Learn to use Debt and Taxes

This week I’ve had a lesson in how to look at the bigger picture. The lesson came from Robert Kiyoaski via Youtube.

What I now realise is that there is an old out dated way to earn money and look after your personal finances. With things moving so fast and information coming at us from every angle, there is also a new way of looking after your personal finances.

Old way

Get an education (preferably a Degree), get a good job, work hard, pay your mortgage off, and retire with a big fat pension.

New way

Invest in self-education, self-development, personal finance, financial literacy, business, accounting and investing.

The industrial age is finished but many people treat their personal finance like it isn’t. The industrial age of a stable job for life and large pensions no longer applies in today’s information age.

To start heading in the right direction, you have to spend less than you earn and invest the rest. Then it is a case of determining what it is you want to invest in.

Robert Kiyosaki is one of the most respected and successful non-fiction authors in the world and has sold millions of books.

In his books, his concepts come from his Rich Dad. His Rich Dad was actually his best friend’s Dad who made millions through business and investing.

He refers to his actual Dad as Poor Dad. His Poor Dad was a successful employee in terms of seniority and position but ultimately ended up broke because he was always working for someone else.

If you read any of his books he will talk in depth about business and investing. He talks about inflation, the dangers of being employees or self-employed and the flaws of the education system and many more subjects relating to money.

When you listen to him speak he is quite blunt and to the point. He is getting on (73 years-old) and he has no filter at all as he says it how he sees it.

The Bigger Picture

‘Rich vs Poor Mindset’ Robert Kiyosaki (Youtube)

  • RK – Don’t save money when they are printing trillions of dollars (Quantitative Easing). The Government in the UK is doing exactly the same and although I agree with what they are doing to get the economy moving, we have to start looking into inflation and how it will affect our personal finances.
  • RK – Look beyond steady pay employee mindset. He talks about this constantly in his books, as the way to make money work for you is to be in business or to be an investor.
  • RK – Being an Entrepreneur is about mindset, skillset and rules. He goes on to say that having to succeed in business when you have nothing will make you hungrier, smarter and is a test of your character. When I was renovating rental number 4 in 2019 with no job and £15,000 into a £25,000 overdraft it was definitely character building!
  • RK – You have got to get to a place where you are comfortable with failure. This is hard but I think that if you start getting comfortable with failure, it is a game changer.
  • RK – He encourages the listener not to get out of debt, but to get into debt. This is when it is time to start looking at the bigger picture. It is about learning to use other people’s money to make shrewd investments. It could be using a loan from the bank to buy a house or even borrow money from friends and family to start a business.
  • RK – World changed in 1971, when President Nixon took America off the Gold Standard. Money then became debt. He stresses the importance of using debt and taxes to your advantage. Basically, use leverage (loans, credit cards etc) to buy assets and learn to become tax efficient.
  • RK – High-paying job is an obsolete idea. I have earned good money in the past and it hasn’t really got me anywhere. This was because I was poor with money. I spent what I earned and pretty much lived month to month.
  • RK – No such thing as a bad economy. The question is what is your internal economy? The poor person with a poor personal economy will always see a bad external economy. The rich person with a rich internal economy will always make money. If the person with the right mindset around money fail’s they learn and keep going and become smarter and better.
  • RK – Weak internal mindset – they are afraid of what happens and it generally happens. He is stressing how important it is to get our head right when it comes to your personal finance.

To summarise, RK is telling us to get our Money IQ (Intelligent Quotient) right and our Money EQ (Emotional Quotient) right. Money IQ and Money EQ are terms that come from Ken Honda’s excellent book ‘Happy Money.’

Money IQ is important and in this case, is about learning to become tax efficient and how to use debt to your advantage.

Money EQ is VERY important and is about having a growth mindset. It is having a strong internal dialogue and knowing with certainty that you will get your personal finances in order. Or to go a couple of steps further and tell yourself that you will get your FI in the next few years and you absolutely refuse to work in a means to an end job into your 50s and 60s.

Leave a Reply