How to go from RAGS to RICHES?? Full Transcript is almost the same with this video from the Rich Dad Channel.
Hey everyone, welcome back to advanced lessons in Millenia Money. I’m your host Alexandra Gonzalez. Have you ever felt like there’s just not enough time in a day and when you really boil it down you didn’t even know where that time went?
Well sometimes it’s taking care of the kids, going to your Job, even schoolwork or staying on the couch watching Netflix and going through your Instagram. And so, I really want you to be mindful on what’s keeping you busy from truly accomplishing your goals.
And so, today Robert and Kim go through their entire journey of entrepreneurship and they really highlight what keeps them staying busy.
How to go from RAGS to RICHES?
Kim and I have been married for 30-something years now but we started off with nothing, you know people think well she married me for my money that wasn’t true. Because I was kind of between businesses I had lost my first second business.
Not only did you not have money we were like in a lot of debt
Yeah bad debt not good was just a learning experience it was a great learning experience and we paid it all back.
Yeah like when I hear people talk about crowdfunding and all that you have no idea what it feels like to pay off your investors when you screw up. So I was cringe when I hear oh weakness crowdfunded I don’t go ahead how you can pay him back that’s the key.
So I met Kim I mean I thought she was and she still has a most beautiful woman wonderful person in my whole life I couldn’t believe it but I was testing her.
Yeah is she real is she fake?
You were testing me.
Of course I want to find out where you’re why not fun you.
Know like hey I was testing you too. So I guess it’s all even well you got you are driving the nice car you lived on the beach in Honolulu. Oh let’s see fake or real I had no money.
How to go from RAGS to RICHES?
I had no expenses on those thing but anyway a lot of our conversation with millennial money is again as the financial statement right income is three of them. So when I met Kim I had zero nothing I got I put all of my assets into that business and we lost everything so not only did I have nothing.
I had 850K an investor I hold money so that’s when we met, so I’m starting to fall in love with her which wasn’t hard, but anyway I wanted to test her and so what was my first gift we’ve been been thinking about a month.
Not a month yeah was not jewelry was not a nice dinner out it was an accounting course.
Yeah What what the most guys tempt you with?
Oh a trip to outer eyelid and like to Maui for the weekend or Kauai for the Weekend.
And you know what that means is right now I say?
How to go from RAGS to RICHES?
That means one one room one one room not two rooms but one that was their gift to me yeah right.
So I you know I’ve been like the other slime dogs out there say hey Kimmy you wanna go to Maui which means let’s get, let’s have sex right that’s what it meant. But I figured I know, I’m gonna change I’m looking for a different type of woman, so I gave Casa Kim that’s an accounting course would you like to take it and what happened.
How to go from RAGS to RICHES?
Yeah it was really interesting because I’m like an accounting course and and I actually I vowed when I left the business degree I have a business degree from the University and I vowed I would never set foot in a classroom and cuz I I just couldn’t stand what they were teaching me, I couldn’t stand my college courses, high school courses so I went but it was a it was an interactive game we actually built a lemonade stand we had different teams we competed, we had to keep track of our income expenses we had to do inventory we had to sell way to do all the things a business does and what that course did where he was just wanting me to understand assets and liabilities what it did is actually it ignited my love of learning again, so that was actually a fantastic gift the best I found out I love to learn it’s just what I was learning I wasn’t interested in before,
So that was an 18-3 good night he’s 84. Yeah I met an 84 yes.
How to go from RAGS to RICHES?
Anyway but out of that we built the cash flow came together 96 because we had so much fun at learning buy games and Connie was boring.
Accounting was boring, and when you talk about real versus fake the cash flow game was people kept asking us how did we get out of the rat race, how did we become financially free and so everything on this game board almost everything on here are things that we’ve done. So it’s a real game based on our real experience a real way the successes and a lot of the failures.
How to go from RAGS to RICHES?
So again using this diagram here when I asked Kim rather than go to Maui which would have been an expense.
Yes, I’d rather spend the money here and see if she won’t take an accounting course again this is my message to anybody including Millennials is where is your head and I know most most Millennials they want a high paying job they want to be able to pay the rent and all this stuff and then you dream up the big house a nice car and all that, but that’s why 99% of Americans are broke because their heads are in the wrong spot, so when I asked Kim if she would take an accounting course was just two days you know I wanted to see if your head could get into the asset column that was a difference wasn’t it.
Yeah and actually, it didn’t happen right at that moment, but…
It’s all in love with me…
Of course I do.
How to go from RAGS to RICHES?
But this started this started the journey on investing the start of the the journey on assets but I do remember the moment down the road where just like everybody else I was focused on the income column get a job get the pay raises if you’re an hourly rate wage work more hours or raise your hourly wage so I was always focused here and then finally after we’d actually bought some investment properties the the light finally went on and I’m like instead of focusing on acquiring income what if we focus on just acquiring assets that the assets go into the income process
So that was a huge shift in my mindset and once that shift happened for me I don’t think about the income column anymore, I just think about the asset and that’s.
And that’s our game called cash flow, and so when Kim and I met we had nothing it took us 10 years to go from nothing to financially free. So she was 37, I was 47 but that’s the power of focusing on assets versus liability most people are so busy working for money so busy trying to pay their bills and so busy buying liabilities I think our assets. So my first gift to Kim was the Accounting game to get her head in here and today we’re financially free. You know that’s the whole thing.
How to go from RAGS to RICHES?
So everybody can do it it’s a matter of putting your head into the right column and if for me it was in 73. I took my first real estate investment course here, I’m free you know I lost money get made money back but I never I never got out of the asset.
We’re still I mean we’re still practising here every single day I’m working on a new project right now in the asset column it’s gonna put a lot of cash flow into the income column because again we’re focusing on asset column not the income column.
So I would do this thing on silver, so one of the first asset type things we accumulated was silver, silver bars, so tell at all what was the price of silver back then it was like 50 or so but 50 to 300 going back and forth so 16.
Yeah so we started acquiring silver bars. We could afford that.
We were living in La Jolla California at the time and.
Look good
How to go from RAGS to RICHES?
So our extra income whatever extra cash we had instead of putting into savings we put it into buying silver bars and little by little we stacked them in our little closet in our bedroom and it was in the back where the clothes hung over it so we pushed it back there and little by little those stacks grew just little by little and the,
Built they almost fell down to that so much
And so then we were looking to buy a personal residence and a personal house and we were gonna buy in La Jolla but it was it was very expensive and not really what we wanted, and long story short we found this beautiful gorgeous 1930s house in Portland Oregon,
Which was still had it.
How to go from RAGS to RICHES?
Stunning I mean leaded glass windows original tile wood floors ohh beautiful and we had no credit bad credit and no money for a down payment and so the woman who owned the house was also a real estate broker and we said if you can get us financing we’ll pay you full price and she struggled and she 235 thousand six million today, because there..
Because I always said to you it’s best when markets crash and the Oregon market had crashed while California was going up wait a spotted owl thing they were the environmentalist was trying to stop the loggers from cutting down trees you can’t cut down trees Oregon’s economy crashes because their lumber come lumber Scott this gorgeous multi-million dollar house for two hundred thousand bucks.
Yeah so so this poor woman is trying to get us financing on on our credit which is shaky er than anything can possibly be and finally one day she calls me, Roberts out of town and she says we got the financing we need to fund it tomorrow and I’m like what she goes we need to fund it tomorrow need twenty seven twenty three thousand dollars tomorrow.
I’m like oh I don’t have 23, we gotta buy this house and how we gonna do it well I went to my little closet opened it up and there’s all these silver bars so I literally Alex I literally put these silver bars in Brown grocery bags there was a precious metals dealer just a couple blocks from our house carried these things I made like five trips carried all these bars down to the precious metals dealer and he cashed them all in and that’s how we bought our first property and it was not an asset it was a liability, but we knew that and to this day we still buy silver we still buy gold we still we still keep that assets that column strong.
Well and so that was your the first property you guys bought?
That’s our first liability, so this is how the first property came about okay so this is the whole thing here so we have our big gorgeous house I mean what’s gorgeous you on the hill you know leaded glass. So then I said to Kim I said, okay Kim you’re pretty good at silver and gold now.
How to go from RAGS to RICHES?
Let’s look at real estate as an asset and this is the whole thing fake busy people so again most people are trying to focus on how to make more money here pay off their bills and buy a new car or something so at this point here because the real estate market was so depressed we took our time and and rather than sitting at the bar eating chicken wings and drinking beer.
Which is always a fun thing to do.
Well we’re looking for property, so we wasted our time we didn’t waste our time we’re a busy going from house to house to house to house to house and my our rule of thumb is you have to look at least a hundred properties to find one.
So, instead of wasting our time eating chicken wings or sitting on the bar which we like to do, we spent our time looking for property.
It is and one point to that is you know you’re busy if you’re doing the same thing day after day after day after day after not doing anything different, for me when Robert started explaining what his rich dad taught him about property for me to go look at property took me out of my comfort zone so the busyness what I was doing was things that took me out of my comfort zone so I was learning all the time if I just kept doing the same thing like you know eating chicken wings drinking beer every day at the bar, nothing’s gonna change, nothing’s gonna change, I’m just gonna end up the same place I am or worse, so that took me out of my comfort zone and then we found a little two-bedroom one-bath house.
Yeah right just blocks from where we lived, really cute had a little butterfly little metal butterfly outside it was really cute and that was my very first property.
First investment property?
It was it was $45,000 this is back in 1989.
That’s incredible.
Actually a few years ago it sold again somebody sent it to me and it was it was like almost 400,000 right so 45,000 to 400,000.
I loved market crashes yeah I just love crashes. When everything’s on sale was wonderful and so I also had to put down $5,000 and we didn’t have it which was the best thing and this is what I want to say is it don’t let not having money stop you because by not having money it forced us to get really creative on how to come up with that $5,000 and we did and so I never we never let the fact if we see something that we really want especially in the asset column we always can figure out a way to get it if we really want it.
How do we get that five thousand?
Two ways one is we had we got about two thousand dollars we we looked at everything that we had and we had a little bit in savings and we had some silver and things like that, but the other thing that we did…
Are most of our silver had gone into the big house we lived in and his little house is right down the street from us.
Yeah in Oregon.
Yes, but the other thing we did is we had a business at the time, education business, and so we don’t do we had we took the database and we said hey everybody, we’ve created we’re creating this great new product, we’re gonna launch it at this time and because if you buy it now ahead of time you’re gonna get the special price. So we pre-sold the product.
Without having?
Without having it done and so that way also we created the product exactly what was needed in terms of quantity so people sent in and we that’s how we funded the rest of the house the down Payment. Yeah there’s always a way to do It, it’s always a way.
So this is the point how much money did that property make you?
Well monthly it made $25 a month.
Yes, I went from here to here at just $25 most people say well that’s not enough money but what increased was our knowledge so that experience made are smarter and really what makes you a rich is much up here, Not the property. So and that’s why people are afraid of failing or I can’t have it or I don’t want to with toilets at all some lousy.
I was I was actually looking for a reason to not do this deal. I was looking for oh please give me something so I can say no I’m not gonna do it because that would have been easier, there was gonna be the steep learning curve if we went through and bought it, and it would’ve been easier more comfortable not to so I knew that and I’m like no got it.
Her goal was to buy twenty properties in ten years, you see you always have goals, so I’m gonna take you in motion, how long did it take you to get 20 properties ten house?
Instead of ten years, It took 18 months, because I understood I got the game, I understood it yeah and then It accelerates.
Had the economy was terrible yeah given what the great real estate and so here all its appeal oh now the economy is bad I real estates bad that’s when it’s good but then what happened we move here to Phoenix and one day how big was that property he just bought 24 hours oh how big is it I mean see what happens is your knowledge increases and if your knowledge increases the money so she bought this property right across again we have a big house in Phoenix but right across the street was the best investment of your life.
Just performing in to this day we’re now we’re now restructuring it putting in a different type of product and it went from truly it went from 7 million when we bought it to up to about 22 million today free and clear and it’s a cash flow property.
Yeah so we’re gonna step it up now 220 million tax-free Wow and then the key is it doesn’t matter you know how much we have today I mean you start with that little two-bedroom one-bath house or whatever it is for you that’s where you learn the fundamentals the fundamentals there are the same on every property now I mean the formula is the same on every single investment property we have it’s the same formula whether it’s two-bedroom, whether it’s 500 units it’s the same formula.
And I was still in the asset columns.
Yeah that’s our rule, our rule is any never leave any dollar that comes into the asset column stays in the asset column, so even if we sell a property which we don’t do often but if we sell it will then take the proceeds from that sale and buy another property or another asset.
And so that’s how you keep yourselves busy?
Yes, yeah and always learning and studying and I’d say if I know anyone who’s busy it’s you guys you all of you both of you are always traveling always looking at properties always talk doing podcasts videos, I mean I’ve never seen you guys not busy.
Now the lesson I have for all young people at all we’re all equal we have 24 hours in a day yeah that’s what you do with the 24 hours that makes a difference and so you know the challenge for you guys you have more distractions, I see young people sit in there thinking, how can you say so busy on that thing I don’t know, but that’s why it’s Millennials the fake generation your challenge is to figure out what’s real what’s fake.
Yeah and I think I mean thank you guys for also being here and teaching us and I think just like you mentioned that we stay busy on our phones maybe the key for us Millennials is finding courses that we can do on our phones and apps just like you started off with your accounting course right or I mean we offer the cash flow game online on the app, so I think it’s just a great you learning tool to be when you are busy just log into an app and start your your financial career through there.
And what happens if you, you know you go buy a silver coin today it’s gonna cost you about 20 US dollars just by you know even if I pay $10 if I pay $20 all of a sudden I’m gonna go wow I wonder what what’s silver doing today and you go online all the sudden articles about silver will pop up you’re gonna get interested so I’m a big believer in putting some money into the game get some money in there because if I put money in my interest is going to go way up and so well my education.
Yeah and I think it’s very powerful and I think it’s just finding a way of doing it and finding the way paying that price increase your financial intelligence and it’s I mean it’s amazing how one little coin can take you so far.
So now you know what to do with your next paycheck start looking for assets to pay for your liabilities and remember start small thing and stay busy if you decide to change how you stay busy give this video a thumbs up, subscribe hit the notification about and comment below, thank you guys so much for watching and I’ll see you in the next
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