather than say, “It’s not my job”

7. To determine the culture of a company rather than try to fit into someone else’s

8. To make a difference in this world rather than complain about the problems of the world

9. To know how to find a problem and turn it into a business opportunity

10. To choose to be an entrepreneur rather than an employee

I believe everyone has what it takes to become an entrepreneur. We were all born to be creative and we can do anything we set our mind to. Being an entrepreneur is not about making money, it is about creation, problem solving and contributing to the world. Then, the money will come along the way. If you don’t first shift your mindset from an employee to an entrepreneur, you will have a miserable time being an entrepreneur. I can guarantee it.

Ken is a fellow advisers from Robert Kiyosaki’s Rich Dad Franchise.  Ken make predictions on the Real Estate for 2008. 

Ken McElroy – Rich Dad Adviser on Real Estate

Alan Jacques is President of a successful Canadian company and excellent teacher of subjects related to money, wealth and entrepreneurial businesses.

This is his Quick Reference Guide To Wealth inspired by Robert Kiyosaki’s work: