Rich Dad Poor Dad: Chapter-3: Mind Your Own Business

Chapter: 3-  Mind Your - Own Business:

The rich tend to focus on their property columns while all the rest focuses on their income statements.

In 1974, McDonald's founder Ray Croke was asked to speak in an MBA class at the University of Texas at Austin.  A friend of mine was a student in that MBA class.  After an impressive and inspiring talk, the class adjourned and the students asked Ray if he would ask to have some beer jointly at his favorite hangout.  Ray graciously accepted.

"What business am I in?"  Ray asked, once the group had all their beers in hand.

"My friend said," everyone laughed.  "Most MBA students thought Ray was just fooling around."

No one answered, so Ray again asked, "What business do you think I'm in?"

The students had a laugh again, and finally a brave soul shouted, "Ray, who in the world doesn't know you're in the hamburger business?"

Ray Chakali.  "Which I thought you would say."  They stopped and then quickly added

"Ladies and gentlemen, I am not in the hamburger business. My business is real estate."

As my friend tells the story, Ray spent a good time explaining his point of view.  In his business plan, Ray knew that the primary business focus was to sell the hamburger franchise, but what he had never seen was the location of each franchise.  He knew that the land and its location were the most important factors in the success of each franchise.  In fact, the person who bought the franchise was also purchasing real estate under the franchise for Ray Croke's organization.

Today, McDonald's is the largest single owner of real estate in the world, owning more symmetry than the Catholic Church.  McDonald's owns some of the most valuable squares and street corners in the US and around the world.

My friend considers this one of the most important lessons of his life.  Today he owns Carwash, but his business is the real estate underlying those car washes.

The previous chapter presents a picture that states that most people work for everyone.  They work first for the owners of the company, then through the government, and finally for the bank that owns its mortgage.

When I was a little boy, we didn't have a McDonald's pass.  Even then, my rich father Mike was reluctant to teach and taught me the same lessons that Ray Crow had spoken at the University of Texas.  This is the secret number three of the rich.  That's The Secret: Mind Your Upsbusiness.  Financial conflict often results directly from working throughout people's lives.  Many people will do nothing for their efforts at the end of their work days.

Our current educational system focuses on preparing today's youth for good jobs with scholastic skills.  His life will revolve around his salary, or, apparently, his income column.  Many will further study to become engineers, scientists, cooks, police officers, artists, writers, etc.  These professional skills allow them to work and work for money.

But there is a big difference between your profession and your business.  Often I ask people, "What's your business?"  And they would say, "I am a banker."  Then I ask them if they own the bank.  And they usually reply, "No, I work there."  In that instance, he has a confused profession with his business.  His profession may be a banker, but he still needs his own business.

One problem with school is that you often become what you study.  So if you study cooking, you cook a chef.  If you study law, you become a lawyer, and studying auto mechanics makes you a mechanic.  The mistake in becoming what you study is that many people mind their own business.  They spend their lives for another person's business and make that person rich.

To become financially secure, a person needs his or her own business.  Your business is around your asset column, not your income column.  As stated earlier, the number-one rule is to know the difference between an asset and a liability and to buy an asset.  Therik focuses on his asset column, while all the others focus on his income statement.

This is why we hear so often: "I need a lift."  "If I only had one promotion."  "I'm going to school to get more training so that I can get a better job."  "I'm going to work overtime." "Maybe I can find another job.

In some circles, these are sensible ideas.  But you are still not paying attention to your own business.  These ideas all still focus on the income pillar and will only help a person to be more financially secure if additional funds are used to purchase income-generating assets.

The primary reason most people in the poor and middle class are conservative - meaning, "I can't afford to take risks" - is that they have no financial basis.  They cling to their jobs and keep it safe.

When the "in" thing became downsizing, millions of workers came to know of their greatest asset, their home, eating them alive.  He had to spend money every month for his "wealth".  His car, another "property," was eating them alive.  Golf clubs costing $ 1,000 at Garget were not worth $ 1,000.  Without job security, they had nothing to fall back on.  They felt that assets could not help them survive in times of financial crisis.

I think most of us have filled out a credit application to buy a house or car.  Always look at the "Net-Worth" section to acknowledge that banking and procurement practices allow a person to calculate assets.

One day when I wanted a loan, my financial situation was not very good.  So I added conceited personal effects to boost the number in my new golf club, my art collection, books, electronics, Armani suits, wristwatches, shoes and property columns.

But I was turned down because I had too much investment real estate.  The loan committee did not make that much money from rent.  They wanted to know why I do not have a normal job with salary.  He did not question the Armani suit, the golf club, or the art collection.  Life is sometimes hard when you don't fit the standard profile.

Every time I hear someone say that their total assets are one million dollars or 100,000 dollars or whatever.  One of the main reasons net worth is not correct is simply, the moment you start selling your property, you are taxed for any profit.

So many people find themselves in deep financial trouble when they run from lack of Ininac.  To raise cash, they sell their property.  But their personal assets can usually be sold only a portion of the value listed on their personal balance sheets.  Or if there is a profit on the sale of assets, they are taxed on the profit.  Therefore, the government takes its share again, thus reducing the available amount and helping them get out of debt.  That's why I say that someone's net worth is often "lower" than they think.

Start considering your own business.  Keep your day job, but start buying real property, notability or personal effects, which have no real value after coming into the house.  A new price is about 25 percent of the price you pay for it the moment you drive it too far.  Even though your banker allows you to list it, it is not a true asset.  My new $ 400 titanium driver, was $ 150, the moment I left it.

Keep expenses down, reduce liabilities, and diligently build solid assets.  For young people who have not yet left home, it is important for parents to teach them the difference between asset and liability.  Start building a solid property pillar before getting them home, get married, buy a house, have children and get stuck in a risky financial situation, stick to a job and buy everything on loan.  I see many young couples who are married and find themselves stuck in a lifestyle that won't let them get out of debt for most of the working years.

For many people, as soon as the last child leaves home, the parents find out that they have prepared remarkably for retirement and they scramble to get some money out.  Then their own parents become ill and they find themselves with new responsibilities.

So what kind of property am I suggesting that you or your children acquire?  In my world, real property falls into the following categories:

Businesses that do not require my presence: I own them, but they are managed or run by other people.  If I have to work there, it is not a business.  This becomes my job.

1. Stock

2. Bonds

3. Income Generating Real Estate

4. Notes (IOUs)

5. Royalty from intellectual property such as music, scripts and patents

6. Whatever the value, it produces income or appreciation, and is a ready market

As a young boy, my educated father encouraged me to find a safe job.  But my rich Dadagiri started acquiring properties that I loved.  "If you don't love it, you don't know about it."  I collect real estate only because I love buildings and land.  I love shopping forts, and I could see them throughout the day.  When problems arise, problems do not arise that it changes my love for real estate.  People who hate real estate should not do it for them.

I also love the stocks of small companies, especially start-ups, because I am an entrepreneur, not a corporate person.  In my early years, I worked in large organizations such as Standard Oil, US Marine Corps and Xerox Corp of California.  I enjoyed my time with those clutter and brought up memories, but I know that I am not a company man.  Starting iLike companies, not running them.  So my stock buys are usually from small companies.  Sometimes I also start a company and make it public.  Fortunes are made in new stockissues, and I love the game.  Many people are afraid of small-cap companies and call them quirky, and they are.  But this risk is reduced if you love what investment is, understanding and knowing the game.  With smaller companies, my investment strategy is to stay out of stockin for a year.  On the other hand, my real estate strategy is to start small and trade forbigger assets and, therefore, delay paying taxes on profits.  This decreases the value dramatically.  I generally hold real estate of less than seven years.

For years, when I was with the Marine Corps and Xerox, I did what my rich Dadri did.  I took over my day job, but I still started my own business.  I was active in myasset columns real estate and small stocks.  The rich father always emphasized the importance of financial literacy.  The better I understood accounting and cash management, the better I would be to analyze investments and eventually start and build my company.

I don't encourage anyone to start a company unless they really want to.  After knowing the icon to run the company, I will not do this work on anyone.  There are times when people do not get employment and starting a company seems like the best solution.  But there are against success: nine out of ten companies fail in five years.  Of those who survive the first five years, nine out of every ten eventually fail.  So only if you really desire your own company then I suggest it.  Otherwise, keep in mind your day job and your own business.

When I say my own business, I mean you keep your asset column strong and strong.  Once a dollar goes into it, it should never be allowed to come out.  Think of it this way: Once a dollar goes into a property column, it becomes your employee.  The best thing about money is that it works 24 hours a day and can work for generations.  Keep your day job, be a great hard worker, but keep building that asset pillar.

As your cash flow increases, you may indulge in some luxury.  An important difference is that ostrich people buy luxury items, while the poor and middle classes buy luxury items first.  Thapur and middle class often buy luxury items like big houses, diamonds, furs, jewelry, orbets because they want to look rich.  They look rich, but really they just go deep

Loan on loan.  Old-money people, long-time wealthy, first build their wealth pillar.  Then the income generated from the asset column buys their luxury.  The poor and middle class buy luxury items with their sweat, blood and children's heritage.

A real luxury is a reward for investing in and developing a real property.  For example, when Mary Kim and I had extra money coming from our apartment houses, she went out and sold to Mercedes.  There was no additional work or risk on his part as the apartment stopped the car.  However, he had to wait four years while the real estate investment portfolio grew and started generating enough additional cash flow to pay for the car.  But Mercedes, the Thales math, was a true reward because she proved that she knew she had to grow cassette columns.  That car now means a lot more to him than another beautiful car.  This means that he used his financial intelligence to carry it.

Instead, most people forcibly go out and buy a new car, or some other luxury, on credit.  They can feel bored and just want a new toy.  Purchasing a luxury on credit often causes Epperson to resent that luxury because debt becomes a financial burden.

When you took the time and invested in and built your own business, you are now ready to unravel the biggest secret of the rich - the secret that puts the rich way ahead of the pack.

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