Personal Development for Smart People Forums

Personal Development for Smart PeopleTM Forums

 

Go Back   Personal Development for Smart People Forums > Personal Development > Business & Financial

Notices

Business & Financial Career, work, money, income generation, personal finance, investing, debt, wealth, abundance, entrepreneurship, sales, marketing, SEO, commerce, economics, blogging, podcasting

Reply
 
Thread Tools Display Modes
Old 07-25-2008, 07:01 AM   #31 (permalink)
Junior Member
 
Join Date: Jul 2008
Posts: 1
Jplunk1 is on a distinguished road
Cool

Took on a little consumer debt and you're a few thousand in the hole and have a steady income. Rice and beans no problem for you, Take the Ramsey approach. Spiritually in the right place also. You'll prolly retire with a coulpe of million.


Do like me and go ridiculously crazy with debt funding education and building your track record in real estate and large projects that can really me some dough. Also learning in detail about finance so you really have the vision to see where you screwed up.
Then it's sink or swim time!

There is sooo much more to money and finance that compound interest! : Time value of money, opportunity cost, tax strategy etc. When I was 18 I read Charles Givin's book( don't remember the name) he said" If you wanna get rich, you have to learn tax strategy, I thought "thats too hard I'll just make soo much money it wont matter" I wish I would have listened to him 18yrs ago!

( do you know how long it would take to pay off 250k in debt with a 60k year job even eatin one meal a day even rice or beans, and drivin a two thousand dollar car?) your grand kids would be askin why you never took any trips with them or spent any time with people socially.
I say go broke, learn some lessons, go broke again if thats what it takes. I plan on havin alot more than two million when I retire, but if I don't, Hey- I had a heck of a lot of adventure, in the mean time, plus I would never trade debt free for the time I spent with my family goin on trips and driving safe vehicles, living in safe neighborhoods, and if I help a few people along the way by being heavily leveraged, maybe my debt did some good.
I say Dave Ramsey's plan is good for the average 8-5 person.
Kiyosaki and Trump have a whole different mindset, but I guess so does an entrepreneur. For me it's calculated risk (more education= less risk) not extravagant lifestyle, but not a "save my way to riches one" A keep going till I make it at all cost.

My 2 cents
Jplunk1 is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 07-27-2008, 07:40 AM   #32 (permalink)
Member
 
Join Date: Jul 2008
Posts: 86
BenThere is on a distinguished road
Default

I've read both of them. And you know what, I think they agree!

I think both of them say: NEVER take on debt for your personal life.

The only difference is what they say about debt for a business.
Kiyosaki says that this is OK to do, but only under one condition: the debt funds an asset that pays for its own debt service and puts profit money into your pocket every month. Anything less than this, and it's bad debt that you shouldn't have. He points out that "Rich Dad's" wealth started when RD noticed that RD couldn't personally afford the unsigned beach lot for sale, but RD's business could afford it.

As far as I know, Ramsey doesn't discuss business finance. He focuses on individual consumers and families.

I've also read Reed's rant. I think he misses the point. Kiyosaki himself often says that he is not trying to tell you exactly what to do, instead he wants to inspire you about a more productive way of thinking that will help you find your own answers that work for you.
BenThere is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-26-2009, 10:57 PM   #33 (permalink)
Junior Member
 
Join Date: Aug 2009
Posts: 1
thetruthis is on a distinguished road
Default The difference is...

Dave Ramsey is helping thousands of people out of bad debt situations. He has excellent advice for the normal work for a company/Corporation kind of people. Robert Kiyosaki is for those that want to get ahead in life by working for themselves. Both have excellent advice and both have great communication skills that make it seem simple and sensible to achieve your goals. I recommend both these guys.
thetruthis is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-27-2009, 02:14 PM   #34 (permalink)
Senior Member
 
Join Date: Feb 2008
Location: KY
Posts: 824
SomeRandomGuy will become famous soon enough
Default

I'm in the group that believes that any debt is bad debt. While it is true that it is possible to see increased financial gains in certain situations by using debt, it is also true that debt introduces a significant risk.

I should also point out that my opinions on this matter are probably very different than others on this site, because my views of wealth are very different. I do not want to be rich, I see no purpose in it. My goal is to live a simple, fulfilling life. I don't need to be rich in order to do that, so I have no desire to become rich. In fact, my goal is eventually be able to live on ~$1,000 per month.
SomeRandomGuy is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-27-2009, 05:42 PM   #35 (permalink)
Banned
 
Join Date: Apr 2009
Posts: 12,690
James81 has a reputation beyond reputeJames81 has a reputation beyond reputeJames81 has a reputation beyond reputeJames81 has a reputation beyond reputeJames81 has a reputation beyond reputeJames81 has a reputation beyond reputeJames81 has a reputation beyond reputeJames81 has a reputation beyond reputeJames81 has a reputation beyond reputeJames81 has a reputation beyond reputeJames81 has a reputation beyond repute
Default

I would start with Dave Ramsey. His stuff will help you put the habits in place that will make your financial decisions sound and help you gain self control with your spending.

Then, you can look into Kiyosaki and start analyzing what you think are good debts and bad debts.

It's not an either or. I think it's a process. I think you want to start with no debt until you gain a sound understanding and maturity with your finances. When that happens (and you'll know when that time comes), then you can look into using debt as a tool for increasing your wealth. Or, you may decide that debt isn't for you at all.
James81 is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-28-2009, 12:45 AM   #36 (permalink)
Family Member
 
Join Date: Sep 2008
Posts: 2,950
Curtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to behold
Default

The two authors are not necessarily in disagreement.

Dave Ramsey probably understands Kiyosaki's message that you can use debt to buy an asset that is worth even more than the debt itself (leverage). But you have to realize that Dave Ramsey's show is focused towards people that are already in bad debt and who want to get out of it.
Curtis2011 is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-28-2009, 06:25 AM   #37 (permalink)
Senior Member
 
Join Date: Aug 2008
Posts: 402
pjhaggerty is on a distinguished road
Default

well, on the subject of debt, I don't like it.

If you want leverage, learn to trade forex. Some forex brokers offer 400:1 leverage. That's bigger than anything you'd get with a bank or in real estate. You do need capital, but you won't owe anybody anything if your investments go south, you'll just be out the money. Now, I'm not recommending 400:1 as the optimal leverage, just saying, it is a much better way of getting leverage in my opinion.

Be patient and make money with your leverage, then use it to buy the things you would've gone into debt for. now you have compound interest working for you, instead of against you.
pjhaggerty is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-08-2011, 08:15 PM   #38 (permalink)
Junior Member
 
Join Date: Aug 2011
Posts: 2
Earl of Texas is on a distinguished road
Default Protect your future assets

I realize this is an old post, but it ranks high on search engines so I feel it is worth it to share my 2 cents. Both authors have useful advice, but probably for different audiences. One point that you will hear more from Robert is that you need to "pay yourself first". Dave will say to pay yourself first until you have a $1k emergency fund, then channel everthing into debt.

The problem is you cannot predict the future. You can spend the next 3-5 years paying down debt, only to be hit near the end with a malicious lawsuit, outrageous medical bills, or enormous but necessary legal bills, like fighting to keep an ex-wife from bring your kids around her sex-offender boyfriend. Some expenses are just necessary, sometimes even mandated by the state, such as the medical bills for your child or spouse, so "chosing" to live frugally is not enough. Health insurance is still riddled with exclusions and limitations and cannot be relied upon. Many families on medicaid today used to be upper-middle-class until they fell through one of the carefully designed cracks of their health insurance policies.

That said, the person who "pays himself first", by stashing the first 10% of his earnings into a bankruptcy-protected 401k, a tax-protected Roth IRA, a divorce-protected trust fund for his kids, and medicaid-protected equity in his home will have a more secure future than the guy with $1k in an unprotected bank account. This person may spend a few more months paying off his debt, and ultimately a few hundred more dollars in interest payments, but he will be happy paying this "premium" for "insurance" against the following events:
Exorbitant taxes
Divorce losses
Frivilous Lawsuits
Medical Bankruptcy
Insufficient Insurance (medical or liability)
Medicaid necessity (like a special needs child, or a disabled spouse in a nursing home)
Any foreseeable crisis

This effort cannot be a last-minute transfer after the problem comes up. Medicaid will look back 3-5 years and will disqualify you if you transfered a significant portion of your assets. Bankruptcy courts will dismiss your petition and possibly prosecute you for fraudulent transfer if you move assets around just before filing. The only sensible approach is to plan and manage these types of transfers today to protect your future assets. Only after this does it make sense to worry about paying bills to anyone else. If you're destitute and homeless you won't be able to pay anyone anyway, so this is only a prudent measure, and our society would be much more secure if everyone took this approach. As a final measure, $10k in an offshore account could be enough to bail yourself out of a bad situation by relocating to a foreign country with more favorable conditions.
Earl of Texas is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-09-2011, 01:01 AM   #39 (permalink)
Family Member
 
Join Date: Sep 2008
Posts: 2,950
Curtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to behold
Default

Quote:
Originally Posted by Travis View Post
I am a lover of books. I have come across two authors with two different point of views.

Dave Ramsey: author of Total Money Makeover and Financial Peace
His basic message is that debt is bad, and that people should not borrow money. No credit cards, no car loans, and if possible no mortgage (he wants you to buy a house with cash, or pay it off as fast as possible).

Robert Kiyosaki: author of Rich Dad Poor Dad series. I have only read his first two books (Rich Dad Poor Dad, and Cash Flow Quadrent).
He says that there is good debt and bad debt. Kiyosaki says that using debt to buy investment real estate is an example of good debt. Consumer debt would be bad debt.

I for the most part agree with what Ramsey says. I do not have any credit cards, my wife and I are paying off our debt, and we plan on putting at least 50% down on a house.

I would like your thoughts on this subject. Do agree with me, or think I am completely crazy. If you have not read these books, well go get them. They are fantastic books.
Both of them are correct in their own ways.

Dave Ramsey's stuff is mostly intended for people who are heavily in debt and trying to get out of it. Thus, he teaches those people how to save money very conservatively and pay off the debt.

Obviously someone who has a problem with debt already, should not be told "there is good debt and bad debt" (which is true) because they have already proven their incompetence at distinguishing between the two. Thus, you tell them that "all debt is bad" because you don't want them mistaking new debt as good debt when it is in fact bad. (kind of like telling a child "crossing the street is bad" because he is too young to know when it is safe to cross)

Meanwhile, Robert Kiyosaki's work is not intended to get you out of debt, but to get you upwards in income and obtain wealth. Thus, if you start a business yourself, taking on large amounts of debt is very often a necessary component of funding its startup.

By the way, if you take even a basic corporate finance class in a business degree at a university, you will soon learn exactly why there is such a thing as good debt. The very shortest explanation of it would be "they borrow money at 5% interest and make 8% returns on it, thus profiting from their debt." (although those two percentages will vary)

Last edited by Curtis2011; 08-09-2011 at 01:05 AM.
Curtis2011 is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-09-2011, 02:24 AM   #40 (permalink)
On Vacation
 
Join Date: Nov 2006
Location: France - Japan - Korea
Posts: 3,241
aelle has a reputation beyond reputeaelle has a reputation beyond reputeaelle has a reputation beyond reputeaelle has a reputation beyond reputeaelle has a reputation beyond reputeaelle has a reputation beyond reputeaelle has a reputation beyond reputeaelle has a reputation beyond reputeaelle has a reputation beyond reputeaelle has a reputation beyond reputeaelle has a reputation beyond repute
Default

Quote:
Originally Posted by Travis View Post
So let’s say you buy 10 rent houses using all debt. What will you do if all of the tenants move out?

That’s right; all 10 houses that you have a mortgage on are empty. Now you are stuck paying the mortgage payment.

What if you had paid cash for all the house, and then they emptied out? The loss on the bottom line would not be as bad.

At some point in our lives, something bad is going to happen. We all need to be prepared. Having no debt what so ever is a great way to prepare. Having extra cash at the end of the month will help most people deal with problems.

Please understand that I am not trying to be a downer. I actually am an optimist. But I also know that something bad could happen at any time. I want to be prepared for that in the best way possible.

Hope everyone is enjoying this debate.
1. Typically if you plan on making money by renting out properties, you figure out in the rent not just your mortgage but also your extra costs like repairs, taxes and, yes, vacancies. If for this neighborhood and this price the typical vacancy is 2 months a year, then you make the rent 15% higher than the sum of your costs. By the time your property is vacant you have put enough aside to cover the mortage when you don't have tenants. You'd need really bad luck (or poor planning) to have your first 2 months be vacancies.

2. Having 10 properties mitigates your risk, as it's really, really unlikely that they all empty out at the same time without warning signs. If one of them empties out you can sponge off the costs with the profit generated by the 9 others.

3. The big problem with paying cash for 10 properties is the loss of income on that cash for the years it took you to gather it. Did it sit in the bank earning 2 meager percents a year until you had your 10 times $100,000 to buy these properties? Then you certainly lost money - through inflation first, and through all the profit you failed to make over the years with your capital.
aelle is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-12-2011, 09:28 PM   #41 (permalink)
Family Member
 
Join Date: Oct 2008
Location: Eastern Long Island, USA
Posts: 1,047
Strem2 will become famous soon enough
Default

Quote:
Originally Posted by Travis View Post
So let’s say you buy 10 rent houses using all debt. What will you do if all of the tenants move out?

That’s right; all 10 houses that you have a mortgage on are empty. Now you are stuck paying the mortgage payment.

What if you had paid cash for all the house, and then they emptied out? The loss on the bottom line would not be as bad.
...
Let's say you have enough money for 10 houses leveraged, or one house paid outright. Let's say you lose one tenant from the 10 houses and one from the one house.... In the first instance you still have income from nine. In the second situation, you have no income and if your house needs repairs, you have to pull from equity or from some other income.

This is the reason Kyosaki suggests that you use "other people's money." However, you do have to buy at a price that will allow you to rent a home for a profit. This is not as easy as it sounds, and won't work in many areas. You have to check with the local realtors, to find out what renters are paying and what they can comfortably pay, and check the local ads to see what the asking range is. I found that I wasn't willing to talk the owners down to a price that would make financial sense for me.

But, I'm a social worker and wanted to be fair.....
Strem2 is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-12-2011, 11:48 PM   #42 (permalink)
Family Member
 
Join Date: Feb 2010
Posts: 1,519
SnerpGoodWord will become famous soon enoughSnerpGoodWord will become famous soon enough
Default

Quote:
Originally Posted by bigadam View Post
That sites a joke. The person writing it has a tremendous personal vendetta against Robert K.

Robert wrote an amazing book (RDPD) then became a fraud, in that order. RDPD is well worth reading.
Nah, he was a fraud to begin with. There never was a "rich dad" - it's all a lie. The person never existed.
SnerpGoodWord is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-13-2011, 02:49 AM   #43 (permalink)
Family Member
 
Join Date: Sep 2008
Posts: 2,950
Curtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to beholdCurtis2011 is a splendid one to behold
Default

Wow this thread is old. I posted in here just the other day, without realizing that I had already responded to it two years ago.

Again I would put my opinion to the mods (if any see this) that old threads in these forums should be locked after they have not had any replies for a certain amount of time. I hate posting in a thread then realizing that it is literally years old and the original author is long gone.
Curtis2011 is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-15-2011, 02:18 AM   #44 (permalink)
Junior Member
 
Join Date: Aug 2011
Posts: 19
Robmeister is on a distinguished road
Default

I have read this thread with great interest....lots of good stuff here.

No one mentioned it, but the KEENER INSIGHTS above seem almost directly derived from a book by Douglas R. Andrew called, "MISSED FORTUNE" and the abridged version "MISSED FORTUNE 101"

If you haven't heard of or read this book, I'm impressed by the number of times some of you hit on Andrew's key strategies.

Here's a link to his sight for those interested in further perusing on this subject of good debt/bad debt....or as Andrew calls it "preferred debt" and "consumber debt"

About Doug
Robmeister is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Old 08-15-2011, 02:21 AM   #45 (permalink)
Junior Member
 
Join Date: Aug 2011
Posts: 19
Robmeister is on a distinguished road
Default

Quote:
Originally Posted by Curtis2011 View Post
Wow this thread is old. I posted in here just the other day, without realizing that I had already responded to it two years ago.

I hate posting in a thread then realizing that it is literally years old and the original author is long gone.
Yer right, Curtis, my post applies to the original flurry of folks back in 2008....oh well.
Robmeister is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
Reply

Bookmarks

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Robert Kiyosaki - Rich Dad Series JoeKinley Business & Financial 26 03-18-2007 02:36 AM


All times are GMT. The time now is 01:51 AM.


Powered by vBulletin® Version 3.8.2
Copyright ©2000 - 2012, Jelsoft Enterprises Ltd.
Search Engine Optimization by vBSEO 3.1.0
Copyright © 2010 by Pavlina LLC