Robert Kiyosaki discussion

[mek42]

I've read some of his RichDad / PoorDad series and played Cashflow 101 in the past and came across another of his books that I hadn't read at a garage sale for 12.5 cents over the past weekend.

I've already been planning and doing some homework to start a part-time small business out of my woodworking hobby. As a part-time accounting student, the primary goal of this venture would be to gain business experience. This plan is on temporary hold though, as I'm going to be laid off soon and don't want anything interfering with unemployment benefits. As a hobby though, I can continue to work on product and I can also work on tracking costs and budgets.

One of Kiyosaki's themes is the proper use of debt to leverage investments. This seems to be contrary to the debt-free principles espoused by Dave Ramsey. On the other hand, Kiyosaki does differentiate between presonal debt and business debt, suggesting that personal debt is always a liability, while business debt may be a net asset depending on whether the cashflow is positive or negative.

Reconciling these two trains of thought for my own life, I have decided that I am not willing to incur debt for business purposes if I as an individual would be liable for said debt. This will likely mean that I will need to demonstrate several years of debt-free business success in order for lending institutions to be willing to extend credit to a business without a personal guaruntee. Being able to accomplish this debt-free business success may well obviate the desire for any business debt at all.

Above all, Kiyosaki's books have impressed upon me the need to take action. To "just do it." Make sure that the downside risk is acceptable, and then go forward, make mistakes and learn from them. This taking action step is the difficult part. This is partly why I enrolled in FPU - I knew many of the things I needed to do to rid myself of my personal debts but I wasn't doing them. By enrolling in FPU, I had some accountability resources and had spent money on the enrollment - now if I didn't take action I'd be doubly stupid by wasting this enrollment fee.

I'd love to hear how anyone else here has interpretted the Kiyosaki books into their lives. How did it work, what was done differently? I hope this will make for a good discussion.

[Greebo]

I have my doubts about RK's authenticity. However, much of the advice he gives - particularly in the first few books - IS GOOD ADVICE.

The problem, of course, is that there's also plenty of mediocre and even BAD advice.

How he looks at assets - if it doesn't make money, it isn't one - for example - great idea.

His cashflow quadrant idea - great idea.

How he looks at money - great stuff!

But at the same time, he's far too encouraging of risk. If you listen to some of what RK says, you're likely to go bankrupt borrowing money to start a business you know little about.

[ms.mel.who]

I was listening to Clark Howard talk to someone about starting a business, and he said where people get capitol for small businesses right now are from the SBA (small business association) and family and friends. He also said it is VERY difficult to get small business loans right now, so it is pretty much family and firends.

Personally I would feel responsible for debt with my family or friends whether my business failed or not.

I say start small, put what resources you can afford into it, and grow the business. Just my two cents.

[mek42]

...

I say start small, put what resources you can afford into it, and grow the business. Just my two cents.

I agree totally. Especially for the first business, which, statistically speaking, has failure as the expected outcome.

A further thought I have merging RK and DR is that if my personal finances aren't in order (a la DR), why should anyone trust me with their money? For that matter, if I am not at least executing a solid plan to get my personal finances in order, it is foolish to trust myself with my own risk capital.

Part of the reason I started making a written budget (on scraps of paper a couple weeks prior to FPU) was, essentially, being shamed into it by a discussion question, "Do you use a personal budget? Why or why not?" in the Cost Accounting class I took this semester. My integrity did not allow me to consider continuing on with an accounting curriculum if I wasn't willing to start putting what I am learning into practice (as much as is relevant) towards my own personal finances.