Rich Dad, Poor Dad Part 9

Reason No. 3. Laziness. Busy people are often the most lazy. We have all heard stories of a businessman who works hard to earn money. He works hard to be a good provider for his wife and children. He spends long hours at the office and brings work home on weekends. One day he comes home to an empty house. His wife has left with the kids. He knew he and his wife had problems, but rather than work to make the relations.h.i.+p strong, he stayed busy at work. Dismayed, his performance at work slips and he loses his job.

Today, I often meet people who are too busy to take care of their wealth. And there are people too busy to take care of their health. The cause is the same. They're busy, and they stay busy as a way of avoiding something they do not want to face. n.o.body has to tell them. Deep down they know. In fact, if you remind them, they often respond with anger or irritation.

If they aren't busy at work or with the kids, they're often busy watching TV, fis.h.i.+ng, playing golf or shopping. Yet, deep down they know they are avoiding something important. That's the most common form of laziness. Laziness by staying busy.

So what is the cure for laziness? The answer is a little greed.

For many of us, we were raised thinking of greed or desire as bad. "Greedy people are bad people," my mom use to say. Yet, we all have inside of us this yearning to have nice things, new things or exciting things. So to keep that emotion of desire under control, often parents found ways of suppressing that desire with guilt.

"You only think about yourself. Don't you know you have brothers and sisters?" was one of my mom's favorites. Or "You want me to buy you what?" was a favorite of my dad. "Do you think we're made of money? Do you think money grows on trees? We're not rich people, you know."

It wasn't so much the words but the angry guilt-trip that went with the words that got to me.

Or the reverse guilt-trip was the "I'm sacrificing my life to buy this for you. I'm buying this for you because I never had this advantage when I was a kid." I have a neighbor who is stone broke, but can't park his car in his garage. The garage is filled with toys for his kids. Those spoiled brats get everything they ask for. "I don't want them to know the feeling of want" are his everyday words. He has nothing set aside for their college or his retirement, but his kids have every toy ever made. He recently got a new credit card in the mail and took his kids to visit Las Vegas. "I'm doing it for the kids," he said with great sacrifice.

Rich dad forbade the words "I can't afford it."

In my real home, that's all I heard. Instead, rich dad required his children to say, "How can I afford it?" His reasoning, the words "I can't afford it" shut down your brain. It didn't have to think anymore. "How can I afford it'" opened up the brain. Forced it to think and search for answers.

But most importantly, he felt the words "I can't afford it" were a lie. And the human spirit knew it. "The human spirit is very, very, powerful," he would say. "It knows it can do anything." By having a lazy mind that says, "I can't afford it," a war breaks out inside you. Your spirit is angry, and your lazy mind must defend its lie. The spirit is screaming, "Come on. Let's go to the gym and work out." And the lazy mind says, "But I'm tired. I worked really hard today." Or the human spirit says, "I'm sick and tired of being poor. Let's get out there and get rich." To which the lazy mind says, "Rich people are greedy. Besides it's too much bother.

It's not safe. I might lose money. I'm working hard enough as it is. I've got too much to do at work anyway. Look at what I have to do tonight. My boss wants it finished by the morning."

"I can't afford it" also brings up sadness. A helplessness that leads to ' despondency and often depression. "Apathy" is another word. "How can I afford it?" opens up possibilities, excitement and dreams. So rich dad , was not so concerned about what you wanted to buy, but that "How can 'f j I afford it?" created a stronger mind and a dynamic spirit.

Thus, he rarely gave Mike or me anything. Instead he would ask, "How can you afford it?" and that included college, which we paid for ourselves. It was not the goal but the process of attaining the goal we desired that he wanted us to learn. The problem I sense today is that there are millions of people who feel guilty about their greed. It's an old conditioning from their childhood. Their desire to have the finer things that life offers. Most have been conditioned subconsciously to say, "You can't have that," or ; "You'll never afford that."

When I decided to exit the rat race, it was simply a question. "How can I afford to never work again?" And my mind began to kick out answers and solutions. The hardest part was fighting my real parents' dogma of "We can't afford that." Or "Stop thinking only about yourself." Or "Why don't you think about others?" and other such words designed to instill guilt to suppress my greed.

So how do you beat laziness? The answer is a little greed. It's that radio station WII-FM, which stands for "What's In It-For Me?" A person needs to sit down and ask, "What's in it for me if I'm healthy, s.e.xy and good looking?" Or "What would my life be like if I never had to work again?" Or "What would I do if I had all the money I needed?" Without that little greed, the desire to have something better, progress is not made. Our world progresses because we all desire a better life. New inventions are made because we desire something better. We go to school and study hard because we want something better. So whenever you find yourself avoiding something you know you should be doing, then the only thing to ask yourself is "What's in it for me?" Be a little greedy. It's the best cure for laziness.

Too much greed, however, as anything in excess can be, is not good. But just remember what Michael Douglas said in the movie Wall Street. "Greed is good." Rich dad said it differently: "Guilt is worse than greed.

For guilt robs the body of its soul." And to me, Eleanor Roosevelt said it best: "Do what you feel in your heart to be right-for you'll be criticized anyway. You'll be d.a.m.ned if you do, and d.a.m.ned if you don't."

Reason No. 4. Habits. Our lives are a reflection of our habits more than our education. After seeing the movie Conan, starring Arnold Schwarzenegger, a friend said, "I'd love to have a body like Schwarzenegger." Most of the guys nodded in agreement.

"I even heard he was really puny and skinny at one time," another friend added.

"Yeah, I heard that too," another one added. "I heard he has a habit of working out almost every day in the gym."

"Yeah, I'll bet he has to."

"Nah," said the group cynic. "I'll bet he was born that way. Besides, let's stop talking about Arnold and get some beers."

This is an example of habits controlling behavior. I remember asking my rich dad about the habits of the rich. Instead of answering me outright, he wanted me to learn through example, as usual.

"When does your dad pay his bills?" rich dad asked.

"The first of the month," I said.

"Does he have anything left over?" he asked.

"Very little," I said.

"That's the main reason he struggles," said rich dad. "He has bad habits."

"Your dad pays everyone else first. He pays himself last, but only if he has anything left over."

"Which he usually doesn't," I said. "But he has to pay his bills, doesn't he? You're saying he shouldn't pay his bills?"

"Of course not," said rich dad. "I firmly believe in paying my bills on time. I just pay myself first. Before I pay even the government."

"But what happens if you don't have enough money?" I asked. "What do you do then?"

"The same," said rich dad. "I still pay myself first. Even if I'm short of money. My a.s.set column is far more important to me than the government."

"But," I said. "Don't they come after you?"

"Yes, if you don't pay," said rich dad. "Look, I did not say not to pay. I just said I pay myself first, even if I'm short of money."

"But," I replied. "How do you do that'"

"It's not how. The question is 'Why,'" rich dad said.

"OK, why?"

"Motivation," said rich dad "Who do you think will complain louder if I don't pay them-me or my creditors?"

"Your creditors will definitely scream louder than you," I said, responding to the obvious. "You wouldn't say anything if you didn't pay yourself."

"So you see, after paying myself, the pressure to pay my taxes and the other creditors is so great that it forces me to seek other forms of income. The pressure to pay becomes my motivation. I've worked extra jobs, started other companies, traded in the stock market, anything just to make sure those guys don't start yelling at me. That pressure made me work harder, forced me to think, and all in all made me smarter and more active when it comes to money. If I had paid myself last, I would have felt no pressure, but I'd be broke."

"So it is the fear of the government or other people you owe money I to that motivates you?"

"That's right," said rich dad. "You see, government bill collectors are big bullies. So are bill collectors in general. Most people give into these bullies. They pay them and never pay themselves. You know the story of the 96-pound weakling who gets sand kicked in his face?"

I nodded. "I see that ad for weightlifting and bodybuilding lessons in the comic books all the time."

"Well, most people let the bullies kick sand in their faces. I decided to use the fear of the bully to make me stronger. Others get weaker. Forcing myself to think about how to make extra money is like going to the gym and working out with weights. The more I work my mental money muscles out, the stronger I get. Now, I'm not afraid of those bullies.

I liked what rich dad was saying. "So if I pay myself first, I get financially stronger, mentally and fiscally."

Rich dad nodded.

"And 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."

Rich dad nodded. "Just like the 96-pound weakling."

Reason No. 5. Arrogance. Arrogance is ego plus ignorance. I "What I know makes me money. What I don't know loses me money. Every time I have been arrogant, I have lost money. Because when I'm arrogant, I truly believe that what I don't know is not important," rich dad would often tell me.

I have found that many people use arrogance to try to hide their own ignorance. It often happens when I am discussing financial statements with accountants or even other investors.

They try to bl.u.s.ter their way through the discussion. It is clear to me that they don't know what they're talking about. They're not lying, but they are not telling the truth.

There are many people in the world of money, finances and investments who have absolutely no idea what they're talking about. Most people in the money industry are just spouting off sales pitches like used-car salesmen.

When you know you are ignorant in a subject, start educating yourself by finding an expert in the field or find a book on the subject.

CHAPTER NINE.

Getting Started.

I wish I could say acquiring wealth was easy for me, but it wasn't.

So in response to the question "How do I start?" I offer the thought process I go through on a day-by-day basis. It really is easy to find great deals. I promise you that. It's just like riding a bike. After a little wobbling, it's a piece of cake. But when it comes to money, it's the determination to get through the wobbling that's a personal thing.

To find million-dollar "deals of a lifetime" requires us to call on our financial genius. I believe that each of us has a financial genius within us. The problem is, our financial genius lies asleep, waiting to be called upon. It lies asleep because our culture has educated us into believing that the love of money is the root of all evil. It has encouraged us to learn a profession so we can work for money, but failed to teach us how to have money work for us. It taught us not to worry about our financial future, our company or the government would take care of us when our working days are over. However, it is our children, educated in the same school system, who will end up paying for it. The message is still to work hard, earn money and spend it, and when we run short, we can always borrow more.

Unfortunately, 90 percent of the Western world subscribes to the above dogma, simply because it's easier to find a job and work for money. If you are not one of the ma.s.ses, I offer you the following ten steps to awaken your financial genius. I simply offer you the steps I have personally followed. If you want to follow some of them, great. If you don't, make up your own. Your financial genius is smart enough to develop its own list.

While in Peru, with a gold miner of 45 years, I asked him how he was so confident about finding a gold mine. He replied, "There is gold everywhere. Most people are not trained to see it."

And I would say that is true. In real estate, I can go out and in a day come up with four or five great potential deals, while the average person will go out and find nothing. Even looking in the same neighborhood. The reason is they have not taken the time to develop their financial genius.

I offer you the following ten steps as a process to develop your G.o.d-given powers. Powers only you have control over.

1. I NEED A REASON GREATER THAN REALITY: The power of spirit. If you ask most people if they would like to be rich or financially free, they would say "yes." But then reality sets in. The road seems too long with too many hills to climb. It's easier to just work for money and hand the excess over to your broker. I once met a young woman who had dreams of swimming for the U.S Olympic team. The reality was, she had to get up every morning at 4 a.m. to swim for three hours before going to school. She did not party with her friends on Sat.u.r.day night. She had to study and keep her grades up, just like everyone else.

When I asked her what compelled her with such super-human ambition and sacrifice, she simply said, "I do it for myself and the people I love. It's love that gets me over the hurdles and sacrifices."

A reason or a purpose is a combination of "wants" and "don't wants." When people ask me what my reason for wanting to be rich is, it is a combination of deep emotional "wants" and "don't wants."

I will list a few. First the "don't wants," for they create the "wants." I don't want to work all my life. I don't want what my parents aspired for, which was job security and a house in the suburbs. I don't like being an employee. I hated that my dad always missed my football games because he was so busy working on his career. I hated it when my dad worked hard all his life and the government took most of what he worked for at his death. He could not even pa.s.s on what he worked so hard for when he died. The rich don't do that. They work hard and pa.s.s it on to their children.

Now the wants. I want to be free to travel the world and live in the lifestyle I love. I want to be young when I do this. I want to simply be free. I want control over my time and my life. I want money to work for me.

Those are my deep-seated, emotional reasons. What are yours? If they are not strong enough, then the reality of the road ahead may be greater than your reasons. I have lost money and been set back many times, but it was the deep emotional reasons that kept me standing up and going forward. I wanted to be free by age 40, but it took me until I was 4? with many learning experiences along the way.

As I said, I wish I could say it was easy. It wasn't, but it wasn't hard either. But without a strong reason or purpose, anything in life is hard.

IF YOU DO NOT HAVE A STRONG REASON, THERE IS NO SENSE READING FURTHER. IT WILL SOUND LIKE TOO MUCH WORK.

2. I CHOOSE DAILY: The power of choice. That is the main reason people want to live in a free country. We want the power to choose.

Financially, with every dollar we get in our hands, we hold the power to choose our future to be rich, poor or middle cla.s.s. Our spending habits reflect who we are. Poor people simply have poor spending habits.

The benefit I had as a boy was that I loved playing Monopoly constantly. n.o.body told me Monopoly was only for kids, so I just kept playing the game as an adult. I also had a rich dad who pointed out to me the difference between an a.s.set and a liability. So a long time ago, as a little boy, I chose to be rich, and I knew that all I had to do was learn to acquire a.s.sets, real a.s.sets. My best friend, Mike, had an a.s.set column handed to him, but he still had to choose to learn to keep it. Many rich families lose their a.s.sets in the next generation simply because there was no one trained to be a good steward over their a.s.sets.

Most people choose not to be rich. For 90 percent of the population, being rich is "too much of a ha.s.sle." So they invent sayings that go, "I'm not interested in money." Or "I'll never be rich." Or "I don't have to worry, I'm still young." Or "When I make some money, then I'll think about my future." Or "My husband/wife handles the finances." The problem with those statements is they rob the person who chooses to think such thoughts of two things: one is time, which is your most precious a.s.set, and two is learning. Just because you have no money, should not be an excuse to not learn. But that is a choice we all make daily, the choice of what we do with our time, our money and what we put in our heads. That is the power of choice. All of us have choice. I just choose to be rich, and I make that choice every day.

INVEST FIRST IN EDUCATION: In reality, the only real a.s.set you have is your mind, the most powerful tool we have dominion over. Just as I said about the power of choice, each of us has the choice of what we put in our brain once we're old enough. You can watch MTV all day, or read golf magazines, or go to ceramics cla.s.s or a cla.s.s on financial planning. You choose. Most people simply buy investments rather than first invest in learning about investing.

A friend of mine, who is a rich woman, recently had her apartment burglarized. The thieves took her TV and VCR and left all the books she reads. And we all have that choice. Again, 90 percent of the population buys TV sets and only about 10 percent buy books on business or tapes on investments.

So what do I do? I go to seminars. I like it when they are at least two days long because I like to immerse myself in a subject. In 1973, I was watching TV and this guy came on advertising a three-day seminar on how to buy real estate for nothing down. I spent $385 and that course has made me at least $2 million, if not more. But more importantly, it bought me life. I don't have to work for the rest of my life because of that one course. I go to at least two such courses every year.

I love audio tapes. The reason: I can rewind quickly. I was listening to a tape by Peter Lynch, and he said something I completely disagreed with. Instead of becoming arrogant and critical, I simply pushed "rewind" and I listened to that five-minute stretch of tape at least twenty times. Possibly more. But suddenly, by keeping my mind open, I understood why he said what he said. It was like magic. I felt like I had a window into the mind of one of the greatest investors of our time. I gained tremendous depth and insight into the vast resources of his education and experience.

The net result: I still have the old way I used to think, and I have Peter's way of looking at the same problem or situation. I have two thoughts instead of one. One more way to a.n.a.lyze a problem or trend, and that is priceless. Today, I often say, "How would Peter Lynch do this, or Donald Trump or Warren Buffett or George Soros?" The only way I can access their vast mental power is to be humble enough to read or listen to what they have to say. Arrogant or critical people are often people with low self-esteem who are afraid of taking risks. You see, if you learn something new, you are then required to make mistakes in order to fully understand what you have learned.

If you have read this far, arrogance is not one of your problems. Arrogant people rarely read or buy tapes. Why should they? They are the center of the universe.

There are so many "intelligent" people who argue or defend when a new idea clashes with the way they think. In this case, their so-called "intelligence" combined with "arrogance" equals "ignorance". Each of us knows people who are highly educated, or believe they are smart, but their balance sheet paints a different picture. A truly intelligent person welcomes new ideas, for new ideas can add to the synergy of other acc.u.mulated ideas. Listening is more important than talking. If that was not true, G.o.d would not have given us two ears and only one mouth. Too many people think with their mouth instead of listening to absorb new ideas and possibilities. They argue instead of asking questions.

I take a long view on my wealth. I do not subscribe to the "Get rich quick" mentality most lottery players or casino gamblers have. I may go in and out of stocks, but I am long on education. If you want to fly an airplane, I advise taking lessons first. I am always shocked at people who buy stocks or real estate, but never invest in their greatest a.s.set, their mind. Just because you bought a house or two does not make you an expert at real estate.

3. CHOOSE FRIENDS CAREFULLY: The power of a.s.sociation. First of all, I do not choose my friends by their financial statements. I have friends who have actually taken the vow of poverty as well as friends who earn millions every year. The point is I learn from all of them, and I consciously make the effort to learn from them.

Now I will admit that there are people I have actually sought out because they had money. But I was not after their money; I was seeking their knowledge. In some cases, these people who had money have become dear friends, but not all.

But there is one distinction that I would like to point out. I've noticed that my friends with money talk about money. And I do not mean brag. They're interested in the subject. So I learn from them, and they learn from me. My friends, whom I know are in dire straits financially, do not like talking about money, business or investing. They often think it rude or unintellectual. So I also learn from my friends who struggle financially. I find out what not to do.

I have several friends who have generated over a billion dollars in their short lifetimes. The three of them report the same phenomenon: Their friends who have no money have never come to them to ask them how they did it. But they do come asking for one of two things, or both: 1. a loan, or 2. a job.

A WARNING: Don't listen to poor or frightened people. I have such friends, and I love them dearly, but they are the "Chicken Littles" of life. When it comes to money, especially investments, "The sky is always falling." They can always tell you why something won't work. The problem is, people listen to them, but people who blindly accept doom-and-gloom information are also "Chicken Littles." As that old saying goes, "Chickens of a feather agree together."

If you watch CNBC, which is a goldmine of investment information, they often have a panel of so-called "experts." One expert will say the market is going to crash, and the other will say it's going to boom. If you're smart, you listen to both. Keep your mind open because both have valid points. Unfortunately, most poor people listen to "Chicken Little."

I have had more close friends try to talk me out of a deal or an investment. A few years ago, a friend told me he was excited because he found a 6 percent certificate of deposit. I told him I earn 16 percent from the state government. The next day he sent me an article about why my investment was dangerous. I have received 16 percent for years now, and he still receives 6 percent.

I would say that one of the hardest things about wealth building is to be true to yourself and be willing to not go along with the crowd. For in the market, it is usually the crowd that shows up late and is slaughtered. If a great deal is on the front page, it's too late in most instances. Look for a new deal. As we used to say as surfers: "There is always another wave." People who hurry and catch a wave late usually are the ones who wipe out.

Smart investors don't time markets. If they miss a wave, they search for the next one and get themselves in position. Why this is hard for most investors is because buying what is not popular is frightening to them. Timid investors are like sheep going along with the crowd. Or their greed gets them in when wise investors have already taken their profits and moved on. Wise investors buy an investment when it's not popular. They know their profits are made when they buy, not when they sell. They wait patiently. As I said, they do not time the market. Just like a surfer, they get in position for the next big swell.

It's all "insider trading." There are forms of insider trading that are illegal, and there are forms of insider trading that are legal. But either way, it's insider trading. The only distinction is how far away from the inside are you? The reason you want to have rich friends who are close to the inside is because that is where the money is made. It's made on information. You want to hear about the next boom, get in and get out before the next bust. I'm not saying do it illegally, but the sooner you know, the better your chances are for profits with minimal risk. That is what friends are for. And that is financial intelligence.

4. MASTER A FORMULA AND THEN LEARN A NEW ONE: The power of learning quickly. In order to make bread, every baker follows a recipe, even if it's only held in their head. The same is true for making money. That's why money is often called "dough."

Most of us have heard the saying "You are what you eat." I have a different slant on the same saying. I say, "You become what you study." In other words, be careful what you study and learn, because your mind is so powerful that you become what you put in your head. For example, if you study cooking, you then tend to cook. You become a cook. If you don't want to be a cook anymore, then you need to study something else. Let's say, a schoolteacher. After studying teaching, you often become a teacher. And so on. Choose what you study carefully.

When it comes to money, the ma.s.ses generally have one basic formula they learned in school. And that is, work for money. The formula I see that is predominant in the world is that every day millions of people get up and go to work, earn money, pay bills, balance checkbooks, buy some mutual funds and go back to work. That is the basic formula, or recipe.