Has anyone read Rich Dad/Poor Dad?

[halik]

This is a habit breaking/building type exercise. In Ramsey's case, people find him because they are in a bad spot or want to get to the next level. He provides a simple and reliable way to help them achieve what they want. Yes, the debt-snowball doesn't make money sense but it does in a mental sense. Celebrating wins and lifting(even a small piece) of load off your shoulders. It keeps people striving to achieve more instead of get frustrated with not seeing "progress". With the state of most people's money situations I don't think Ramsey will have any problems continuing to sell his process(that works BTW) to more and more people.

Yes, it "works" in the sense that you are paying down debt. If you have 20K @ 22% on your credit card and 5K in student loans ~2.5%, paying down the latter first is completely irresponsible.

 

[IronWing]

I own my house free and clear and I still consider it a liability overall. Even if its value were to increase ahead of inflation I can't think of too many investments with a ~4% annual load: taxes, insurance, maintenance, repairs, utilities (basic level required to prevent weather damage). But on the plus side I get to live here rent free.

 

[CADsortaGUY]

Yes, it "works" in the sense that you are paying down debt. If you have 20K @ 22% on your credit card and 5K in student loans ~2.5%, paying down the latter first is completely irresponsible.

For sure, but usually there are other cards/loans in the mix if someone is that heavy into one card. In his books and on his show he even states that sometimes you change the order due to factors such as you bring up but usually once a person gets close to just have two unsecured debts like you mention, they've already snowballed and have learned a thing or two and thus would know to chop that 20K first.
I find that most people's objection to Ramsey is the snowball and then his faith. Both can be ignored as needed by the individual. snowball critics are usually more financially savy than most people so it stands to reason they wouldn't follow it but then again they usually don't have the bad habits(lack of good habits) that the people turning to these types of programs have.

PS - I think we've gone a bit off topic with the ramsey as this is more about RDPD and such. oops

 

[LegendKiller]

Besides being painfully obvious, a bunch of lies, a huge amount of poor advice, and available on the internet for free, the book is good, for fire starter.

A house is an asset and a liability. There isn't a single asset that doesn't have some type of load. Just because it doesn't have a huge appreciation, doesn't mean it isn't an asset.

The definition of an asset is...

a useful or valuable thing, person, or quality.

Does a house have value? Yes. Does that value depreciate, regardless of you maintaining it? Not for most of history.

Cars are assets too, just depreciating one.

Would you rather rent and not have an asset by the time you pay it off?

Kiyosaki is a fucking moron.

 

[brianmanahan]

The Bogleheads' Guide to Investing, The Bogleheads' Guide to Retirement are great books.

The most important lessons: live below your means, be aware of investment expenses choose an asset allocation and stay the course.

+9000

these books are great

 

[spidey07]

If one focuses on building net worth and wealth the decions become easy.

Limit money out and make your money make more money for you.

At today's insanely low mortgage rates you are a fool for paying early. Over the long term it is an asset. Think long term on every decision. 10 years or more.

 

[KillerBee]

Dang - this wasn't a Rich Man / Poor Man - is Nicke Nolte still alive thread?

 

[Slew Foot]

Besides being painfully obvious, a bunch of lies, a huge amount of poor advice, and available on the internet for free, the book is good, for fire starter.

A house is an asset and a liability. There isn't a single asset that doesn't have some type of load. Just because it doesn't have a huge appreciation, doesn't mean it isn't an asset.

The definition of an asset is...

a useful or valuable thing, person, or quality.

Does a house have value? Yes. Does that value depreciate, regardless of you maintaining it? Not for most of history.

Cars are assets too, just depreciating one.

Would you rather rent and not have an asset by the time you pay it off?

Kiyosaki is a fucking moron.

QFT

 

[tcsenter]

Hasn't Kiyosaki filed for bankruptcy protection like TWICE; once decades ago and then most recently AFTER he made a fortune from his dubious book?

 

[Ancalagon44]

Your primary residence is a liability as long as you owe money on it. If you pay it off, I suppose you could say it is an asset with a low rate of return. However, owning it does save you rent money.

I think having a paid off property makes other investments much easier to achieve. You can use your property as collateral, and not having to pay rent reduces the amount of money that you would bleed if your income were to drop, say if you wanted to start a business. Renting for the rest of your life makes no financial sense to me, even if it requires a 10 to 20 year investment. That is to say, for 10 to 20 years, you will pay more money than if you were renting.

 

[drbrock]

Hasn't Kiyosaki filed for bankruptcy protection like TWICE; once decades ago and then most recently AFTER he made a fortune from his dubious book?

That might be true I have no idea.

If there is anything I do know. For guys like him bankruptcy means about zippo. My work as a CPA and time as credit officer for a major bank has shown me credit score and bankruptcy has very little to do with getting approved for loans or gathering money to invest. I was shocked that we would turn away regular people with great credit. But business men with horrible credit that had some cash in their pocket would get loans all day long.

The reason why is even if they file bankruptcy they can still make money. A regular person with a steady job has not been proven to do anything other than hold a job and do a menial task/paycheck. A business man like trump or Kiyosaki go into bankruptcy tactically and use it to their advantage.

I once did a business loan for a famous cooking channel host. Horrible ratios and credit. It has been years but I think they had a previous bankruptcy. Their name got them approved. If that was drbrock applying for a loan it would have been denied instantly lol.

 

[LegendKiller]

Hasn't Kiyosaki filed for bankruptcy protection like TWICE; once decades ago and then most recently AFTER he made a fortune from his dubious book?

He also lied prolifically in his book. Not just about his methods but also about his past. He is a 100% huckster selling snakeoil.

 

[LegendKiller]

Your primary residence is a liability as long as you owe money on it. If you pay it off, I suppose you could say it is an asset with a low rate of return. However, owning it does save you rent money.

I think having a paid off property makes other investments much easier to achieve. You can use your property as collateral, and not having to pay rent reduces the amount of money that you would bleed if your income were to drop, say if you wanted to start a business. Renting for the rest of your life makes no financial sense to me, even if it requires a 10 to 20 year investment. That is to say, for 10 to 20 years, you will pay more money than if you were renting.

Whoever believes this has *NO* idea what finance is. This is Kiyosaki's problem, he convinces everybody of the utterly wrong thing in life.

Everything you own is an asset, everything. If it can be used, if it has value, it is an asset. Your toothbrush is an asset.

Assets are funded by debt and equity. Thus, A = L + E.

As halik explained, a $500,000 house with $450,000 of debt then has $50,000 of equity. It is still a $500,000 *ASSET* but that is offset by a $450,000 LIABILITY.

While a house may only return inflation, plus some nominal amount, often times that return is higher than the interest rate you are paying on the debt, thus, your leverage (debt/liabilities) magnifies the equity return.

Some people talk about how much a house costs in maintenance, taxes...etc. Sure, it does have those costs associated with it. But so does every single asset you own. Your toothbrush has maintenance. Your stocks have taxes and brokerage fees. Your car has maintenance. Even a gold bar has storage fees, transaction fees, and taxes.

There isn't a single asset that doesn't have costs. Thus, under Kiyosaki's moronic rubric, all assets are really liabilities. Stupid, no?

Now a house may not yield as good of a return as stocks, but it has many positive attributes, many of them mentioned here, such as rental inflation, housing stability, having more "equity" in your asset and eventually having 100% equity, not having to be beholden to a landlord, having your own living space that can be customized to your tastes...etc.

Furthermore, *EVERY* one of those "liabilities" that Kiyosaki carps on about is built into the cost of renting an apartment, PLUS a profit for the landlord. After all, they don't rent to you for no profit, do they?

This is what is moronic about Kiyosaki, he doesn't even look at things correctly. He says something and mindless followers spew the same cud all over the internet and praise him and make him rich while they wallow in the same putrid shit that they have been their whole lives. He laughs the whole way to the bank.

 

[Vdubchaos]

I love how people think that there is even an option or chance of getting rich (to an extent of course, I know there is, but just small, VERY small).

Most wealthy people are born into it.

There are some (VERY VERY few) that make it from the ground up, but we are talking SMALL percentage of population. And even those that do make it from the ground up, require LUCK and TIMING....even though hard work and other things play a big role as well.

Out of MILLIONS that are chasing this dream, very few make it.

It's like playing lottery.

Now, don't let me stop you if you want to chase money and being rich, by all means DO IT.

But one also has to be realistic.

It's similar to finding a "dream job" or having a "dream career" or other dream BS people feed you so often. Yeah, chase your dream and all, but remember that dream is not reality and be realistic.

Besides, even when you get to your dream, you WILL get tired of it quick anyways.

I have been able to obtain # of my "dreams" in my life, guess what, once I had them they were just another "thing" in my life, it becomes norm and is no longer worth what it was prior to getting it.

Same for jobs. I know plenty of people that got their dream job and got tired of it quick. To me, comfortable/happy life is all I ask for. Quite happy where I am today actually.

Chasing "things" is for people that are are unwilling to be happy with what they have/accept reality.

It's human nature to always want things one can't have. I like to ignore that part of myself, but that's just me.

 

[lagokc]

I'm pretty sure the book says not to do any of that...... including the wife part

You shouldn't need a book to tell you that a wife is among the worst liabilities to take on, particularly in the 21st century in the West.:thumbsup:

 

[Ancalagon44]

@LegendKiller

To be honest I think the problem is the exact definition of the words asset and liability that is causing confusion.

Technically, you are correct - houses and cars are both assets, and are usually funded by liability. However, if your house is your primary residence, then neither of them will generate any income for you. Your house may appreciate in value (if you are lucky), but your car definitely will not. So your house may stay static in value, and not generate any annuity income, while your car just flat out costs you money.

Compare that to owning a business, or owning bonds, or stocks - they can generate income for you. That, I think is what Kiyosaki was getting at - the traditional thinking was to pay off your car, pay off your house, and then you will be okay. Kiyosaki is saying, rather concentrate on building up assets that will make you money.

It is of course rather more complicated than that, since the interest rate on debt is generally higher than the rate of return on most investments. So, in most cases, investing only makes sense when you have no debt left to repay. But, if there was a family that owned a small house with no mortgage on it, buying a new larger house would not be an investment - it would not generate money. Sure, it might be necessary for a growing family, but its not an investment.

 

[Vdubchaos]

You shouldn't need a book to tell you that a wife is among the worst liabilities to take on, particularly in the 21st century in the West.:thumbsup:

If you look or think of a person as a "liability" you are already failed the relationship before it even begun.

In 21st century in the West you NEED a significant other and support JUST TO GET BY!!! This is not 50s/60s anymore.......good luck getting by on your own or building any kind of assets (have fun with that)

 

[lagokc]

If you look or think of a person as a "liability" you are already failed the relationship before it even begun.

In 21st century in the West you NEED a significant other and support JUST TO GET BY!!! This is not 50s/60s anymore.......good luck getting by on your own or building any kind of assets (have fun with that)

Feelings are ephemeral and women are fickle. The risk/reward ratio for a wife is simply too high in the West today. Best investment advice if you can't be comfortable on your own salary? :hmm: Be gay.

 

[Rakehellion]

No, all they sell is oversimplifcations of personal finance ("house is a liability", "pay off smallest debt first") etc. None of those advices are correct, but they're still better than not doing anything.

No, we're selling oversimplifications of finance because this thread isn't a book.

My house is is a 440K asset with a 335K liability. Unless you borrow money and turn around and burn it, each one of those loans will have corresponding asset on your balance sheet.

Your house isn't worth 440k unless you sell it, which makes you homeless. And you're still paying property taxes and insurance on it every day which is another loss.

Your house is costing you money, not making it.

 

[Rakehellion]

Would you rather rent and not have an asset by the time you pay it off?

Let's say an apartment is $1600 and a mortgage is $5000 a month. After you pay off the house in 20 years, you'll then live rent free, but you'll never break even with how much you've already spent. And houses still cost money even after they're paid off in maintenance, taxes, and insurance.

Your house might appreciate in value, but won't beat inflation.

 

[Ancalagon44]

@Rakehellion

I think an apartment that costs that much to buy would also be quite expensive to rent - especially with interest rates as low as they are in the USA. So it would be more like rent $1600, mortgage $3200.

My mortgages comes out to about 50% higher than rent would be, maybe 100% higher including levies, rates and taxes. But I live in South Africa, so I'm paying a much higher interest rate.

 

[highland145]

Let's say an apartment is $1600 and a mortgage is $5000 a month. After you pay off the house in 20 years, you'll then live rent free, but you'll never break even with how much you've already spent. And houses still cost money even after they're paid off in maintenance, taxes, and insurance.

Your house might appreciate in value, but won't beat inflation.

We were very fortunate. Paid $75K in 1995. Then house prices blew up. At the height of the stupidity, it was appraised for $280K. Maybe $220k now.

And it's cheaper to buy than rent around here. 3br/1ba lower income is $700/mo. You could buy the same place for $500/mo.

 

[overst33r]

I read it. His writing style keeps you turning pages. As far as financial advice goes, there are many better books.

This ebook by William Bernstein is one of the most succinct and practical books I have read about investing. How Millenials Get Rich Slowly. It gives you reading assignments to some classics.

My favorites include:
Bogleheads Guide to Investing (very thorough)
Four Pillars of Investing
A Random Walk Down Wallstreet
The Richest Man in Babylon (simplistic but the message is solid)
Common Sense on Mutual Funds (Dry but solid advice from an iconic man)

 

[spidey07]

A house can positively generate income. At 4% on a 100k HELOC put that money into stocks and you will easily beat 4% not even counting the tax deduction. Free money.

Make your money make more money for you.

 

[Kev]

Finish it and then read the cashflow quadrant. Follow that one with Tim Ferris's 4-hr work week. I could list another 10 after that...

4 hour work week is garbage.

TL;DR version: "Create a company, become a millionaire, then you don't have to work a lot." Derp