Decide to be Rich - Steps 1-10 by Robert T. Kiyosaki

Today, because of the multitude of choices we all have, it is easy to get distracted from where we want to go in life. So just because you decide to choose a path to riches one day, does not mean you will choose it again the next day. The following are some simple basic steps and thought processes I have repeatedly gone through in my life. I say that I have gone through them repeatedly because I have had to make and re-make these decisions over and over again. Everyday we are constantly presented with multiple choices, and I found that I needed to constantly remind myself of my choices, if I were to remain on the path I chose. I offer you a few suggestions on how to find your path and stay on your path to great wealth, if you should choose to do so. But please remember that we all have the ability to change our mind. So to stay on our chosen paths, we often need to chose and re-choose our chosen paths on a regular basis.

One night in 1975, I sat in my little apartment and began to choose the path I was now to take. That night I had to again decide which dad's path I would follow, my rich dad’s or my poor dad's. I had been off track for ten years, and it was now time to get back on track. These are some of the thoughts I went through that night, and some of the decisions I made and have continued to make over the years.

10 DECISIONS YOU NEED TO MAKE TO GET RICH

STEP ONE: DECIDE TO BE RICH

That night in 1975, I had to first stop feeling sorry for myself and decide again to be rich. That night I sat and began to go over some of the lessons my rich dad had given me over the years. Lessons that were more important than money, because they were the lessons that would ultimately create for me the financial empire I wanted. That night, I could hear my rich dad talking to me. I sat quietly and my lessons began all over again. They began with him saying, "The only difference between the rich, poor and the middle class was the kind of life style they wanted. He said, "You don't have to be a psychic to tell a person's future. If you will listen carefully to the words a person uses, they will tell you their future."

Over the years, I found rich dad's words of wisdom to be so true. Rich dad believed that words were a person's most important tool. He believed that rich people used rich words, and poor people used poor words. He constantly reminded me to watch the words I spoke simply because he believed that the words you spoke and the words you thought ultimately became the world you lived in. He often quoted from the Old Testament, "And the word became flesh." So that night, I remembered rich dad reminding me to listen to different people's words and then tell him what I noticed. Over the years, rich dad pointed out to me that poor people often said words such as these:

"I just want enough money to pay the rent."

"I need a few dollars to get me to the next pay day."

"After I pay my bills, I don't know how my family can afford to eat."

Rich dad pointed out that people who used words such as these are often focused only on financial survival. Rich dad often referred to people such as these as poor people. He called them poor, but not in the sense most people think of when they think of poor people. He called them "poor" because they were poor managers of money. So a person who used words such as these in speech or in thought, were constantly fighting a financial battle of survival, regardless of how much money they made.

The middle class used different words because they had different ideas about how to use their money. Rich dad pointed out that people who's future was in the middle class often said things such as:

"Our home is our most important asset and is our largest single investment."

"We're setting a few dollars aside every month, so we can afford the down payment on our dream home."

"We're saving money for our children's college education and our retirement."

Rich dad had me notice that the middle class focused on comfort. That is why so many of them say, "I don't want to be rich. I just want to be comfortable."

I sat there in the darkness that night, going over my rich dad's thoughts on what words the rich used. I began to recall the words my rich dad's rich friends used. They used words that were different. They often were heard to say:

"How did you finance your shopping center? Did you syndicate it with a joint venture partnership or did you go to a hard money lender for the interim money?"

"My underwriter has a new private placement, pre-IPO offering. Do you want a position in it?"

"I bought the shares through my corporation because the long term tax consequences are better."

Rich dad pointed out that the rich used the vocabulary found in the asset column. He said, "The reason the rich are rich is because they are not focused on day-to-day short term survival, or the expense column as the poor are. Nor are the rich focused on comfort and the acquisition of liabilities using credit, as is the middle class. The rich are rich because they focus on the long term acquisition of assets...assets such as stocks, bonds, businesses, and income producing real estate. Many times the rich will forsake meals, a steady paycheck, a vacation, or the comfort of a nice home, in order to build or acquire real assets."

So Step One is decide to be rich, even if you are broke and penniless today. In Rich Dad Poor Dad , I wrote of the difference between being poor and being broke. I wrote that poor was a state of mind. It is a state of mind where thoughts such as "I can't afford it." or "Live below your means." come from. I wrote that being poor was eternal and being broke was temporary. The opening chapter of CASHFLOW Quadrant is entitled, "Why Don't You Get a Job?" The chapter begins with my wife Kim and me being homeless for approximately 3 weeks. The point here is that even though we were homeless and virtually out of money, we continued to strive to become rich. We continued to strive to build a business and invest through that business. Today, even though we now have plenty of money, and several businesses, nothing much has changed. We continue to build businesses, or reinvest in our businesses, and invest through those businesses.

In CASHFLOW Quadrant, I wrote about Be-Do-Have. I wrote that the "Be" was the most important part of the three word formula. I wrote that most people want to "Have" what the rich have, the problem is they often are not willing to do what the rich "Do" to have what the rich "Have." Again, the three different classes of people behave differently. So regardless if you have money or not, it is important to "Be" rich if you decide to do so, which means being willing to make being rich more important than being comfortable or merely surviving financially.

STEP TWO: DECIDE WHAT KIND OF MONEY PROBLEMS YOU WANT.

There are only two kinds of money problems. One problem is not enough money and the other is too much money. Unfortunately, the only kind of money problem most people know is the problem of not enough money.

Rich dad stressed that his son and I know not only how to make money but to know what to do with the money we made. Rich dad often said, "Most people know how to work for money, but they do not know how to have people and money work for them." That is why he taught us how to plan on having too much money. He went on to say, "If you want to be rich, you must know what to do with your excess money and make sure your excess money creates more excess money. If you want to be rich, you must know what to do with your excess money before it gets to you. The problem with most people is that when they receive any excess money, they do not know what to do with it...so they spend it foolishly or just park it in the bank."

So decide what kind of money problems you want.

STEP THREE: WRITE YOUR PLAN AND THEN FOLLOW YOUR PLAN

After choosing between being rich, poor, or middle class, and then choosing to have a problem of too much money or too little money, it is now time to write your plan.

If you have chosen to be rich, even though broke today, and have decided that you would rather have the problem of too much money rather than the problem of too little money, then read on. If you do not plan to be rich or have too much money, then you need not read any further. There are many other books written for people who simply want to get out of financial survival and get into being comfortable with their money. In fact, most money books are really written for people who want to hang on to their money and be comfortable, rather than become rich.

Rich Dad’s plan started with a few basic goals:

1. Change the characteristic of your income. Start a part-time business.

2. Change the characteristic of your expenses. Convert personal expenses into business expenses.

3. Place your business inside a legal entity.

4. Have your business buy your assets.

5. Harness the power of re-investing.

If you're willing to be a little uncomfortable, become very rich, and retire early, develop your plan. Maybe rich dad's plan can apply to you, even though you may be broke, but not poor, today. And if you are already rich, then rich dad's plan may help you become richer and happier...even beyond your wildest dreams.

STEP FOUR: DECIDE ON WHERE YOU WANT TO DO YOUR BANKING

Rich dad often said that you could tell the difference between the rich, poor, and middle class simply by where they went to get their money or where they did their banking.

WHERE THE POOR DO THEIR BANKING

Rich dad said, the poor use pawn shops as their bank. He often said, "A pawn shop is a poor man's bank." A pawn shop will lend money on "assets" that a banker would not loan money on. That is why, when a poor person is short of cash, they will often go to the pawn shop and put their chain saw, microwave oven, jewelry, TV sets, tools, watches, up as collateral or security. The pawn shop owner then gives them pennies on the dollar, which a pawn shop owner should do, since what the poor spend their money on is not worth anything after they buy it anyway. The way the pawn shop owner makes their money is by charging legal usurious interest rates.

WHERE THE MIDDLE CLASS DO THEIR BANKING

The middle class on the other hand, has the creditworthiness to use banks, savings and loans, or credit unions for their lines of credit. A popular form of credit for this group is the credit card, which is easy to obtain. The interest rates on credit cards range from 9% to 36%, depending upon the state you borrow from. That is because, it is up to each state to determine it's own interest rates on credit. An interesting note, the state with the lowest interest rate is Arkansas, at 9%...and because the rate is so slow, they also have the toughest qualification standards, and they also have the lowest charge-offs from non-payment. The lesson being, the higher the interest rate, the easier it is to borrow money.

WHERE THE RICH DO THIER BANKING

The rich also use banks. But they often use different banks. They often use the services of investment bankers, or find private capital from wealthy individuals, or money from institutions such as pension funds, insurance companies, or the stock market. The rich, if successful as business people, have fewer problems raising large sums of money and at better interest rates.

So look at your various choices and decide where you will do your banking.

STEP FIVE: CHOOSE YOUR FRIENDS AND PARTNERS WISELY

One of the reasons the rich get richer is because they spend time with other rich people. Most of my best investments come from my rich friends, not from my stock brokers or real estate brokers. So that is why step 5 is to choose your friends wisely. It is important to know if a person's aspirations are to be rich, comfortable, or simply survive. People and friends who merely want to be comfortable or survive will not understand why you want to be rich, and may unconsciously pull you down, rather than push you up. And besides, the investment tips I get from people who only want to be comfortable are often tips on investments that no one else wants.

How do you find people who are rich or want to be rich? Rich dad had a simple answer to this question. He often said, "It's what you know that determines who you know. If you want to change who you know, simply change what you know." That is why the most important investment you can make is the investment in your financial education and financial experience. Invest in that first and the people you spend time with will change.

STEP SIX: GIVE YOURSELF TIME

It takes time to build a business as well as an investment portfolio. Building a business is not the same as getting a job. With a job, you expect to be paid soon after starting to work. With a business, you may not be paid for years, if you are paid at all. That is why I recommend keeping your daytime job and starting a part-time business.

It is said that 90% of all businesses fail in the first 5 years. In my opinion, there are two main reasons for this sad statistic. One reason is lack of education and experience. Business is not something you can learn in school. Business is a combination of formal education, experience, and guts.

The second reason is the lack of money. We have heard the old cliche "Killing the goose that lays the golden egg." Well, when starting a business, many people kill the baby-goose before it's old enough to lay the golden egg. In other words, most small businesses are under-capitalized, which means the new business owner tries to support his or her self and often his or her family on a business that is not yet up and running. So the business is drained of cash when it needs it most to grow in order to keep the owner and the family alive.

STEP SEVEN: START SMALL...DREAM BIG

In 1975, I realized that my $700 in savings was not much when compared to Mike's hundreds of millions of dollars, which was rapidly growing into a billion dollars. Initially, I felt like giving up, saying to myself, "What's the use. I'll never have more than Mike."

But then I also realized that if I continued with that thought process, not only would I never have more than Mike, I would never have much of anything. I then realized that I was comparing myself with Mike and trying to compete with him, rather than use him as inspiration and as a mentor. So that night I decided to start small and dream big.

Many people start small and stay small, simply because they have small dreams. It is my opinion that big dreams are important, because dreams possess ingredients vital for success. And some of those ingredients are hope, desire, passion, energy, vitality, faith, drive, inspiration, and creativity. These are the ingredients that make life worth living.

So dare to dream big. Dream of all the wonderful things this world and life has to offer and write your plan on how you can have all your dreams come true. Write that plan and look at it everyday. Talk to people about your dreams, even those who criticize you and your dreams. Then take their criticism and use it to make your desire to achieve your dreams even stronger.

STEP EIGHT: BEFORE YOU EXPAND YOU MUST CONTRACT

In 1975, I knew that if I was to achieve great wealth quickly, I first needed to tighten up before I could expand. As I silently sat in the darkness, I knew that if I wanted to expand financially, I first needed to tighten up. It occurred to me that the reason I was hurting financially was because I had been sloppy with my money during the past ten years. While in college, I spent a lot of money just having fun. While in Vietnam, I had developed the attitude of live life to the fullest because tomorrow I could be dead. So my motto truly was "Eat, drink, and be merry, because tomorrow somebody was really going to try and kill me." If I was going to get ahead, I first needed to pull back a little. Instead of playing golf, rugby, and tennis, I focused only on rugby. Instead of spending every night of the week in the clubs or watching television, I needed to get back to studying again. In other words, instead of trying to be everywhere and do everything, I decided to begin to focus more. I began doing more--of fewer things.

So step 8 is, regardless of what you did yesterday, if you want to do better financially tomorrow, you may need to forgive your past, tighten up and clean up your activities today, so you can have a bright and prosperous tomorrow. Always remember that to expand, you must first contract.

STEP NINE: GET BIGGER FASTER

The problem with a small business or small investments such as one single family rental, is that if they are small then you have to do all the work. You do all the work because there is not enough money to support paid management. So you own it and manage it. Very often, a person begins to buy real estate and soon quits because the work is hard and the pay is low. They quit because they started with a small plan and stayed small. For business or investing to work for you, in most cases, you must get big. Instead of buying only two rental properties, it is best to plan on acquiring at least 20 properties, and get them as soon as possible. (But make sure you know what you're doing before you acquire them.) With twenty properties you can afford professional management, if the cash flow is strong, or you can trade the twenty units into one larger apartment house or office building. The same goes with businesses, especially businesses such as franchises. If you have only one franchise, you are the chief cook, bottle washer, owner, and manager. If you have twenty of them, you have a chance of finding freedom faster.

The people who work the hardest and are paid the least are people who dream small, think small, and work small. So that night, I vowed that I would focus, study hard to acquire education, gain experience, start small, and get big as quickly as possible. I always remind myself of my rich dad's words, "The bigger the asset you build, the less you work and the more money you make."

STEP 10: THE MORE I SHARE THE RICHER I BECOME

That night in 1975, I knew that if I wanted to acquire great wealth quickly, I had to be a person who shared. I had to be a person who was generous. I knew that if I was greedy, stingy, or tight, it would take me longer to attain great wealth.

That is why in 1975, I decided to operate out of the B (Business Owner) quadrant, rather than follow my poor dad's ideas on labor unions and protectionism. I decided that if I was to get rich quickly, I needed to focus on doing more for less money, for more people. I needed to focus on sharing as much of my wealth with as many people as possible. That is the fastest way to get rich quickly. You get rich by sharing rather than by being greedy.

So step 10 is to decide to be generous and share with as many people as possible. If you do that, you will become far richer than those who work only for themselves.

From award winning writer Robert Kiyosaki, author of Rich Dad, Poor Dad and The Cashflow Quadrant. For more information about Robert Kiyosaki, visit www.cashflowtech.com.

Labels: Motivation

posted by Yanto Sanusi @ 10:52 AM