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Old 10-09-2006, 09:38 AM   #1
Goatboy
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Question Officially lost my faith in Donald Trump and Robert Kiyosaki

I caught some of the Today show before I left for work today, and saw an interview with Donald Trump and Robert Kiyosaki. Donald Trump needs no introduction, but, Robert Kiyosaki might; he's the guy who wrote the book "Rich Dad, Poor Dad". That book was on my list of "to read" until this morning.

Together, Donald and Richard came up with a list of "financial myths". Here are the top 3 "financial myths" that both of them were saying people today are focusing too hard on.

1. Work Hard

2. Save Money

3. Get ouf of debt

Am I missing something here? I mean, how do you become a millionare by being lazy, spending all your money, and going into debt?

I'm not making this up; these were actual things that they both considered people worked too hard to do to get themselves out of debt.
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Old 10-09-2006, 09:50 AM   #2
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Re: Officially lost my faith in Donald Trump and Robert Kiyosaki

Takes money to make money.

I'm sure as rich as either of them may be, they've surely got debt.

Work smarter, not harder...of course you can only get away with that line of thought in a service oriented economy like ours has become.

I know where you're coming from w/ the outrage/wierd feeling in the pit of your stomach, but it sounds to me like their trying to start the atkins diet equivelant of financial thought? I dunno, here's a pick of Donald's Daughter to make you feel better.
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Old 10-09-2006, 10:38 AM   #3
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Re: Officially lost my faith in Donald Trump and Robert Kiyosaki

Quote:
Originally Posted by Goatboy View Post

Together, Donald and Richard came up with a list of "financial myths". Here are the top 3 "financial myths" that both of them were saying people today are focusing too hard on.

1. Work Hard

2. Save Money

3. Get ouf of debt
I haven't read the book or seen the interview but I'm going to take a stab at this anyways.

1. As JB metioned .. work smart > work hard - don't get into the mantra of just working hard at your job and rising through the ranks .. make sure you consider all options

2. Save Money - Well you could let your money sit in a savings account at 3-5% interest or you could buy and hold and hopefully get good returns or you could look into investing your money in the market or investing your money into real estate to make some serious returns.

3. Get out of debt. - Well i think this one depends on what type of debt you're in and why. I would bet that they would advise to get out of credit card debt because of the high interest rates. But other types of debt - mostly mortgage debt isn't so bad due to tax benefits and the increase in capital value that the property will gain. Other types of debt - student loans or car loans aren't so bad if you have a low enough rate and are able to earn higher returns with the money invested in the stock market or real estate market.

Is this what they were hinting at or am I way off?
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Old 10-09-2006, 11:27 AM   #4
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Re: Officially lost my faith in Donald Trump and Robert Kiyosaki

That's the thing; they were really hinting at that.

I mean, they literally had the points posted in graphical format during their little interview worded just like I posted. There were others, but, I can't find the story yet online.

I admit, working 80hrs a week for $5.75/hr isn't working smart. The only way you'll get rich working minimum wage is to live with your parents for 50 years, and never buy anything.

And yeah, savings accounts are pretty lousy for returns. Real Estate is one of the better/faster returns for your money, but, you've got to have money to make money there. If you borrow money to make money in real estate, you're askin for an anal rapeing.

Getting out of debt is one of the simplest (maybe not the easiest) ways to have money. There's not one way to get into debt that makes sense money-wise. A personal residence is about the only way I can see going into debt, but, only with fixed rate mortgages, and 15yr loans. Anymore, and your money is working for the bank, and not for you. Student loans are still amazing to me. I know they help people get through college who couldn't afford to get through without them, but, look at what happens. There's a lot of people who borrow $50-60,000 in student loans who get out of college, only to make $30-40,000/yr. They spend half their working life paying off the student load debt. They can look hard enough and work a $30-40,000/yr job for a few years, and save up enough money to pay for college in a few years, and not come out upside/down. I may get ripped for this one, but, there are VERY few jobs out there worth taking out a loan to work at, and that's what you're doing when you take out a student loan... Borrowing money to work a job. Now, don't get me wrong. I think higher education is a must, but, I think too much importance is placed upon it right now to the point to where people think they have to go into debt to get a diploma. There's nothing wrong with NOT going to school until you an afford it. If you get grants, scholorships, etc., only THEN are you stupid NOT to go to college.

It's taken me a LOT of years and bad experiences to finally realize this; car loans are the absolute worst way to spend your money. There is not a car loan out there that is worth the money. The only one that comes close is the 0% financing, but, you still loose a ton of money. You may not accrue finance charges, but, if you buy a brand new $30,000 car at 0%, you loose approximatly $4-7,000 value off the car the first year. So, after your first year, you're still financing $28,000 for a $22-25,000 car. Plus, the 0% financing is being looked at more and more lately as a bait-and-switch tactic. The majority of people do not qualify for the 0%, and auto companies know that. They use it as a marketing gimmic to get you in the store, and when ya don't qualify, that's when they have a better chance of getting you into a car at a %7-12 finance rate.

A car loan is bascily borrowing money for an object that depreciates in value, and no self-made millionare is going to tell ya it's a smart thing to do.

To me, the one that sticks out the most is the myth "get out of debt". Here's the simple logic. If you have debt, you don't need to start investing over and above a simple 401K that your company may/may not be helping you out on. If you have a mortgage, you don't need to invest yet. If you have a car loan, you don't need to invest yet. If you have credit car debt, you don't need to invest yet... Why? If you didn't have any debts what-so-ever, would you go and borrow money at 7% for 15-30years to use to invest? Would you borrow $30,000 at %7-12 for 5-7years to invest with? Would you borrow money from your credit card at %22+ percent to invest with?

Smartest way is to pay off your debts, including your car, house, credit card (ESPECIALLY) and student loans BEFORE you invest. Then, you take the money you were spending on those loans, and ALL of that money is going to work for you in the investments; not the banks, auto lendors, or credit card companies.
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Old 10-09-2006, 11:47 AM   #5
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Re: Officially lost my faith in Donald Trump and Robert Kiyosaki

I know one thing, I feel a lot better after JB showed me some strange booty. I'd let her sit on my face for sure.

Thanks JB!
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I mean, when you are with a woman, doing a bit of heavy pettin' and you put your hands down her pants, and into the panties, I want to know when I hit that border line. That unmistakable sensation of pubic hair through the fingers that lets you know, you are now into a private area, and you wouldn't be there unless she wanted you there. It's like a green light of sorts, when your hand hits hair!
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Old 10-09-2006, 12:04 PM   #6
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Re: Officially lost my faith in Donald Trump and Robert Kiyosaki

Why the hell did you have faith in Donald Trump to begin with?
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Old 10-09-2006, 12:42 PM   #7
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Re: Officially lost my faith in Donald Trump and Robert Kiyosaki

Here's how I look at the whole debt issue...

I currently only have two sources of debt, credit card and a car loan and I anticipate going into debt for a mortgage on a a house or condo. Regardless of the debt and the amount of cash I have, I plan on investing a significant amount of money into the stock market instead of using that money to completely pay off my debt, here's why...

Credit Card - I pay this off every month, never keep a balance, and never spend more than I have because obviously the amount I'd have to pay in interest is way too high and it's almost impossible to justify unless you need to pay for necessities (e.g. food)

Car Loan - I'm working to pay this off as soon as I can but I'd rather not pay it all off now. I bought an affordable car that has very strong value retention and got a pretty competitive rate (5.25 I think) to minimize how much I lose to interest and reduced principal of the car.

I made a big lump sum payment so that my monthly payments are hitting the principle of the loan rather than just the interest.

However I don't pay off the full amount just yet due to the opportunity cost of spending the cash instead of investing it. Instead of paying down more of my car loan I took a good sized chunk of cash and put it into an investing account instead. I have faith that I can make a larger gain on that cash by investing it than the amount of interest payments I'd reduce by paying down my car loan.

Let me give a concrete example.

Say my car loan is 10,000 and I'm paying 5.25% interest.
Ignoring compounding and all the other stuff, I'd owe 525 interest for the year.

So I have 10,000 in cash, should I pay off the loan, put it in the bank or invest it? If I pay off the loan today, I save the 525~ in interest.

If I put it into savings, I make 4.4% - 440 and end up losing $85 pre tax

I could put it in a 1 yr CD and make 5.25% which nets me 0 pre tax.

Of course in both of these cases I'd have to pay taxes on my interest income which would create a loss.

I could invest the 10,000. If I hit the S&P Historic average of 10% / yr even after capital gains taxes (if you assume short term rate @28%) you'll make 720 which nets you approximately 200 dollars. So basically if you earn as much as the market and you decide to pay the car loan instead of investing you'll lose 200 dollars.

Now obviously this is all potential gains so you have to use your best judgement and the risk you're willing to take on. Because you could end up with a negative return for the year and end up costing yourself more money by investing rather than paying off the loan.
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Old 10-09-2006, 12:58 PM   #8
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Re: Officially lost my faith in Donald Trump and Robert Kiyosaki

1. Work Hard - Never work hard, work smart.

2. Save Money - I think what he means, is if you have small amounts of money and want to be sucessful you will put it all into what you are trying to be a sucess at.

3. Get ouf of debt - Most big business are run in constant debit. I knew a guy that ran his entire business off of his credit cards. He bought and sold small tractors, golf carts and so on and used the credit card companies money to do it.
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Old 10-09-2006, 01:28 PM   #9
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Re: Officially lost my faith in Donald Trump and Robert Kiyosaki

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1. Work Hard - Never work hard, work smart.
Understandable. It's dumb to work hard for minimum wage. But, you'll never get paid good money just for being smart. You can be a genius, but, there are lots of broke lazy geniuses out there.

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2. Save Money - I think what he means, is if you have small amounts of money and want to be sucessful you will put it all into what you are trying to be a sucess at.
But, if you put every bit of money you have into what you're going to be successful at, you are running the risk of loosing it all.

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Originally Posted by crockett View Post
3. Get ouf of debt - Most big business are run in constant debit. I knew a guy that ran his entire business off of his credit cards. He bought and sold small tractors, golf carts and so on and used the credit card companies money to do it.
Most companies are run in constant debt. Enron, Worldcom, etc.

And if the guy you knew thinks he was running his business off of the credit card company's money, he needs to take a finance class.
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Old 10-09-2006, 01:52 PM   #10
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Re: Officially lost my faith in Donald Trump and Robert Kiyosaki

Ivanka's luvin the photoshop era..I saw her on TV and she's pullin way more poundage than in that pic
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