Robert Kiyosaki’s Cashflow 101 Board Game – Watch the little introduction video on the cashflow 101 game that changes people’s lives! Enjoy!
Get out of the Rat Race – buy Rich Dad’s Cashflow 101 Game
Robert Kiyosaki, a self-made millionaire and bestselling author of “Rich Dad Poor Dad” in his newly released book, “Rich Brother, Rich Sister” said, that strengthening one spirit is important to success. Spirit is the difference between success and failures. The world is filled with talented people but it’s the people with talent AND strongest spirits who win. In sports there are many gifted athletes but it’s the athletes with the strongest spirit who win. In business, according to real estate tycoon Donald Trump, “successful entrepreneurs run on spirit”.
Just want to talk to you about the cashflow 101 board game by Robert Kiyosaki. We play Cashflow with our friends on a regular basis. I love the game, financial education is the best way to help you learn about money, and what better way …
Robert Kiyosaki’s Cashflow 101 game is a great learning tool. The following hints have been compiled so that you can get the most value you possibly can from the game. These tips apply to real life as well, so keep your heads up. …
Cashflow 101 is an educational board game that teaches accounting, finance, and investing at the same time. It makes learning fun. Cashflow 101 is recommended for adults and children age 10 and older.
Historically a first tier lender has been an institutional lender such as a Bank or similar company which falls under the regulatory agencies such as the FDIC or Federal Reserve. The rates of interest they charge are almost always tied to Prime, or to the Libor rate of interest. The interest charged is at quoted rate plus a factor which can be as high as 4%. An example would be if the rate was agreed to be the prime rate, you would take that rate and add 4% to it which would get you your annualized interest rate.
The second tier lender is usually a company which does not fall under these regulatory agencies. In some states they are regulated by the state banking laws. But all second tier lenders are restricted to lending to businesses and are restricted from making any type of consumer loans. All of the loans are secured by collateral and almost always personal guarantees of any owners of more than 20% of the stock. Interest rates are usually tied to the prime rate but the rate which is added on rate is higher than a Banks because of the additional cost of doing business.
The final tier is usually an individual or individuals who lend money but are quite often interested in one particular industry or type of collateral. The terms from these lenders tend to very high interest rates and low loan to value ratios.
In the current banking economy few first tier lenders are actually making loans. Therefore the second tier lender is acquiring a larger market base as companies who traditionally would have secured first tier financing are only option is to obtain financing with the second tier lenders.
That being said, one has to ask themselves if a lender who is not making loans can be considered a 1st tier lender. Likewise if a commercial finance company is lending money in this economy can they still be looked upon as a second tier lender when they are the only segment of the business community that is lending money.
This site shows how to improve your Internet business cash flow by applying PROVEN methods to your online business, even if it’s a one-person operation.
On the cover of the October 19, 2009 issue of “Time” magazine ran this headline: “Why It’s Time to Retire the 401(k).” The cover picture was ominous, showing a 401(k) sinking like the Titanic.
I recommend reading this entire article, especially if you do have a 401(k). My concern is that the flaws of this retirement plan will grow into personal tragedies as the first of approximately 75 million baby boomers retire, leading to the biggest stock market crash in history.
But in spite of the apparent problems with the 401(k) plan, the darlings of financial media continue to tout its benefits. The same month “Time” ran its article, “More” magazine’s financial guru, Jean Chatzky, wrote an article about using low-interest savings to pay off high-interest credit cards. In the article she states, “There’s no better guaranteed return on your money (except, perhaps, a 401(k) match).”
Countering Jean’s wisdom of “no better guaranteed return,” the “Time” article stated, “At the end of 1998, the average 401(k) balance was $47,004. By the end of 2008, the average balance was down to $45,519.” If that is a great guaranteed return, I’m glad I don’t have a 401(k). The “Time” article pointed out that $100 in 1998, after inflation, was worth about $73 in 2008, a loss of $27 after ten years. So whom do you believe…”Time” or “More” magazine?
If you are unsure as to whom (and what) to believe, the “Time” article made two more statements worth considering. They are:
1. “The older you are the riskier a 401(k) gets.”
2. “Forty-four percent of all Americans are in danger of going broke in their post-work years.”
Now, I can hear some of you saying, “But the stock market is going back up. Green shoots are appearing. Everything is fine. The crash was just a correction.” For those optimists among you: I wish that all of your dreams come true and you live happily ever after.
I do not criticize the 401(k) plans just to criticize. I write because I am concerned. Let’s say “Time” magazine’s estimates are correct. Let’s say 44 percent of all Americans will go bankrupt after retirement. For approximately 75 million baby-boomers preparing to retire, that means 33.8 million of them will go bust once they stop working. To me, this is disturbing.
While many think the financial crisis is over, I believe the worst is yet to come. In spite of the green shoots in the stock market, the fundamentals of the U.S. government are worsening. I doubt Social Security can afford the avalanche of retiring baby boomers. The Social Security fund is empty, underfunded by approximately $10 trillion. For the first time in 35 years, Social Security will not pay a cost of living increase. And Medicare is projected to face a shortfall as well, of between $65 and $85 trillion.
In 2009, interest payments on our national debt are about $380 billion, which is $1 billion a day in interest. At the same time, the national debt is projected to climb to $20 trillion by 2012, which means the U.S. will have to borrow money just to make the interest payments.
I know the Federal Reserve Bank can continue to print more and more money…but city and state governments cannot. This means your city and state taxes will have to go up. If you think your property taxes are high now, just wait five years. I predict that, even if your home’s value does not go up, property tax rates will, and higher taxes will do wonders for property values. This means people counting on their home as their biggest asset may be disappointed.
In 1913, when the Fed was created, and in 1971, when President Richard Nixon took the U.S. off the gold standard, the ultra rich were allowed to siphon off our wealth — via our own money, the very thing we work hard for and do our best to save. In other words, with every dollar the Fed prints, our wealth is being drained via increased taxes, debt, inflation, and savings.
A Cash Heist
There are four expenses that keep the poor and middle class struggling financially. They are:
1. Taxes — both apparent and hidden
2. Debt — mortgages, credit cards, and student loans.
3. Inflation — rising food and fuel costs
4. Retirement plans — 401(k) and savings
It is via these four expenses that the rich get richer. In other words, all four of these expenses are a cash heists, the ways the rich use the government to get into our pockets, draining us of our wealth.
The Silver Lining
The silver lining of all this: With a more sophisticated financial education, rather than have taxes, debt, inflation, and retirement accounts as drains on a person’s wealth, a person can convert those government-sponsored expenses into elements that work in one’s favor. By using the same rules of money the rich use, those four expenses will make you richer. In other words, taxes, debt, inflation, and not needing a retirement plan can make you richer if you use different rules of money. As stated earlier, in 1971 Nixon changed the rules – and so should you.
In closing, the 401(k) has a few good points…but not good enough, in my opinion, given the financial challenges that lie ahead.
A HELOC, or a home equity line of credit, is set up to have a maximum draw limit rather than just a set dollar amount in the form of a lump sum like a home equity loan. Similar to a home equity loan, a home equity line uses your home as security.
This line of credit is set up to a certain amount decided between you and your lender (generally 80% of the market value on the home in question minus any fees currently owed upon it) that can be drawn out in a set amount of time. A HELOC, in simple terms, is a recommended alternative to a home equity loan for those with ongoing projects.
So, you are in desperate need of cash, got projects to fund, mouths to feed, bills to pay, and so you decide to drop by the bank and get a loan. First option you are presented with when offering your home as collateral is whether to go with a home equity loan or a HELOC, or simply a home equity line.
In most cases a HELOC will probably be your better choice, simply because when you need the cash, you have it, and when you don’t, don’t worry about it. Sounds simple enough, and for those in need, a HELOC is a welcome alternative to many other loan choices because you won’t have a lot of money just sitting around that you have to pay interest on.
The easiest way to describe how a HELOC is a superior loan alternative is safety. With a HELOC you obtain safety in both terms of being more likely to handle your payments as well as safety from yourself. When the money isn’t just dumped into your pocket all at once you are less likely to waste it and end up in trouble.
A HELOC generally has low settlement cost rates (on a $150,000 line of credit it would be around $1000 compared to $2500-5000 for a home equity loan of the same amount). While other fees associated with a HELOC tend to be more expensive, overall a HELOC doesn’t cost that much more that a standard home equity loan.
In addition, the idea of saving you from, well, you, plays an important role as well. If you just receive all the money up front and it’s just sitting there, you are going to be tempted to spend it on things you don’t need. Obviously this situation can come back to hurt you.
However, in a HELOC, since the money isn’t just sitting in the bank but is rather drawn out when you need it, you will be less tempted to spend it and you also will not have to pay interest on money you do not use.
Disadvantages of a HELOC
The main disadvantage to a HELOC is that people are likely to try to go for long term repayment. Although the monthly payments can be held in check in long term repayments, what ends up happening is that the item purchased with the loan doesn’t last nearly as long as the repayment schedule.
In essence, you will be paying for something you no longer have. Similar to a home equity loan, a HELOC also puts you in danger of losing your home. If the payments can’t be met then serious problems arise.
A HELOC is also available to people with bad credit, and can even be used to improve credit as long as payments are made on time. Since the security is a home and the line of credit given out is usually less than the value of the home, lenders have little risk offering these types of loans to everybody.
We hope we have shed a little light on the world of home equity for you here. Hopefully after reading this article you will be better prepared on how to handle your money problems.
Just keep in mind that whenever getting a loan with something as valuable as your home as collateral to be careful, be smart, and always take the time to shop around and read the fine print.
As soon as word got out, it didn’t take long for lawmakers to seize upon the highest credit card rate around — an offer being tested by First Premier Bank, a subprime card issuer, with a mind-boggling APR of 79.99 percent.
Moreover, much to the disdain of House Democrats pushing for a rate cap, the action by First Premier takes advantage of an apparently unforeseen loophole in credit card reform laws set to take full effect in February.
The First Premier card normally offers a minimum of $256 in fees for the first year for a credit line of $250. When the Credit CARD Act of 2009 becomes enforceable Feb. 22, the cap on such fees will be 25 percent of a card’s credit line. In recently mailed notices for its pre-approved card, First Premier offers a fee matching that same limit – $75 in the first year for a credit line of $300.
Reform laws do not set caps on interest rates. It only places restrictions on when and how rates should be imposed, but no limits.
First Premier has said that the offer is being tested, and does not know if it will be continued. First Premier said it needed to “price our product based on the risk associated with this market” in a statement to the Associated Press.
Rep. Dennis Cardoza, D-California, today lashed out at First Premier’s card offer in a letter to Pres. Barack Obama and California Senators Barbara Boxer and Dianne Feinstein.
Cardoza is asking them to support a bill sponsored by Rep. Louise Slaughter, D-New York, chairwoman of the House Committee on Rules. Slaughter and Rep. John Tierney, D-Massachusetts, that would cap credit card interest rates at 16 percent, and penalty fees at $15.
“First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry,” Cardoza said. “It’s a strategy other subprime card issuers could start adopting to get around the new rules.”
First Premier’s website says that credit cards are serviced by Premier Bankcard. The company, based in Sioux Falls, South Dakota, says Premier Bankcard is the 10th largest issuer of MasterCard and Visa cards in the country, with more than 3.5 million customers.
“Our representatives have done a lot to take care of Wall Street, how about doing something to help real people. Almost everyone has a horror story regarding credit card companies, and it’s time to protect consumers from this immoral and predatory industry,” wrote Cardoza.
Under the bill introduced by Slaughter and Tierney, the Truth in Lending Act would be amended to create a “National Consumer Usury Rate,” which provides that the annual percentage rate (APR) “for an extension of credit or outstanding balance on any credit card account may not exceed 16 percent.”
The bill allows the Federal Reserve to make adjustments to the maximum APR in the cap when it is “in the public interest and economic conditions warrant.”
NEW YORK — It’s no mistake. This credit card’s interest rate is 79.9 percent.
The bloated APR is how First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry. It’s a strategy other subprime card issuers could start adopting to get around the new rules.
Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card’s credit line.
In a recent mailing for a preapproved card, First Premier lowers fees to just that limit — $75 in the first year for a credit line of $300. But the new law doesn’t set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent.
“It’s the highest on the market. It’s the highest we’ve ever seen,” said Anuj Shahani, an analyst with Synovate, a research firm that tracks credit card mailings.
The terms are eyebrow raising, but First Premier targets people with bad credit who likely can’t get approved for cards elsewhere. It’s a group that tends to lean heavily on credit too, meaning they’ll likely incur steep financing charges.
So for a $300 balance, a cardholder would pay $20 a month in interest.
First Premier said the 79.9 APR offer is a test and that it’s too early to tell whether it will be continued, according to an e-mailed statement. To comply with the new law, the bank said it will no longer offer the card that has $256 in first-year fees as of Feb. 21, 2010. However, customers will still be able to use their existing cards.
According to First Premier’s Web site, the credit cards are issued by its sister organization Premier Bankcard. The company, based in Sioux Falls, S.D., says Premier Bankcard is the 10th largest issuer of MasterCard and Visa cards in the country, with more than 3.5 million customers.
In a mailing sent to prospective customers in October with the revamped terms, First Premier writes “…you might have less-than-perfect credit and we’re OK with that.” The letter notes that an online application or phone call is still required, but guarantees a 60-second status confirmation.
The letter also states there are no hidden fees that aren’t disclosed in the attached form. That’s where the 79.9 percent interest rate and $75 annual fee are listed. There’s also $29 penalty if you pay late or go over your credit limit. The credit limit is $300.
The bank did not say how many people were offered the 79.9 APR card, but noted that it needed to “price our product based on the risk associated with this market.”
Even if First Premier doesn’t stick with the 79.9 APR, it will likely hike rates considerably from the current 9.9 percent to offset the lower fees, said Shahani of Synovate.
The revamped terms may not be the only changes; First Premier also appears to be moving away from the riskiest borrowers.
The bank typically mails offers to subprime households, meaning those with credit scores below 700. In the third quarter, however, 84 percent of its offers were sent to subprime households, down from 91 percent the same period last year, according to Synovate.
First Premier could be cleaning up its credit card portfolio since the new regulations will limit its ability to raise interest rates. That could mean First Premier won’t issue cards as liberally to those with bad credit.
As harsh as First Premier’s terms seem, that could be a blow to those who rely on the card, said Odysseas Papadimitriou, CEO of CardHub.com.
“Even when the cost of credit is astronomical, for people in true emergencies, it’s much better than not having access to credit,” said Papadimitriou.
Until Feb. 21, First Premier is still offering its even-higher-fee card online. So the price for credit the bank charges is at least $256 in first-year fees.
I am sure most of you don’t watch AlJazeera especially those who are in the States. So if you have missed, here is an interview with Robert Kiyosaki on AlJazeera with Riz Khan. Robert Kiyosaki is well known for his book “Rich Dad, Poor Dad”, his latest book is “Rich Dad’s Conspiracy of the Rich”.
What’s your opinion on the education system of your country? Does it prepare you to be successful businessman or good employee? I think in almost all countries in the world, it’s the latter. Please share your thoughts on this in the comments section.
In view of the current economic difficulties facing many, people ought to be more ware of what’s happening in the world and how what’s happening can adversely affect their financial securities and lives; if it has not done so already!
It is not a well known secret that one can avoid being a financial casualty by simply acquiring a set of skills different from what we are usually programmed from young to have. The latter has to do with being enslaved to a job or business controlled by others; the other being about having skills to generate an income independent of any circumstance or other people.
Anyone depending solely on a job for a living would be almost completely lost if he loses his job. The unfortunate fact is that since the Multi-Nationals Companies began institutionalizing the treatment of employees as just another business resource, albeit commodity, the age of life-long employment seizes.
Financial results associated with satisfying shareholders’ expectations became the main reason for a business enterprise. Coupled with the practice of achieving short term objectives and the need to maintain share prices, retrenching workers became a normal business practice. Words like ‘downsizing’ and ‘business rationalizing’ became common business parlance.
This dehumanizing of business enterprises, prevalent throughout 18th and 19th century industrializing Britain was revived and practice by American businesses. The new reality in a capitalist environment anywhere means a worker is subject to his job being taken away any day. More importantly, this means also that the individual worker must realize quickly the insecurity of a job.
What then is a worker to do to secure himself? Off course there are skills like being a doctor or dentist and others which are not down sizable. However, most workers are dispensable!
Men are, however, born with an innate creativity which can be described as entrepreneurial but this has historically been replaced by skills which are intended for us to work for someone else. The result is that only the top five per cent or so of employees can acquire financially independence (with high salaries) while the rest remained dependent and vulnerable all their lives.
To acquire these forgotten skills would require a change in mindset from one of being a worker (a worker’s mindset) to that of being a boss (an entrepreneurial mindset). The latter entails having a ‘Possibilities Mindset” which would enable one to know how to garner resources and knowledge and, to apply them to secure one’s own financial objectives.
Henry Ford, the car genius, once said that ‘money is not a man’s security; he is his own security’. What he meant was that a man’s security lies in his knowledge and skills. However, if your skill and knowledge is tied to working for someone then those skills and knowledge can be replaced any time.
However, Henry Ford is not wrong; if a man’s skills and knowledge is in the area of creating a money making enterprise. Robert Kiyosaki, a very successful entrepreneur, said that ‘every man must mind his own business’. He didn’t express it too well but what he meant is that ‘to have financial security a person must learn to develop his own money making business’. Is this possible? Every man? In my opinion, in today’ new reality, any worker who wants financial security has no other option!
Off course, whenever an uninitiated thinks of starting a business he thinks of big capital, connections, special knowledge and skills. For a man who has little money and has just lost his job, it’s even more unrealistic to think of starting his own business. However, many have done it, albeit, at great odds.
But what if you are not retrenched yet? And you have some time to learn. Could you invest in a money-making skill that can provide an alternative income? Could you learn to be an entrepreneur with little resources and connections?
The answer is yes but you have to adopt an entrepreneur mind-set; which really means that you to start believing in possibilities! Remember that when Bill Gates and Steve Jobs started their little enterprises in garages all they had mainly were their belief in possibilities. The amazing fact is that because of them the possibilities have increased exponentially with the advent of the internet.
Besides a strong belief in possibilities, an entrepreneur is one who learns to gather resources, knowledge and skills and organize them into money making processes. In most conventional businesses, this is usually a huge ask for any newcomer. Fortunately,, there are now other avenues where starting a business is made more possible for any one with little money and is prepared to spend time learning.
For example, the internet has made it easier to start your own business. The main thing you would need is a good PC, some affordable money, a willingness to learn and a lot of belief in yourself. What is to be learned is seldom difficult; a man’s limitation to success is often his own lack of self-belief!
If your motivation is create a secure financial situation for you and your loved ones, you need to be an entrepreneur. The days of secure employment is long over and moreover, personal wealth is seldom acquired by working for others.
1. Simplify and get out of the rat race faster
I noticed that whenever I played the cashflow 101 game and was able to choose a “simple” profession like a truck driver for example, I was able to get out of the rat race faster.
As a truck driver, although my salary was low, my monthly expenses were also very low. Because I had low monthly expenses, I already had a positive cashflow and all I needed to do was just get those passive income generating deals.
After each payday, I had more money to invest, and with just a few passive income generating deals, I had enough passive income that exceeded my monthly expenses, and I was able to get out of the rat race faster.
In real life, I am applying the same strategy by reducing my monthly expenses by leading a simple life. This was also described by Bo Sanchez in his book “Simplify and Live the Good Life ” and T. Harv Eker in his book “Secrets of the Millionaire Mind”.
My family and I lead simple lives, which explains my very low target monthlypassive income which is why I know I am going to get out of the rat race in real life very soon!
2. Start with small deals first, and the big deals will follow
In the beginning of the game, I always chose small deals even if they produced little cashflow. Later on, when the market presents good opportunities, I was able to sell or “flip” these small deals and then I used the profit to buy the bigger deals that produced greater cashflow, allowing me to get out of the rat race.
In real life, I am also following the same path. I focus on single family homes or properties which may produce little cashflow at the very least, but can actually generate significant profits if “flipped” or sold through “rent-to-own”. I can then use the profit later when they are enough to get bigger deals that can produce bigger positive cashflow.
3. Over-leverage often leads to bankruptcy
During the game, we often encounter great deals that produce a lot of positive cashflow but require a big downpayment and it is tempting to borrow money from the bank just to be able to buy those great deals. However, there is such a thing as becoming over-leveraged which can produce negative cashflow situations because of the high monthly payments for those loans.
Even if one’spassive income is enough to cover the monthly payments for those loans, imagine if something happened and the monthly income of one’s investment properties were affected, suddenly the monthly payments for the loans cause a negative cashflow and can lead to bankruptcy. The same can also happen when one is downsized. This is the reason why one should avoid deals that lead to too much exposure or over-leverage.
Applying this is real life is a no brainer. I would not dare buy those multi-unit apartments unless they were in the same price range as the single family homes I focus on. As mentioned in lesson number 2 above, I can go for those bigger deals later when profits from my small deals are enough.
4. It is better to wait for a good opportunity than settle for those not so good deals
In the game, good opportunities come in the form of deals that have big ROI potential, and can be bought with little or no downpayment, while producing positive cashflow. If any of these elements are missing, I consider a deal as “not so good” and I pass them up and just wait for the good deals.
In real life, I do the same and patiently wait for good opportunities. If a not so good deal comes my way, I can either look for ways to make it into a good deal, or I just pass it up and wait for another more worthwhile deal to pursue.
5. Learn how to spot a good deal and grab it
One of the biggest challenges one faces in the game is how to spot those good deals so that you can grab them. Sometimes a good deal is right under your nose and it slips away because you didn’t realize soon enough that it was a good deal.
I believe spotting good deals is a skill and you can only learn this skill by continuously analyzing deals. Once you get the hang of it, you will start seeing those good deals more often. Normally those deals would have normally slipped away without you knowing it. If you see good deals often, it’s just logical that you will eventually grab one of those deals right?!
6. Learn how to protect your investments
I distinctly remember games where apartment buildings getting toppled by mud and all the cashflow generated by these properties are gone, unless I am covered by insurance.
Does Ondoy and Pepeng ring a bell? Who would have thought that a game like cashflow 101 actually teaches us to protect our investments from such disasters and calamities. Better get your investments insured with “Acts of God” coverage pronto!
7. Net worth is worth less, cashflow is king
Once you play cashflow 101, you will notice its emphasis on the importance of cashflow over one’s net worth. You will see that it really is more important to have positive cashflow frompassive income. What is the use of having a big net worth if you don’t have any positive cashflow?
In real life, we should apply this by focusing on building our positive cashflow with income generating assets. Even if we have to use leverage to buy these assets, it really is okay. We call this good debt. Don’t be afraid to have good debts that buy real assets that produce the cashflow we need to get out of the rat race for real!
Get out of the rat race in the game, and in real life!
So you got out of the rat race when you played cashflow 101. So what?! That’s useless if you don’t take action and apply the lessons you have learned from the game in real life. But playing a game is one thing, doing it in real life is an entirely different thing… or is it?
I can truly say that Robert Kiyosaki’s Cashflow 101 game is a “life changing” game because my life has really changed ever since I decided to apply in real life the lessons I have learned from it. Take note that I only listed the top 7 lessons I have learned and I can assure all of you that there are more lessons one can learn from this game.
People may find it hard to believe that one can learn so much from a game and can have such a huge impact in life. I guess you just have to play the game and experience it for yourselves.
How about you, have you played Rich Dad’s cashflow 101 game? What did you learn? Are you applying them in real life?
