Unfair Advantage -The Power of Financial Education (30 page)

For obvious reasons, I would love to have you purchase Rich Dad’s advanced education and coaching programs. But bad debt is a sign of deeper problems, sometimes emotional ones. Bad debt is often just the tip of the iceberg.

Rather than sign up for our financial education and coaching programs, especially the advanced programs, I would recommend you join a CASHFLOW club and play the game with like-minded people a number of times. That experience will help you discover the true reasons that cause you to be deeply in debt. Once you have a better understanding of your situation and its causes, you will be able to make better decisions about your financial future.

Emotions are the biggest cause of financial problems. As Warren Buffett often says, “If you cannot control your emotions, you cannot control your money.”

Years ago, when I was nearly $1 million in debt, Kim and I created a program we used to get out of bad debt. We needed to get out of bad debt—so that we could get into good debt. To learn more about this product,
How We Got Out of Bad Debt,
visit RichDad.com.

Bonus FAQ #4: How Do I Start?

FAQ

How do I start? I don’t have much money.

Short Answer

Get a job. Do something.

Explanation

When I was young, I was taught: “God helps those who help themselves.”

Too many people want help, but are unwilling to help themselves or others. Too many people allow the excuse, “I don’t have any money,” to stop them.

It takes no special talent to say, “I don’t have any money.” Anyone can do it and millions of people do. In the real world of money, ambition is far more important than your education. The primary reasons people lack money are first, the lack of ambition, and second, the lack of education. If you cannot find the ambition to make some money, financial education will probably not help you.

In Hawaii, there is a 15-year old boy who rides his bike after school to the bus stop, loads his bike on the bus and rides an hour to town. When he arrives, he unloads his bike and rides to where his CASHFLOW club meets. After the meeting, he rides his bike back to the bus stop, loads his bike on the bus, and rides an hour to the bus stop nearest his home where he unloads his bike and rides home.

I have no doubt this young man will be successful in anything he does in life.

Bonus FAQ #5: Is There a Program for Me?

FAQ

I’m a pretty sophisticated investor. Will your programs help me?

Short Answer

Probably not.

Explanation

Our education and coaching programs are for people who want to learn, not for people who think they know all the answers. In the recent financial crisis, millions of people lost trillions of dollars following the advice of people who knew all the answers.

You may recall that the leaders of Enron were often referred to as “the smartest guys in the room.” Today, Enron is gone and the employees of and investors in Enron are also gone.

Remember Lehman Brothers? Lehman was run by really smart men and women, many from our best schools. Today, they’re gone, too.

Merrill Lynch, the stock-brokerage house advising millions of clients, was on the verge of going bust before they were saved by Bank of America.

And what about all the financial gurus on TV? They’re really smart people. Why didn’t they tell the world to get out of the stock market? Why are they still giving financial advice today?

Then there’s Ben Bernanke. How can the Federal Reserve Bank Chairman say (on June 9, 2010), “I don’t fully understand movements in the gold price?” If he controls the most powerful bank in the world, isn’t he supposed to be one of the smartest people in the world?

Even if you made millions between 2007 and 2010, you can still learn more.

The period between 2007 and 2010 were the best years of my investing career. I made millions, and I know I can still learn more I plan on learning more because it is my financial education, not my college education, that is my unfair advantage.

Always remember that the difference between the top 20 golfers in America and the top 120 is less than two strokes, less than one stroke per round. The top 20 make millions. The bottom 100 earn a comfortable living. No professional golfer can afford to say they know everything. Even though they’ve putted a million balls a million times, they know they can still learn more about putting.

Professionals know it is sometimes the smallest things that can give them their biggest unfair advantage.

Bonus FAQ #6: Are There Programs for Entrepreneurs?

FAQ

What programs do you have for entrepreneurs?

Short Answer

Rich Dad has many programs for entrepreneurs.

Ultimately, all of our programs are designed for entrepreneurs. There are entrepreneurs in business, in real estate, in paper assets, and in precious metals. They are people who take control of their money and their financial future.

If you are not an entrepreneur, you probably have a job, work for money, save your money, and turn your retirement money over to strangers.

Explanation

Building a business into an asset takes the highest degree of financial education. Since the world needs more entrepreneurs to create more jobs, we at Rich Dad are developing a program called GEO. GEO stands for Global Entrepreneurs Organization. It is, without a doubt, our most dynamic and ambitious undertaking ever, and it is for people who are entrepreneurs or want to be entrepreneurs. We expect that GEO will be a three-year program that will train people to become entrepreneurs the Rich Dad way.

FAQ

Will it teach me to build my business?

Short Answer

No.

Explanation

GEO will train people to be entrepreneurs. Once their training is complete, they can start to build their business.

FAQ

What if I want to build my business while I am being trained?

Short Answer

Then the program may not be right for you.

Explanation

I went to flight school to learn to be a pilot. I did not become a pilot until after I finished flight school.

Doctors do not become doctors until after they finish medical school. After medical school, they become interns or resident doctors, still in training. Not all students finish flight school. Not all students finish medical school.

If I had said to the Marine Corps, “I want to fly fighter jets the first day of flight school,” I would have been released immediately for mental and emotional delusion. The same is true for business. Many people get so caught up in the idea of starting a business (“being my own boss”) that they forget the critical need for formal training. Small wonder that nine out of 10 new businesses fail within the first five years.

If you want to take the risk and believe you can beat the odds and become the one in 10 that succeeds, give it your best shot. The GEO program is probably not for you.

It was only after I was awarded my wings that I was allowed to choose the aircraft I wanted to fly. I knew I was not cut out to be a fighter pilot or a transport pilot. I chose helicopter gunships. It was one of the smartest decisions of my life. Once I knew how to fly, I then knew what I wanted to fly.

The gunship fit my personality. I wanted an unfair advantage: air versus ground… a helicopter-gunship pilot versus a soldier on the ground.

FAQ

But what if I have a great idea for a new product or business?

Short Answer

That is where the delusion begins.

Explanation

Pictured below is the B-I Triangle, the 8 Integrities of a Business.

Notice the eight components that make up the B-I Triangle. You can see that “product” is the smallest integrity of the triangle. That is because the product or service is the least important part of any business.

The product is just the tip of the iceberg. It is the lower part of an iceberg, what’s below the surface, that sinks big ships.

Whenever I have someone say to me, “But I have a great product or great idea,” I know they do not see the iceberg. That’s what sunk the
Titanic
and what sinks most businesses, big or small, old and new.

The GEO program is being designed to teach you to put a complete business together, making sure that the eight integrities are working together and to your advantage in building a strong and profitable business. Putting the eight integrities of a business together is what successful entrepreneurs do.

Once an entrepreneur knows how to put together the eight integrities, they are better able to build a business around any product or service.

FAQ

What are the “8 Integrities of a Business”?

Short Answer

I wish I had a short answer but I don’t have one. So I will simply explain what each of the eight integrities stands for.

Mission

Mission is at the base of the B-I Triangle because it is the foundation, the business’s reason for existence.

A mission comes from the heart of the entrepreneur. A mission goes far beyond just making money.

There are two kinds of entrepreneurs.
Transformational entrepreneurs
want to change the world. Steve Jobs of Apple falls into this category. This is why he is a designer and innovator.
Transactional entrepreneurs
want to beat their competition, drive down prices, and make money. Most entrepreneurs fall into this category. I operate in both categories.

Team

A successful business is made up of a team of different people with different professions. Great teams have professionals (such as lawyers and accountants) people with different skills (PR, marketing, sales), different talents (marketing, graphic design, copywriting, web design), different experience (years of work and varied backgrounds) and different expectations. Rich dad often said, “Business is easy. Working with people is hard.”

This is why most entrepreneurs fail to build a business. They are lone rangers, or lone wolves, working by themselves or with fewer than 20 people. They do not build a business. They own a job.

Leadership

The leader, the entrepreneur, focuses people and resources in order to produce a result on time and on budget. The leader of an organization is responsible for the successful integration that’s needed for all eight integrities to operate together.

Leaders employ specialists such as lawyers, accountants, and web designers. Specialists know a lot about a very specific topic or area — generally only one of the eight integrities. Leaders know a little about a lot. And they must know a little about each of the eight integrities.

One reason why so many people fail as entrepreneurs is because they leave school overly specialized in only one of the eight integrities and lacking in generalized business knowledge and skills, especially leadership skills.

Looking at the B-I Triangle, you will see…