Passive Income

Comment from Dom Leong
Time: January 5, 2010, 7:02 pm

Assets as Robert Kiyosaki puts it are things that put money into your pocket. Liabilities pull money out of your pocket.

A house does very little to put money into your pocket. Sure it goes up in value but you can not really use the “Equity” until you sell. the whole time your paying out of pocket to live in a home. Why do people sell their homes most times then not? Easy, to move into a bigger home, which in turns gives them a larger mortgage and a larger amount owing to the banks. They use the “Equity” of their last home to put towards their new bigger home and move up in the middle class. So essentially they will never get to touch the “Asset” part of their homes “Equity” Very few people will ever fully pay their house off. Most people will take the “Equity” out of their home to pay off debts (liabilities) leaving them owing more now to the bank. And maybe 3% – 5% of those people who paid off their debts using Equity, will actually learn their lessons on debt spending and move forward where 95% of the other people will just be back in the same position 2 years later. Very few people understand money which is their biggest down fall.

In the long term a rough estimate is a $200,000 home will cost you over $350,000 – $400,000 by the end of a 25year mortgage. So your paying out the nose for something that the interest is eating you a live. How is that an asset?

We all need somewhere to live. You can’t just sell your house and Tada your made a profit. Now where are you going to put your profit? Exactly, back into another home or rental appartment so you can have a warm place to sleep at night. Cha-Ching, back into the liabilities column you go. its taking money out of your pocket again. Rarely do you see a direct “Flow” of cash.

You really need to re-think R. Kiyosaki’s words “Cash flow”. Its’ the flow of money not the “sit and wait years till its worth something” type of idea. Where is the flow in sitting and waiting 25 years? most of you will probably be dead by that time. If you want your money working for you right away, focus on the “Flow” of cash to pay for your living style. i’m 26 years old, a high school drop out and I know that. Hell, i’ve already made my 2nd rental property transaction and its brining in an additional $600/month in “Cash Flow” on top of my existing rental property of $535/month into my bank account every month. These combined pay for my mortgage on my current condo just outside of downtown as well as my strata fees and taxes and some groceries. I’m living free and clear on my “Cash Flow” and use my money from my 9-5 to start investing into more assets.

Some people who bring down R. Kiyosaki as a “Fraud” or “Used Car Salesman” really need to get their heads out of their asses and take a look at their own life. Pul your self out of denial and give your whole life a shake. Your too old or your too stuck in your ways it seems. Saving and mutual funds, 401k and retirements wont be what you expect them to be when you retire. You need to change the way you think about money and how you make your money work for you NOW, not in 10,20,30 years. Obviously your paddling against the current because your working in the wrong direction fighting for financial freedom that you will never achieve unless you turn around and paddle with the current and see how easily wealth will come to you.

As R. Kiyosaki says in a lot of his work, does a stock broker invest in stocks? does a real estate broker invest in real estate? I wrote a paper on this to explain to my boss at the paper that 1 out of every 10 people I interviewed actually did personally what they try and do every day for their 9-5 job. Thats 1 our of every 10 stock brokers actually invest in stocks. and 1 our of every real estate broker owned real estate. It was quite depressing because they sell this stuff to people like us day in and day out yet only 1 out of 10 actually follow what they’re selling? After interviewing 160 people only 16 of them knew what they were selling and stood behind it by investing as well on their own.

I come on here telling you these things because i’ve done them. Some of you sound like you come on here with your “Opinions” THINKING you know what your talking about, in most cases you do have valid points, others, just sound like your running a dead end program in your personality and that your to afraid to research the truth or your in denial about money and investing.

Do this, get rid of the word “Net Worth” and use the word “Financial Wealth” do this test to see how you fit. Financial wealth is how long can you last with out a paycheque? most people can not survive more then a month with out a paycheque. If your home is an asset where is the “Cash Flow” to help you if you lose your job? most chances your going to have to foreclose your house because you can’t afford to keep up on the payments…. Right now, if I lost my job, my condo is covered, I can keep a roof over my head, the heat on during the winter, and some food on my plate. My liability, which is my car, would have to go but that will change when i close the 3rd property in the future.

If your offended or angered by what I wrote, please, explain your self, i’d love to hear what triggered you into anger. I’m sure you will have some great points that i’d love to hear.

Cheers
Dom

Comment from Dusty
Time: January 6, 2010, 8:00 pm

Well said my friend…well said.