Rich Dad Poor Dad: What's an asset?

I hope that you've had a chance to look into some of the books about personal finance I've recommended in the past. Rich Dad Poor Dad is one that has been around for a while now. Robert Kiyosaki has created an entire brand around the title of this book which has its own line of instructional board games and personal finance seminars, not to mention a whole slew of other books. The ideas in his book can be a bit abstract sometimes but very insightful once you understand what he's getting at. There are many lessons in which he preaches in his book, I will try to go over a few of them briefly, but to get the full impact of the lessons it would be best to give it a read.

The story in which Kiyosaki tells is one of growing up with two dads. One is his biological father and the other is his best friend's father. Both have great influence over Kiyosaki as he grows up, but have very different outlooks on life and how to go about making a living. Kiyosaki's biological father is known as Poor Dad. He made a living as a teacher who eventually became the superintendent of the entire district school board. He always preached to Kiyosaki that he should get an education then get a secure well paying job. Kiyosaki's Rich Dad on the other hand made a living as an entrepeneur who owned several businesses. Rich Dad preached that the path to freedom and wealth was to own and operate businesses. Kiyosaki was always confused by the lessons taught by his Dads since they differed greatly from one another. Poor Dad's mentality on living life was very risk adverse while Rich Dad's mentality on living life was full of risk.

For now I'll leave that lesson about entrepeneurship since it can be very lengthy. I will be sure to post more on Kiyosaki's entrepeneurial lessons in the future. Another important lesson in his book is when Kiyosaki creates a definition for an "asset." He defines an asset as something that provides positive cash flow. He tries to explain how most people are confusing what an actual asset is, since a majority of people think there biggest asset is their home. Although you are building equity in home ownership, it does not provide a positive stream of income (unless it's a rental property). The important thing to note is that your home is more of an expense then it is an asset. Every month you have to pay property tax, utilities, a mortgage and maintenance fees. In the end you are working for your home, your home is not working for you. It does not actually put money in your pocket at the end of the day. Once you understand what Kiyosaki defines as an asset and can distinguish between what is an asset and what is an expense, than the path to true wealth is to gain as many assets as possible.

Rich Dad Poor Dad is filled with valuable lessons. I will have more posts in the future about the many different lessons from Rich Dad Poor Dad. The one thing that I really feel that this book lacks however is the concrete examples of how Kiyosaki would go about building wealth. He explains a lot of principles but does not go into to many details. He leaves it up to the reader to go out and get the information. The lessons are important and they are quite inspiring. I highly recommend starting with this book and reading some more of Kiyosaki's work in the Rich Dad series.

Hang Dry Clothes for Big Savings!

Here is another green savings tip. Instead of powering up the drier you can hang dry your clothes. Now that summer has started those of you with back yards can set up a clothes line. If you don't have the luxury of a back yard you can always just set up a rack in a room with some windows. This is a great savings tip that only requires some patience.

Hang drying is also better for your clothes. Driers can be rough on clothes, subjecting them to intense heat and agitation. Hang drying will make your clothes last longer which is another cost saving advantage. In my building we have coin laundry and to use the drier takes $2. Hang drying is definitely the best alternative. I don't have a backyard so I just use a rack in the bedroom. It only takes a couple hours and they're dry. This can even be done indoors in the winter. Just don't leave your clothes out in the rain!

Save 30% on Your Home Cooling Bills with this Simple Tip!

The temperature is really heating up this summer. Those of us that a fortunate to have a central air system can stay comfortably indoors without breaking a sweat. However, blasting the AC all the time can have dramatic effects on our electricity bills. A quick tip that could save upwards of 30% on your AC electric bill is have a programmable thermostat installed. The larger your home the more significant your savings can be.

This is a very simple do it yourself project. The cost of a programmable thermostat ranges from $20-40, but the savings can be significant. The savings come by setting the temperature a few degrees warming when you're out of the house, say between the hours of 9 am-5 pm and while you're asleep say between 11 am to 7 am. This dramatically cuts down the time your AC is spent on and cooling a home that nobody is in. More expensive programmable thermostats allow you to set 4 day time cycles such as morning, afternoon, evening and night. Better ones also allow you to set for weekday and weekend modes.

There was a special incentive from Union Gas, when I installed mine. They took $20 off my gas bill with proof of purchase. Check your local utility providers for extra incentives. If you are a renter and pay your own utility bills you can ask your landlord to have one installed or install one yourself and just switch the thermostats back when you move out. This is not only a great way to save but an environmentally friendly initiative.