Rich Dad, Poor Dad- Kiyosaki bankrupt? Still worth reading.
Rich Dad, Poor Dad... Broke Dad?
Given Robert Kiyosaki's company's bankruptcy in late 2012/early 2013, you might be a little skeptical about this guy giving you financial advice. Having said that, there's one big concept I've gotten out of his book, "Rich Dad, Poor Dad", and that's the main principle of "pay yourself first" that the "rich dad" in the book preaches over and over again.
Please, if you do read this book, take all of the real estate advice with a grain of salt. Owning your own property is indeed a fantastic way to make passive income, and it can be done ethically and profitably, but when Kiyosaki goes off about flipping homes, borrowing against the one home you don't yet own to get a loan for cash you don't really have in order to buy yet another home or apartment complex you can then flip for a profit? If this sounds familiar, that's because it fully describes the real estate crash of 2008.
Now I bought my first home (where I still live) in January of 2009, so it was a good time to buy in terms of interest rates (5.0%). For me, the lesson from "Rich Dad" is to make even more aggressive monthly payments against my mortgage (my goal is to have my home paid off within just 2 more years - a lofty aim, but I am determined to do it). If you "invest" first, you'll find a way to pay your other bills by making extra money.
In spite of the bankruptcy of one of the author's companies, Robert Kiyosaki still makes some very valid points, especially if you know what you're looking for. The "asset column" stuff resonated with me.
Rich Dad also talks about passive income a pretty good bit, and that kind of got me interested in article writing (which ultimately led me to Hubpages), so there's that as well. Very briefly, a few sources of passive income would be:
- Investing in real estate (although you're likely to start as a property manager as well, thus defeating the "passive" portion completely)
- Owning intellectual property (like writing articles) and collecting royalties (a song on iTunes, for example, or a video on YouTube that generates Adsense revenue)
- Accruing interest from savings, CDs, or a money market account
- Buying and selling stocks
- Running your own business (again, not especially passive at the beginning, to say the least)
As you can see, there are quite a lot of different opportunities out there to generate passive income without having to do anything on a regular basis, at least in an ideal world.
One of the main concepts that Kiyosaki touches on in his book is that of the "asset column." This is one aspect I've focused on a great deal over the last few months, essentially having a group of money-earning assets, like the above mentioned passive income streams. The idea, though, is that you can take this money and then reinvest it, without touching your personal checking account, and especially without using the asset column money to pay your bills.
"Rich Dad" always paid himself first, then paid the monthly bills. In other words, investing was a huge priority. "Poor Dad", on the other hand, paid the monthly bills first, and likely didn't have anything left over to pay himself. The concept of Rich Dad is that you pay your asset column no matter what, and then you work extra (or do whatever you need to do) in order to pay your bills for the month.
Since I finished "Rich Dad, Poor Dad" a few months ago, I've taken the "asset column" advice to heart, to say the least. My current prerogative is to use PayPal as my asset column- a simple but profoundly effective way to separate the rest of my money from my investment funds. This part of the book really spoke to me as I listened to the audio book (and reading what I've just written, I realize that all audio books do indeed speak to me, literally). As such, I'm being extremely diligent with my PayPal funds, with which I will hopefully collect megabucks from my immense writing empire.
Or, at least, I'll have a few dollars every month to add to my "asset column" so that I can start living my dreams. So far, so good.