Wisdom of Rich Dad

It’s no big surprise that energy costs money, but some people greet their bills each month with shock when they see how much their consumption is costing them. According to the U.S. Department of Energy (DOE), the average family spends approximately $1,600 per year on utility bills alone. Anything you can do to conserve energy puts some of that money back in your pocket.

Let’s take a look at 10 painless ways to reduce consumption and cut your expenses.

1. Use Your Thermostat

Turning up the temperature during the summer and turning it down during the winter are great strategies for putting your thermostat to work for your wallet. The DOE recommends setting the air conditioner at 74 degrees and the furnace at 68 to keep your house comfortable while reducing your energy costs and decreasing the demand on the energy grid. A programmable thermostat lets you make the house hotter or cooler during periods when you aren’t home. This reduces the temperature difference between the exterior and interior of your house, which in turn reduces energy loss. If you don’t have a programmable thermostat, you can manually adjust your existing unit.

2. Ceiling Fans

If you have ceiling fans in your house, turn them on and use them properly. According to Energy Star, a voluntary labeling program sponsored by the DOE and the U.S. Environmental Protection Agency (EPA), ceiling fans should be set to spin counter-clockwise in the summer, which pulls hot air up to the ceiling and away from the living space. In the winter, reverse the setting so the fans blow the hot air down.

3. Energy Star Appliances

Energy Star also identifies energy-efficient appliances, including washers, dryers, refrigerators, freezers, dishwashers, dehumidifiers, room air conditioners, computers and more. When you are shopping for new appliances, look for the Energy Star label and you can rest assured that the items you are purchasing will go a long way toward saving you some cash. The point here is Read the rest of this entry »

The middle class and the poor people spend their earned income on luxury items while the rich people use their money to invest in assets that generate passive income. Then the rich people use the passive income to enjoy luxury items. Based on my understanding of the Rich Dad’s series by Robert Kiyosaki, this is one of the main differences between the rich people and the others. If I want to be wealthy, then I need to adopt this approach of not using my earned income money on luxury items.

But I find that it is very difficult to adopt this approach. I must stop spending on luxury items and invest in assets that generate passive income so that I can be rich. Even though most people know that simple rule, few people actually are capable of adopting it.

This is the same in the case of people who had been smoking for years. Most of them are aware of the dangers of lungs cancers due to smoking. Yet, they continue to smoke. Similarly, if you tell an obese person the danger of overeating, he will still continue to overeat. If you tell an alcoholic to stop drinking, he will still continue to drink.

Do you know why?

To answer that question, there is a need to understand how pains and pleasures work.

If you had a chance to ask a smoker why does he smoke, he would likely to give you a reason that is related to pleasure. I have heard people who smoke do it when they are stressed. According to them, smoking helps them to relax.

If you were to interview someone who overeats, he would likely to give you a reason that is related to pleasure. I have heard people who overeat when they are stressed. According to them, eating helps them to relax.

If you were to question someone who is an alcoholic, he would likely to give you a reason that is related to pleasure. I have heard people who get drunk when they are stressed. According to them, drinking helps them to feel high. And the list goes on.

I notice a common thing among all these people. Though they are doing different things, they are doing them because they derive pleasures from doing them. Their minds have been wired to treat their actions as pleasures not pains.

That explains why I have difficulty in adopting the approach as learned from the Rich Dad’s series by Robert Kiyosaki. I enjoy luxury goods. Thus, I will associate pleasures with the luxury goods. I do not associate pains with spending money on luxury goods.

Everyone in the right frame of mind will go for pleasures and not pains. Thus, it only makes sense for me to tolerant pains now provided I can enjoy greater pleasures later. And this conviction is even stronger if I could have a taste of greater pleasures first. This is like a glimpse into what my future would be like if I were to adopt the approach of wise investment instead of spending on luxury items. If I were also able to experience pains of no money for retirement at old age now instead of in my future, then I would associate pains with spending my earned income on luxury goods now. And this is the same for the other cases.

If a smoker were able to experience the pains of lungs cancer now instead of in the future, then he would definitely associate pains instead of pleasure with smoking. He would associate pleasure with no smoking now if he could experience great health in the future. He would definitely stop smoking on his own accord.

If an obese person were able to experience the pains of bad health due to overeating now instead of in the future, then he would definitely associate pains instead of pleasure with overeating. He would associate pleasure with no overeating now if he could experience great health in the future. He would definitely stop overeating on his own accord.

If an alcoholic were able to experience the pains of liver failure due to over consumption of alcohol now instead of in the future, then he would associate pains instead of pleasure with drinking alcohol. He would associate pleasure with no drinking of alcohol now if he could experience great health in the future.

In other words, the way that I associate pains and pleasures with things will determine my future. With this new understanding, I can make use of the association pains and pleasures to my advantage. If I want to be rich and wealthy, then I need to associate pleasures by adopting the approach as learned from the Rich Dad’s series by Robert Kiyosaki to invest in assets that generate passive income instead of spending on luxury items.

~ Bryan Dulaney

“How do you know where you are going, if you don’t know where you have been?”

I am a big fan of measuring performance through numbers. Numbers have no political agenda or emotions. They simply measure a result.

In business, if I spend $10,000 on a trade-show, how much business have I got back from that? If its less than $10,000 then perhaps we shouldn’t sign up again next year. But most of us do not take this type of analysis in our personal lives because we don’t have a proper record keeping system. Watch any television show where they do a financial make-over and what’s the first thing the host does?

Makes the person organize their financial lives so they know where they are at. You can’t plan the future without figuring out the results of your past and adjusting accordingly.

When I was a little kid, my parents always argued about our “great” dining room filing system (he says with sarcasm). Everyone just threw the mail into piles onto our dining room table (we ate in the kitchen).

My Mom always tried to clean it up and my Dad was always saying “don’t touch my stuff!” (I suspect a lot of you are nodding your heads remembering similar discussions at home). Of course, come tax-time, there would always be a mad scramble to find this tax stub or that statement, buried somewhere in piles.

I am known at work as the pile guy- I file in piles at my desk (gee, wonder where that came from?) but I believe I am pretty good at getting myself organized on my personal finance side. I am not a personal organizer but this is what I do:

1. I had my desk built-in with a shelf over it when I first moved into my condo. This is where I put all my current filing. My last year’s records are in the condo for easy access and everything else is in storage.
2. I have two magazine files on my shelf over the desk. I bought them at Ikea for a couple of bucks each. One is labeled “bills” and the other “filing.” As soon as I get the mail, I file into one of the two files- immediately; no mail piles. Everything that doesn’t fall into those two categories, I recycle. Every Sunday I empty out both by either paying the bills or filing.
3. I have separate binders for the following: (i) financial statement (bank statements, transaction records from stock trades, portfolio statements etc.); (ii) mortgage and condo related material (this is where I keep the legal documents from the purchase of the condo and mail from the mortgage company); and (iii) car and home insurance (my original insurance policies, I keep in a safe). These binders are on my shelf over the desk. If I sell a stock, I immediately find the stub where I bought the stock and stapled them together- it makes it easier to calculate capital gains that way (well… if I actually sold things at profit…).
4. I have a separate file folder for receipts where there may be a warranty attached to them (i.e. computer hardware purchase, television etc.) and for credit card statements. This I keep in a drawer.
5. All the tax related correspondence goes into another file folder in a drawer. This helps me keep organized for tax time.

That’s it. I can access data easily, compare against last year (non)performance and don’t have to worry about piles. Plus, its all close to my work area so its contained. This system probably cost me about $25 in binders, file folders etc.

For goals, I have a bulletin board in behind my computer. I write my goals down on a sheet of paper and stick it to the board. I have to stare at my goals every single day. I also put these goals in my binder containing financial statements. Its a reminder of where I need to be every time I file.

If you are reading this blog to get your personal financial life in order then think about literally getting yourself organized first.

Any readers care to share tips on organizing their personal financial lives?

An early action to teach your kid about money and savings are a good idea to give better money management ideas when they grow. Using simple methods depends on there age, you can easily bring them getting good understanding on money and can grow a habit of savings.

Below are some practical methods a parent can use to teach there kid about money and savings. Have a look:

Age group 1 to 7 – Give her a piggy bank and let her collect and deposit coins to that box. Regularly give coins to your kid for her piggy bank. This approach build a habit of small savings in the early ages.

When the piggy bank is full, open a savings bank account in parents name and deposit the amount to that account. Small drops can form a sea in the future.

Someone in my place starts this habit at the age of 2 and still he following at his present age of 43. The account his father opens for him still alive with enormous amount from his small deposits for long term and now he planned to teach this habit to his daughter and present this account to her.

Age group 7 to 10 – Give her awareness about savings bank account, how adding and removing money from savings accounts, how the money growing in it with interests etc… teaching her about interest calculations will do magic at this stage.

Take her to bank with you and let her learn how dealings are happening there. Give ideas to know more about bank transactions.

Age group 10 to 15 – Start a recurring deposit. Instruct to add a small fixed amount in each month. She can easily collect this amount from her pocket money and gifts. You can also give small amounts as gifts on there good work like well study, helping mother and father, cleaning house, gardening etc. Let her build very good awareness about systematic savings well as the hardworking nature to get awarded promptly.

Teach her on compound interest and the magic of compounding. It is very good in this age to know how compound interest works and how the amount increasing by its power.

Give practical knowledge on banking services like using ATM, cheque book, internet banking facilities etc.

Age group 15 to 18 – Give directions to get knowledge on various investment instruments available in the market. Teach her about mutual funds and how it is working, fixed deposits etc. Let her get awareness about various investment products and the difference of returns from these products and different risk levels related to each products.
 

~ Robert Kiyosaki

How did we get into the current financial mess? Great question.

Turmoil in the Making

In 1910, seven men held a secret meeting on Jekyll Island off the coast of Georgia. It’s estimated that those seven men represented one-sixth of the world’s wealth. Six were Americans representing J.P. Morgan, John D. Rockefeller, and the U.S. government. One was a European representing the Rothschilds and Warburgs.

In 1913, the U.S. Federal Reserve Bank was created as a direct result of that secret meeting. Interestingly, the U.S. Federal Reserve Bank isn’t federal, there are no reserves, and it’s not a bank. Those seven men, some American and some European, created this new entity, commonly referred to as the Fed, to take control of the banking system and the money supply of the United States.

In 1944, a meeting in Bretton Woods, N.H., led to the creation of the International Monetary Fund and the World Bank. While the stated purposes for the two new organizations initially sounded admirable, the IMF and the World Bank were created to do to the world what the Federal Reserve Bank does to the United States.

In 1971, President Richard Nixon signed an executive order declaring that the United States no longer had to redeem its paper dollars for gold. With that, the first phase of the takeover of the world banking system and money supply was complete.

In 2008, the world is in economic turmoil. The rich are getting richer, but most people are becoming poorer. Much of this turmoil is directly related to those meetings that took place decades ago. In other words, much of this turmoil is by design.

Power and Domination

Some people say these events are part of a grand conspiracy, and that might well be. Some people say they represent the struggle between capitalists, communists and socialists, and that might be, too.

I personally don’t participate in the debate over a possible global conspiracy; it’s a waste of time. To me, the wider struggle is for power and domination. And while this struggle has done a lot of good — and a lot of bad — I just want to know how to avoid becoming its victim. I see no reason to be a mouse trying to stop a herd of elephants from fighting.

Currently, many people are suffering due to high oil price, the slowdown in the economy, loss of jobs, declines in home values, increased bankruptcies and businesses closings, savings being wiped out, the plummeting stock market, and rising inflation. These realities are all direct results of this financial power struggle, and millions of people are its victims today.

An Extreme Example

I was in South Africa in July of this year. During my television and radio interviews there, I was often asked my opinion on the world economy. Speaking bluntly, I said that South Africans had a better opportunity of comprehending the global turmoil because they’re neighbors to Zimbabwe, a country run by Robert Mugabe. Read the rest of this entry »