I recently read three books by Robert T. Kiyosaki, with Sharon L. Lechter, of the Rich Dad, Poor Dad fame.
The three books are Rich Dad, Poor Dad copyright 1997 and 1998, Rich Dad’s Guide To Investing: What the Rich Invest In, That the Poor and Middle Class Do Not! copyright 2000, and Rich Dad’s Success Stories copyright 2003.
As I have previously written and will write again after this, I do not find the age or date of books highly relevant. 99% of the information in these, and other books of these years and earlier, remains relevant today and in the future. There are, however, quite a few assumptions and recommendations from these books that have proven erroneous in the years since their publication (most of the wealth generated in these books is the result of real estate investments), however, the general advice, and even some of the real estate-related advice remains relevant now and always.
If you have not read these books, the totality of what I have learned from them would probably end up being a 100 page post, which I do not care to write and you do not care to read. You can purchase these books for cheap on Amazon if you would like to read them, or perhaps find them in your local library and pay nothing in addition to the library’s share of your real estate tax bill.
I will donate these three books back to the Library where I purchased them for fifty cents apiece last spring.
Should I ever gain enough wealth to invest in the sophisticated investment products written about in the investing guide, I will either repurchase the book, find it at the library as I suggested or, better yet, obtain the most current book on the topic, since about a hundred are published per month and it would probably be several years from now by the time I will make enough from my writing endeavors to invest more.
Also, just looking at my notes for the first book, I had 27 bookmarks and could have easily had more. I had nine bookmarks in the investing guide.
I only had five for the success stories book, the weakest and most irrelevant by far of the three, but one that the authors obviously wrote to prove that it was not just a lot of hollow words and hot air in the books, but that readers like me, and you by reading my account of these books, have actually become wealthy as a result of following the advice in the previous books.
Instead of writing the 41 major points that I took from these three books, I am going to highlight about twenty, at least ten of which will be from the original Rich Dad, Poor Dad that I and millions of others found so influential.
- Early on in the introduction, Kiyosaki grabbed me and his millions of fans by perfectly describing my Middle Class mindset, which is closer to what the recent political rhetoric all referred to as “working class,” a term that I detest because it ascribes the term “working,” which I and millions of other hard-working Middle Class professionals and hard working people are, to those who work in “blue collar” type of positions, who work “with their hands.” He describes the average-educated hard-working person as being pretty smart, getting good grades, going to college and maybe graduate school, doing as programmed by trying to obtain a good, steady job, getting married, buying a house, having kids, buying cars and TVs etc., going on vacations, saving for their own kids’ educations, working harder, seeking raises, trying to save for retirement, paying mortgages, paying higher and higher income taxes the more they work, buying a bigger house, paying higher property taxes, paying into Social Security, etc. etc. etc. Kiyosaki explains how those same striving, hard-working parents encourage their children to do the same: try hard in school, go to college (now financed largely by loans), maybe graduate school, obtain a steady job… He describes how this is how generations of Middle Class Guys like me and you end up living our lives in the “Rat Race,” never really getting ahead. This describes my life to a tee, although I am learning to proudly embrace my Middle Classiness. But, Yes, both of my grandfathers embraced this philosophy, my own parents taught it to me, and I am currently teaching it to my own children, although my wife and I do encourage their artistic and entrepreneurial skills with the hope that both of them can rise above the Rate Race that I have spent most of my life in. I loved my late father very much. However, his attitude in making money was always to work harder. He was a working machine, and taught that value to me and my younger brother and sister. What he never really taught us, however, was how to invest in such a way that our investments could make as much or more money for us than our hourly or per unit wages. My brother somehow learned this on his own, as a successful business owner after several failed attempts to work for others, but as the oldest, I never did. My current goal is to survive my chosen Rat Race for nine more years while building up my online writing dossier in the meantime to make some extra scratch.
- In the Rich Dad, Poor Dad book, Kiyosaki’s Rich Dad is actually his best friend’s entrepreneurial father, who generated enormous wealth through leveraging small businesses in Hawaii, where the author and his best friend grew up, into real estate, business and stock investments that generated millions per year. His Poor Dad was his real father, who was much more like me than my own father: a government employee obsessed with pay raises, medical benefits, sick leave, retirement plans and other benefits. His Poor Dad’s idea of job protection was more important to him than the job, itself, and taught Young Robert about the importance of writing a resume and striving to obtain a steady job with good benefits. He always struggled to save a few dollars (like Yours Truly). He always said that he would never be rich, which became a self fulfilling prophesy. Meanwhile, his Rich Dad taught him how to achieve financial self-reliance, how to identify and create business and investment opportunities, how to write sound business plans and how money works, something that most people (again like Yours Truly) fail to understand. His Rich Dad told him that he “does not work for money. Money works for me.”
- Life will push you around. I have been getting pushed around for over 23 years, and have at least nine more years of getting pushed around in front of me, and that is if I am lucky. If I can survive and remain gainfully employed until that time, I will start collecting about $6,700 in pension payments per month at the age of 55, a Middle Class income on its own, but an amount that I still plan on at least matching with my writing and future consulting opportunities. Also, it is not a given that I will be able to remain in my current or comparable employment for that period of time. Kiyosaki’s Rich Dad advised him not to just let life push him around. He said that if he does not push back, that he would spend his life blaming a job, low pay or his boss for his problems, living life while waiting for the big break that will solve his problems. Rich Dad advises him that if he is that type of person, like many of us average Middle Class Guys, we’ll live all of our lives playing it safe, doing the right things and saving ourselves for some event that will never happen. Then, guys like us will die boring old men. Our friends and families will lament our passing, being the nice hard-working Middle Class Guys that we are. Kiyosaki hits me where it hurts, noting that “Deep inside, you and only you will know that you didn’t go for it. You chose to play it safe.” Play it safe I have. Rich Dad described a bunch of guys that he showed his son and the author playing softball in the park as people who “work very hard, for little money, clinging to the illusion of job security, looking forward to three weeks of vacation every year and a skimpy pension after forty-five years of work.” Sound familiar? The main difference with me is that my skimpy pension would come after 33 years of service.
- On the chapter on something that I believe is very important, Financial Literacy, Kiyosaki describes us Middle Class, Middle Aged, Suburban White Guys in the Midwest: “One day, sleepless and deep in debt in suburbia, living the American Dream, they decide that the answer to their financial problems is to find a way to get rich quick.” He writes that the key to becoming rich is to have a solid financial foundation in place, and the first rule is to know the difference between assets and liabilities, and to buy assets. Although this sound absurdly simple, most people do not know the difference. Rich people acquire assets. The poor and Middle Class Guys like us acquire liabilities, but think that they are assets. Reading this simple advice was like getting hit on the head with a board for me. It seems commonsensical, but then I realized that I have owned a liability for a few years, that I had thought of as an asset for some reason. Long story short: between my wife and I, we own three crummy vehicles: a 2006 Chrysler minivan, our “family car” that my wife drives, and I alternate between a 1998 (yes, 1998) Subaru Outback and a piece of shit 2001 Nissan Maxima. My wife and I are in our mid-forties and have owned cars for twenty-plus years. We purchased the minivan about a year after I landed my current job, needing it as a requirement for a suburbanite family with two children. I purchased the Nissan in August 2010 for $6,000 (I wrote a $4,500 check after being credited a mere $1,500 for my trustier older Subaru) and it had 65,000 miles on it. I have probably put another $6,000 into it over the years, even though I have only driven it 30,000 miles. My mother gave us the Subaru (my current one as opposed to the Forester that I traded in six years ago), for our son who still does not drive, in May 2014 with about 110,000 miles on it and many needed repairs. Believe it or not, our old Subaru is the most trusty of the three cars and, despite its rusty and battered appearance, is by far the best winter car of the three due to its four wheel drive. It took reading this particular paragraph in Kiyosaki’s book this past summer for me to identify the car that I do not drive a lot, that I spent a thousand bucks over the summer trying to get it to pass Illinois emissions (it never did), that I just blew out a tire on and need to get two more new tires, that I just had a new engine belt installed in, that I continue to pay insurance on, that I probably spend a few bucks per mile that I actually drive this thing, as a liability rather than an asset. In my quest to become more charitable, and in the faint hope that continued contributions to the American Cancer Society can somehow make a dent in the plague of cancer, it is my intention to donate this liability to the charity in 2017, which should also come in handy as a tax write-off but, more importantly, I will be able to shed a liability that, for some reason, I have long thought of as an asset.
- Kiyosaki writes that he probably had a better foundation with money than his parents by the time he was 16. His Rich Dad taught him what I have now come to believe, that schools were designed to produce good employees instead of employers. He goes on to debunk the Middle Class notion that our homes are our greatest assets. Kiyosaki explains how his Poor Dad thought of his house as an asset, while the Rich Dad viewed it as a liability. He writes that he does not expect everyone to agree with him because a nice home is an emotional thing and, like me, people have many good memories attached to times at their home. Now that we have lived in our home for over fifteen years, I realize that we owe almost as much now (about $132,000) as when we purchased it (borrowed $160,000 for a $200,000 purchase) due to several refinancings, including one where we received $14,000 in cash to make some needed repairs. Kiyosaki accurately writes that most people work all their lives paying for a house that they never own, that they continue to pay large amounts of property taxes for many years (we pay $6,000 per year for a home valued around $240,000), you must continue pouring money into repairs (don’t get me started!) and that houses do not always go up in value. He mentions friends whose homes were worth hundreds of thousands less than when they purchased them, and this book was written before the housing bubble!
- In Chapter 4, “Mind Your Own Business,” Kiyosaki points out that there is a big difference between your profession and your business. Think about it. If I ask you what your business is, will you tell me that you are a banker, an accountant, a lawyer, an engineer, a small business owner? He writes that to become financially secure, a person needs to mind their own business, meaning that too many of us Middle Class Guys, including Yours Truly, spend their entire careers minding someone else’s business and making them rich. He refers again to learning the difference between an asset and a liability, and to focus your business around your asset column, as opposed to your income column. The rich focus on their asset columns while you and I tend to focus on our income statements. Guilty as Charged!
- In Chapter 4, Kiyosaki lists out his own assets, which together have made him wealthy. This list is hardly unique, as all of the books in the Change Your Way of Thinking/Become Wealthy/Improve Your Life genre have some form or other of this.
- Businesses that do not require his presence. He owns them, but they are managed by others. If he has to work there, it is not a business, it becomes his job.
- Mutual Funds.
- Income-generating real estate.
- Notes (IOUs).
- Royalties from intellectual property.
- The catch-all, “anything else that has value, produces income or appreciates and has a steady market.” Remember that this was written years before you could rent out your home on Airbnb, work as a driver for Uber, or sell your skills on Fiverr or any one of the hundreds of other such websites and sharing platforms.
- In Chapter 6, titled “The Rich Invent Money,” Kiyosaki disparages the kind of person who is waiting for the “right” thing to happen. He likens it to waiting for all of the traffic lights to be green for five miles before starting your trip. “The poor and the middle class work for money” the Rich Dad would say. “The rich make money. The more real you think money is, the harder you will work for it. If you can grasp the idea that money is not real, you will grow rich faster.” Indeed, while I write this on a day off from a job that I have busted my tail off at for almost twelve years, I still have not made a dime from all my blogging. I do have a Plan to add advertising to this site, to compile my posts into an e-book, and to eventually record my thoughts and ideas on audio, to sell as MP3s on iTunes or whatever platform. You do not have to buy any of these, but I know that many people will. I add this personal tidbit because I know that I can continue to toil, to wait for my days off and vacation days, calculate my potential pension benefits, etc., but I want more out of life and am determined to get it, although I just started this in my mid-forties. It is very difficult to change your Middle Class Guy way of thinking and doing things, but it can be done. I do plan to “invent money” by doing these things, and look forward to the day when I can write posts on the most popular topic of all, “How to Make Money Online.”
- In Chapter 7, “Work to Learn – Don’t Work for Money,” Kiyosaki again hits the nail on the head, citing an old cliche that goes, “JOB is an acronym for ‘Just Over Broke.’ Sound accurate to you? He writes that because school fails to recognize financial intelligence as an intelligence, most workers “live within their means.” Like me and you, we work and we pay our bills. This blog is intended for hard-working, bill-paying Middle Class Guy family men. If you reside in the Midwest, like me, that is even better so you know where I am coming from. I occasionally meet with my best friend at a Buffalo Wild Wings restaurant mid-way between our two towns. For some reason, I end up complaining to him about my job most of the time, although I have tried to tone that down since it is so tiresome, but he said a few get-togethers ago, “You do just enough to remain employed, and they pay you just enough to keep you there.” So true. Once you are trapped in the lifelong process of bill paying, like I am, you become like a hamster running around in those little metal wheels. Their little furry legs will keep running hard and spinning furiously, but come tomorrow morning, they will still be in the same cage.
- In Chapter 8, “Overcoming Obstacles,” Kiyosaki says that busy people are often the most lazy. He says that by staying busy, they are avoiding something that they do not want to face. If they are not busy at work or with their kids, they are “busy” watching TV, fishing, playing golf or shopping. He cites a neighbor who is totally broke, but cannot park his car in his garage due to the clutter of toys for his kids. The neighbors do a lot of shopping and travel to Las Vegas frequently. The father, he explains, wants the good life for his kids, and cannot say No to them. Not like how I just told my daughter about five times in the last week, “This is not a good time for us to go on a vacation” even though all of her BFFs are going somewhere exotic this week. His Rich Dad taught the author and his friend to question whether they could afford something, but he forbade the words “I can’t afford it.” Instead, he required his children to say, “How can I afford it?” which opened up their brains about how to come about the means to afford whatever it is that they wanted.
- In the same Chapter, Kiyosaki’s Rich Dad teaches him to pay himself first, rather than everyone else. Again, I have read this in dozens of different books, and am pleased to write that I took this to heart and now automatically send $250 on alternate Fridays (pay days) to one of my two Roth IRA accounts, or my wife’s. I came about this number from a different book, but I first read the concept in Rich Dad, Poor Dad. The quote that he attributed to Rich Dad is that “if I pay myself last, or not at all, I get weaker. So people like bosses, managers, tax collectors, bill collectors and landlords push me around all my life. Just because I don’t have good money habits.”
- Skipping over fifteen more bookmarked pages, I refer to the end of the book in a section entitled “Take Action!” The authors remind us readers, and I remind my fellow Middle Class Guys, that we were given two great gifts: our mind and our time. Investing in your mind will teach you how to acquire assets and wealth as your goal and future. Every day and with every dollar, we decide to be rich, poor or middle class. Ours and our children’s future will be determined by choices that we make today, not tomorrow. As for your humble Middle Class Guy blogger, I will try to remember this at least once per week, if not every day.
- Kiyosaki and Lechter continue their successful franchise with Rich Dad’s Guide To Investing: What the Rich Invest In, That the Poor and Middle Class Do Not! With the reference to Middle Class in the title, I had to purchase and read this second book in the series. Having already been a thoroughly Middle Class investor for over twenty years (22 if you are counting), I wanted to learn what the other half is investing in, and us Middle Class Guys are not.
A quote from Chapter 11 (in the book, not filing for bankruptcy), “Each Plan Has a Price,” is Rich Dad saying that poor and middle class folks cling to their money like it has some magical value. While the Rich Dad thinks of money as only a medium of exchange, those (like us) who cling desperately to money, the money that we spend for things of very little value is what helps make us poor or middle class. Middle Class Guys like me, and those who wish they could be as middle class as we are, place far too much importance on money itself. So we work hard for it, cling to it, work hard at living frugally, shop at sales, and do our best to save as much of it as we can. Many of us try to get rich by being cheap. But at the end of the day, we may accumulate a decent amount of money, but we’re still cheap. Wow, describes me well.
14. In Chapter 18 of the investing guide, the author details the price of becoming rich, and lists out seven ways, as follows:
1) You can marry for money.
2) You can be a crook, cheater, or an outlaw.
3) You can become rich through inheritance.
4) You can win the lottery.
5) You can be a rock star, movie star, sports star, or be outstanding in some field.
6) You can be greedy.
7) You can be cheap.
I have known of people who have become rich in each of these ways, although I only know of stars through the media. I know a young lady, the daughter of somebody who I know, who married into an extremely wealthy family and went from a Middle Class Gal to someone who travels the world extensively, drives a $100,000 Mercedes, purchased a huge house with a massive pool, and dines at exclusive restaurants and even got to go see Hamilton on Broadway and spend a week in Manhattan even though she lives in suburban Chicago. Her in-laws maintain a residence in Manhattan as well as one of the most expensive suburbs in Illinois. Her lavish lifestyle is all due to her recent marriage. Did I mention their month-long safari and tour of Africa last summer?
My best friend lives in a $800,000 home, by Zillow’s estimate or “Zestimate,” given to him by his mother about four years ago when she moved into a higher-end co-op unit on Lake Shore Drive in Chicago. Yes, there are such buildings in Chicago, even though much of the City is more dangerous than Iraq, Afghanistan or the Wild West ever was.
Even though he is my best friend and I am happy for him, being given a $800,000 home sure beats paying a mortgage for over thirty years for a house worth little more than one-quarter of that and in need of numerous repairs, and in a far inferior, far-flung car-oriented suburb an hour out from the City.
By the way, even though he only makes a little bit more than I do, my best friend is not a Middle Class Guy in the sense that I am. I may write more about him in the future, but not now in an effort to maintain his privacy. But he does live in a nicer house than we Middle Class Guys do. Below is the “Zestimate” of his home.
I even know someone who parlayed a winning lottery ticket into restaurant and hotel ownership, although the restaurants are, for the most part, dismal failures. But, it has allowed him to live in very good style for the last 20 or so years, while dabbling in and out of the restaurant and real estate business, without any particular skill or acumen or even a very strong work ethic.
It goes without saying that I personally know wealthy people who are greedy and/or cheap.
Having watched both Scrooged two nights ago and the Jim Carrey version of A Christmas Carol last night, I think we can both think of people like this who are wealthy, but also greedy and cheap.
15. Kiyosaki writes that the idea of a ‘job’ was created in the Industrial Age and ever since 1989, we have been in an Information Age. In the Information Age, he describes students that he meets who are much like his Rich Dad, who are going from school to becoming rich without a job. I could list Internet billionaires as examples, and we both know who they are.
While us Middle Aged Guys toil, and are presented new platforms, operating systems and software to use by our IT Directors, or perhaps you, my dear reader, are a Middle Class IT guy who presents these new Windows upgrades, etc., to your colleagues every year or so. Or some scheduling software, or some new sales software, or some new blah blah blah software.
It is probably a 25-year-old guy wearing jeans and a hoodie who collects $100 in his bank account when you purchase the program for $149.99 or whatever. Maybe a guy who surfs, plays video games and smokes a lot of weed. Who knows? I just know that it is not a Middle Aged guy working his tail off 40+ hours per week for 40 years who is profiting from it.
In the Information Age people are getting rich with information, which is what I intend to do, as well.
16. Kiyosaki’s Rich Dad had the ability to create businesses in his head, which is why he went on to become one of the richest men in Hawaii. He could create assets, which would in turn purchase other assets.
He did not have the money sitting in a bank account, money market or CD. He preached keeping the assets as a business holding, a recommendation made in nearly all of the books I have read on these topics.
The Rich Dad agreed that the average investor, like Yours Truly Middle Class Guy, may have excellent ideas, but we often lack the skills to turn our ideas into assets that purchase more assets. The second half of this particular book addresses ways to do just that.
17. Chapter 29, entitled “The Entrepreneurial Spirit” captivated me. Kiyosaki writes that he has met many people whose fear of losing prevents them from acting. If you look at the great wealth of this world, that wealth has not come from cautious investors. The great changes when this book was authored, and in the twenty years that have passed since that time (think Facebook, Google, Tesla, LinkedIn and Apple) have come from investors and inventors backing what Rich Dad called the entrepreneurial spirit.
While the money is important, he writes that it is not the primary motivating factor for building a business. It is the excitement, the challenge, the spirit, and the potential for a big payoff at the end that keeps the entrepreneur going.
I have purchased and read several books on entrepreneurship this year, and will post about them soon, since this is a most fascinating topic for a long-time office dweller and one who dreams of becoming more entrepreneurial. Also, I now have sixteen years working in business development and ask a lot of questions and have been confided in by both very successful entrepreneurs as well as many who have lost it all including their homes, retirement accounts, their families and sometimes all three. I find what they tell me very interesting and have come to several conclusions on my own in addition to what I have read in these books and articles on the topic.
18. In Conclusion, since this is already way too long, I want to confirm the author’s statement that the people who physically work the hardest are paid the least and taxed the most. He is not saying that he, himself, or that I, as an office worker, do not work hard. However, as hard as my job is, it consists of meeting with people in offices or at trade shows or their places of business, many hours on the phone, many e-mails and about fifty percent of the time reporting on my activities and what is communicated via these emails, phone calls and meetings to my bosses.
Meanwhile, I have an in-law who “works with his hands” in the “Rust Belt” and is one of the “blue collar” and “working class” guys who voted for and helped to elect Trump in a swing state.
As hard as he works, whether it is in an auto body shop, hauling construction materials, or putting up or tearing down piers for rich folks who own houses on the lake that he lives near, he cannot ever make as much as I currently do, just as I cannot ever make as much as an upper class professional, like a doctor, lawyer, real estate developer, successful business owner, or one who marries or inherits from one could make.
Kiyosaki urges the reader to consider working hard in a part-time business for yourself, which is what I am (kind of) doing, not yet having made a dollar on this blog despite spending several hours per week working on it.
Once my blog, future e-books and podcasts gain some momentum, I envision myself as one of those who make money mentally, not just physically, even though my job is mostly mental but requires me to physically be present at an office for 40+ hours per week, fifty-two weeks per year, minus about three weeks (hopefully four) of vacation.
I aspire to work less, but make more passive income and portfolio income rather than just earned income.
I liked and learned so much from Rich Dad’s Guide To Investing that I just might hold on to it a little bit longer…
18. I am going to skip sharing what I have learned from the third book that I read in the Rich Dad series, detailing success stories from real life people who followed the Rich Dad lessons. I highlighted four stories, which consist of stories of a former hippy couple in California investing in a series of eight homes in three states, another property investor who purchased three foreclosed homes in Pennsylvania from HUD and the VA, a thirteen-year-old who purchased and owned a rental single family home in Florida (bought it for $111,600 with 5 percent down with parents as co-signers) with the hope to pay for his own college and become financially independent, an accountant and financial advisor in Arizona who became investors (again, including real estate) and a former welfare recipient single mother in New Zealand (they have welfare there?) who paid off massive debt and became wealthy by, You Guessed It!, real estate investment.
I will gladly donate this book to the Library or a Little Free Library because, despite how prescient the Rich Dad and Mr. Kiyosaki were, I never read about anybody losing money by investing in real estate, as I now know dozens of people who have, who simply had the misfortune of purchasing real estate between the years of 2007 and about 2012. Not once in any of these three books did I read a warning about a Real Estate Bubble.
19. Finally, while looking up information on the Rich Dad franchise, I came across the website and signed up. Now, you and I can access the wisdom and the dozens of sales pitches that have helped Mr. Kiyosaki become even wealthier than he must have ever envisioned, and here is the automated response, redacted with my e-mail and password removed:
To (my Yahoo! email account) Today at 6:32 PM
Your User ID is: Middle Class Guy Your password is: ___ Confirmation Link: ___
To access your account, please click on the link below to complete the registration process.
You can change your password at any time. Simply login to your account page by clicking on your username in the upper righthand corner of the website.
Once you completed the registration, login at www.richdad.com and continue your journey to financial literacy.
This is an automated message and replies cannot be answered.
For all other inquiries, please contact firstname.lastname@example.org