Book Notes: Rich Dad Poor Dad
- Broke is temporary, poor is eternal
- Affirming you're rich is a big deal. You can have a rich life without having loads of money
- Money comes and goes, but education about money is powerful
- Lesson 1: The Rich Don't Work for Money
- You can only change what you have control of
- Assets over income
- When emotions go up, intelligence comes down
- Lesson in action: rich dad paid the kids nothing, they eventually collected the old comic books from the store and opened a comic book library and charged kids to come read for a couple hours after school. Their money worked for them, they made money while not present (their sister ran it while she studied)
- Lesson 2: Why Teach Financial Literacy
- It's not about how much money you make, it's about how much you keep
- Rule 1: you must know the difference between an asset and a liability, and only buy assets
- “The illiterate of the 21st century wii not be those who cannot read and write, but those who cannot learn, unlearn, and relearn” - Alvin Toffler
- Cash flow tells the story of how a person handles money
- Lesson 3: Mind your own Business
- Assets to purchase
- Business that do not require my presence
- Stocks
- Bonds
- Income-generating real estate
- Notes (IOU)
- Royalties from intellectual property such as music, scripts, and patents
- Anything else that has value, produces incomes or appreciates, and has a ready market
- Get in with startup company stock, get out within a year
- Get in with real estate, get out by year 7, trade up for bigger and better properties and delay paying taxes on the gain
- “The rich focus on their asset column”, the rest focus on their income statement
- “Once a dollar goes into your asset column, it becomes your employee”
- Assets to purchase
- Lesson 4: The History or Taxes and the Power of Corporations
- Tax code 1031 - you can delay paying taxes on real estate as long as you keep upgrading until you finally liquidate
- Financial Intelligence
- Accounting
- Investing
- Understanding markets
- Understanding the tax law
- Corporations can spend on expenses before getting taxed (eg: write offs and only get taxed on what is left)
- Have your corporations (or trusts) own your stuff, it will protect it from lawsuits
- Lesson 5: The Rich Invent Money
- “Often in the real world, it's not the smart who get ahead, but the bold”
- Look for opportunities to invent money
- Real estate, trade up properties and tax defer the gains with the 1031 exchange process
- Lesson 6: Work to Learn - Don't Work for Money
- “You want to know a little about a lot”
- JOB is an acronym for “just over broke”
- Highly specialized, then unionize. Skills don't always transfer from one industry to the other
- “People are so afraid of losing that they lose” - don't miss out on an opportunity out of fear
- “Failure inspires winners, failure defeats losers”
- “Cynics criticize and winners analyze”
- Getting Started
- Find a reason greater than reality: the power of spirit
- Make daily choices: the power of choice
- Choose friends carefully: the power of association
- Master a formula and then learn a new one: the power of learning quickly
- Pay yourself first: the power of self-discipline
- Pay your brokers well: the power of good advice
- Be an Indian giver: the power of getting something for nothing
- Use assets to buy luxuries: the power of focus
- Choose heroes: the power or myth
- Teach and you shall receive: the power of giving
- “There is always another wave” - surfers realize that missing a large wave isn't the end
- Be careful to not get stuck listening to chicken littles
- “You are what you eat” — “you become what you study”
- “The rich know that savings are only used to create more money, not to pay bills” - don't “dip into savings”
- Put money into an investment, let it grow, pull out your initial investment, and you just got more money for free now that you made back your initial investment
Justin Hammond
I love all things tech. I've been programming since the age of 12, repairing iPhones since 16, and founding tech companies since 20. I'm an open source fanatic, Apple fanboy, and love to explore new tech. I spend my time coding open source projects, tinkering with electronics and new tech products, and consulting teams on how to get things done.
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