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Hello its Robert Kiyosaki and my sweetheart Kim
"Hello" and we'll be talking about how we got out of debt our story actually begins when
around 1984 when we first got together as a couple and a
I was personally deeply in debt that I had lost nearly a million dollars on one of
my
many businesses and I'll
I still owe another 400,000 500,000 was paid off when I met Kim
I was like this big albatross around her financial neck because
I had no money on top of that I was in debt
and on top of that though you did live in one of the nicest apartments
in Waikiki you drove a nice little Mercedes so if he were certainly looking
good
I had no idea you had no money yeah I did look good
restaurants played a role quickly that apartment on Waikiki Beach from the
shores of
Diamond Head same place where Tom Selleck used to live only cost me three
hundred dollars a month
and the Mercedes all beat up Mercedes but look good
I but I'll still deeply in debt and madly in love with Kim we decided to
make our lives together
so that was a 1984 we got together
and that's how we paid off quite a bit that even though we had no jobs and no
money
but the good news is even though we went this process a 10-step process can I
were financially free by 1994
so we are couple on a computer that but we had invested enough that we never
have to work again for the rest of our lives
so this is a true story of how we got out of debt and after
we met in nineteen eighty-four we then decided we were gonna go build a new
business together and we left away with everything we had
and headed to California and within about three months we were pretty
much broke and napkin savings the lasso I
nine hundred dollars come I'm I but we went through that many pretty quickly
and
as I said we were broke we're actually homeless for a short period time we
slept in a car we
knocked on friends doors if we could stay with them and I'll tell you when it
comes to being financially when it comes to struggling financially we know what
it's like
the pressure the stress arguments it was a really tough time
so I was in 1984 through 1988
687 Republic the toughest years in our lives because
not only for building this business we had to survive but also pay off a large
amount of debt
but I have no money coming in with no steady job and fortunately a friend let
us live in her
apartment which is in her basement in our garage and somehow
something always happen that way survive and we're outta money several times
along the way
but somehow we survived and I still remember back then
the credit cards that we had they didn't have the elect not not not not on
emergence and electronic
machines a lot of them just had they made an imprint so we would find the
places like the motels in all where they were just taken
imprint so they couldn't check and see that our credit cards were maxed out
so on top of the debt Robert had because we were then
broke we did not have any income coming in at the time cuz we're building our
business
we were also accumulating more and more debt so the problem wasn't getting any
better
red they interest on the debt was a skeptic ruling
health I still remember nineteen eighty-four drive around a friend's
borrowed car
and Kim Nitish they were looking for any place to sleep that would take her
credit card
and were up and down just north of San Diego and going in a little motels and
they would say or your credit card is no good way to go someplace else in
it was horrible I'm and talk about self-esteem self-confidence all for a
it was absolutely horrible so that's why when the Royals tell me
well money is not that important to me obviously they have a man broke it
and I'll it was horrible time in as kim says we fought a lot during that period
of time on the wash stuck it out with me
but I also know that shouldn't marry me for my money because
he had no money I
but we were having a good adventure together and any it's true that the hit
to your self-esteem in your self-worth
your self-confidence he started out everything and so it was important that
we were going through this together because at least we could lean on each
other when one of us got scared or frightened
you know we had someone to talk to win and we go through this together
so let us say for two thousand dollars today is a lot of money but back then
there was almost 20 something years ago it was a considerable sum
and on several occasions you know people advise me personally it's just take
bankruptcy in
not pay the four hundred thousand dollars now the summer reasons I didn't
do that in bankruptcy or foreclosure look are you losing your house are
pretty serious and we never had to go through that simply because
I already sold all my rental property in my investment property and I was still
broke
so that ethical for foreclosure but I still have this debt
so at the end a verse are recording a great friend of chem in my hours
Ascot McPherson who was a mortgage banker
we'll be talking to those of you who may be facing foreclosure
or bankruptcy or already have gone through foreclosure or bankruptcy and as
a banker he will give his points have your weekend what you can do
but I'm kind of happy to say I did not have to take personal bankruptcy work
we decided instead to just pay off the debt which are the 10 steps were gonna
come to
and much of the debt was your personal family and friends as well
you know my investors in my business i felt obligated to pay 'em backs I don't
want to
you know stephan through through a bankruptcy so we
we paid off as one more reason you know if I O two million dollars and I was
only making lets a seventy-five thousand dollars a year
and I was the most I could earn I'd probably declare bankruptcy
but because chem and I were entrepreneurs we have the ability
it through our business is a generates pretty substantial amounts of cash
to pay off the debt pretty quickly so that is a key reason I did not declare
bankruptcy
and home otherwise bankruptcy is always an option I'm not saying is good or bad
but I'm was strongly recommend if you're facing out right now
please get good legal advisers credit counseling services and all that and
face the problem now
but we did not declare bankruptcy or foreclosure
so the name in this program is how we got out of debt
and as we've talked about often there's two kinds of that there's good debt and
bad debt
to Robbie one explain a little bit we had tremendous months a bad debt
and bad as debt that doesn't make you rich for example if i buy a house
and I have to pay for to buy a car and I have to pay for it that's bad debt or
women who wanna buy all that nice jury
that's bad debt yes but not as bad
and good day at his death somebody else pays for you but the reason getting rid
of bad that was so important for us
endorsed starting our lives together was that its
its future to get good at IEEE loans and things like that on
apartment houses and commercial buildings a rental property if you have
no bad debt
and so we had no blemishes by the time we came to this process we never stopped
investing by the way
but we did pay off the bad debt can get into good
so good at is very simply that the makes you rich and somebody else pays off for
you
I your tenants and bad debt as data makes you pour every month and you have
to pay for
one with a little about financial intelligence as many people who just
simply say get out of debt
and that's a good idea if its bad debt but if you're going to be a savvy
investor I have a high financial IQ is important to realize there is good at
and that's why I just explained
nothing that's very important about good debt is one the ways can I
were able to retire less than 10 years was once we got out of the bad or as we
got outta the bad
we were investing with good debt an what what I say to most people who have
mutual funds are stocks or bonds and savings as a
trouble with that stuff is a banker doesn't lend you money
I E savings they are dollars I'd rather invest with my debt bankers dollars
so high financial intelligence is knowing how two years good
to get richer quicker but then that means that the next subject you gotta
know a good investment from a bad investment
thing I'll say all your mutual fund lovers out there
is ask your bank if your bankroll and you a million dollars to buy mutual
funds answer is No simply because most of us are too risky
so that's part of the financial intelligence and the way we got out up
debt
and we got financially free so quickly was when you did everything good and bad
debt so what this
CD is about is getting out of bed so we'll start with a ten steps are getting
out of debt
and for those who do have a workbook please follow along with the workbook
that comes with the CD serious
so step number one as you go tell yourself the truth
I think that's why the hardest things I had to do because
in a Cayman ever met at a financial disaster like me
I she couldn't believe anybody
could be driving a Mercedes a living in a nice hotel right on the shores of time
it had to be flat broke
well so deeply in debt an actor pretending I was rich
and that was in Els faking it till I'm a curtain
you know I was praying to God and Jesus and Buddha and hoping that money would
come by and
pretending I had I had no debt and I was looking good in
lip you know heating in the best restaurants and flaunting the cash in
but I was flat broke you can fake your girlfriends but you can't fix your wife
had so the first thing I had to do with Kim a sit-down eventually tell the
trigger for
I wasn't as great societal hooked I
but it sure you i mean you gotta tell yourself the truth because if you have a
goal and where you wanna go
you like a bill to get there if you don't know where you are yeah basically
it's its
telling yourself that if not lying to yourself not pretending anymore
here's the hard facts here's where I am yeah I still thought it was a good deal
you know this
condo right on Diamond Head beach and the best you know the colonists our
hotel and I love her room service and all this grace up is still the only
three dollars a month it was cheaper than anyplace else I could find it was a
good deal you're still
broken in debt I go show very well and the
a member cities with a nice looking for fifty as a SL Mercedes
but it was cold all and burn some oil
so once you have %uh sat down and face that you're gonna tell yourself the
truth the step number two
is you gotta stop accumulating the bad debt
yes and that what that meant a sometimes you might have to make a little bit a
sacrifice
and when can I move from Hawaii to California know when almost right away
our living in the garage basement apartment
there were some times I had to run up we have no money so Kim had like two bucks
to get through Friday Saturday and Sunday to lead came on Sunday night
hopefully got paid for what I was doing
so much to tell them how you survived into I well first of all
you know gas costs I don't want to use up a lot a gas and drive to a lotta
places
and there was this little taco stand that I could walk to was about three
blocks from where we lived
and sidewalk down this little taco stand get my little cheese and chicken case
India
cost me a one dollar and then I'd walk back and i'd have Mike a city in the
next ed walk down in
have second case idea that's two dollars and that's basically how we would
survive at times
right and in Camas against you as a great figure in all that much does like
to eat
but she was able to make for meals at a2
were 42 bucks and she'll survive and I come home in a Sunday night from a trip
wire
either Monday morning and other we had some money again but then we went
through the process
for us getting outta bed debt rather than going out to restaurants i can.
down some hundred dollar bottle wine
hearings prime rib and stuff so we live pretty frugal ear during this period of
time to we got our feet on the ground and built in your business
so really what we did is we put a freeze on all above accumulating
more debt on our credit card because I for one reason
we can use our credit cards because they were so maxed out so I'm again we did
have to make some sacrifice but we started
that alone started us started putting us in the control love
handling our money yeah i i war sure it's a longer until
you know go and buy a new shirt a new socks and you wonder where can I use a
longer a bottom or better
and kept going you know but we don't just keep spending money which a lot of
people do because
a lot of times people eat or spend or the shop when they feel depressed
and I think that's really an easy thing to get into park or drink a lot
a mere ten I was time to hit the bottle number times I felt so bad but
cost money so we just basically cut back on our feet it took us about six months
and then the money months a business was up and running caserta come in a little
bit more regular basis
but during that period of time we really made it a point not to just
waste our money on things I got us deeper in debt
which brings us to the next step step number three is make a list of all
and the key word is all the debt that you owe
and just talking to me a dirty look which uses the word all last
you know I had so much daddy wanna tell her and I kept sneaking off from
paying bills here sneaking around their health plan which is urs
you know because I wanna tell her how bad the Titanic was that I ran aground
call my last business
and finally we have to sit down and write I at the right down all the
investors I owed money to all the friends and family of money to
and everybody I felt bad about you know that was still not paying things like
this so share miss it done right
and even though the credit card companies that I get really nasty when
you talk to help
so she was show you how to shore the envelopes I was receiving from angry
credit card companies and all the stuff on
basically tell the truth and face the music by I still remember every once in
a while Robert Wood
put his list together and then the next day he come back because well
I didn't think this was so important but there is this guy in Hawaii and I
I really still do own 4,000 I could probably not pay a man he'd be okay
mike was put down the four thousand let's put it on the list let's keep
going
its own bed alone with but for the whole painful process
and his name was *** and it was a how unfortunate as a friend to both of us or
the telecoms I
so we paid which is four thousand dollars even though he was fine with
you know now getting a back he invested in a company in the company to go down
but I just felt personally obligated to him because
and about the 10,000 from Emma still on for so I paid him
okay I'm back before eventually so
step number four is a very important step and all you guys out there who are
deeply in debt and all those I like to say this is possibly
a very or the most important first real step you can go through or them
I a major commitment and that is higher a bookkeeper
if you look in the workbook you know I talk about
a bookkeeper is part of your team and there was times you know I was just
trying to do my own books and
you know when I'm stressed out and embarrassed in upset that I also much
money I would not
really confront the truth might play some SC I'm not very detail-oriented
so can I finally won out in marriage to talk to me you know and talk to be
talking over them misses you have a bookkeeper
and I said no cuz they cost too much money says look rich people have
bookkeepers poor people don't
you've got to keep accurate records and you're not supposed to do that your job
is to make money
not to keep track of the money necessarily actually your
her job as a give you accurate records that you can look at 10
a bookkeeper is a most important party a team so I say this right now because one
where
when I was facing so much debt it was really hard to go and spend the
two to four hundred dollars a month on a bookkeeper but he was among the most
important steps in like 20
for those who read Rich Dad Poor Dad and they are my wrist at all was a
never say I can't afford it because poor people say I can't afford
so a bookkeeper was somebody that was very important
you know an important expense and he too was getting other debt because every
month
Oldbury would force especially me
and Kim to sit down a look at our financial situations
and we had to come up with a plan of how we're gonna get out of debt
seat spending the money was the hardest thing for you pacing mares
bills twice a month and seeing very little money coming in and a lot of
money going out
that was that took a that took everything to sit down there and not won
a bolt out of there
yeah it but it was a little sweet little lady was vicious
I talk about holding you accountable
talk about making sure all your debt sir they're making sure you're telling
yourself the truth
that was Betty Berryman my first grade teacher and I was having i jus
nervous reaction or temples around her but she really held our feet to the fire
my feed the fire especially with the face all the bills and
who was being paid white and to this day now we have multiple bookkeepers because
them
the cash is pouring in I'll say it all over those you
maybe in financial trouble higher a bookkeeper simply because
rich people have bookkeepers you either pay on that much a start but as your
wealth
roles you're really appreciate it if you have good records not only that your
banker will
be more willing to give you good debt
if you have adequate records and neat and tidy and timely and prepared every
month
now another story about Betty is dead Robin I also knew that we've had to pay
off our bad debt
but we also had to start accumulating money for future and so we had this
um philosophy it was called pay yourself for some shirts from earlier too many
%uh view
and the plan our plan was we had three piggy banks
and for those of you who read Rich Dad Poor Dad you know about the three
piggybacks
but let me it's a song about very first she want to pay bills first machine was
a good book keeper but she was an air rich bookkeeper
now if you wanna be a rich you gotta pay yourself first so I would go in there
and I say okay barry
we're gonna pay ourselves for us and then she turned into the salt
schoolteacher insert scolding me
so we argue back and forth effort that special segment with the team
but we always pay ourselves for us and if you read the book is pay yourself 10
percent ten percent ten percent or thirty percent 14 savings one for
investing in one for tithing
so I means even make a thousand dollars you paying three dollars right off the
top
and most people screaming quittin cryin'
give up at that point so with kim's mentioning the piggy banks
is at the start maybe too painful to pay 30 percent of what your grocer's
so start with a piggy bank I don't care but 10 cents a day or one penny a day
but get the habit of you know putting money aside for savings investing in
tithing
if you do it every day it becomes a habit home for those are read Rich Dad
Poor Dad
when I say that it's not money that make sure it is your habits that make your
rich so even when you're broke
even when we're broke we still pair of urself first and the reason belly is
probably still broken she never paid a cell for she paid her bills first
soho so are always with every dollar bill that came in our household we took
30 percent off the top and as Robert said doesn't have to be 30 percent but
that was our discipline
but here's what they would say when we propose this to bed issue goes
because we had all these bills that were doing all these creditors they were
screaming at us to pay
she's oh no no no no here's what we're gonna do his we're gonna do we're gonna
pay
all the bills first and then what's left
over will put into your piggy banks and that's why she still poor
cuz there was never a at ever going to be anything left over because we aren't
so much money
place here the cement this is problem next most important thing after hiring
a personal like Betty is you've really gotta pay yourself first please hear me
poor and middle class people pay themselves last so the hard part was we
would take off
saddam doesn't have to be 30 percent let's say even if its ten dollars ten
dollars ten dollars per month is gonna habit of doing that
and then you pay your bills may be surprised how smart you become
if you have to pay those bills because look your piggy banks don't scream at
you
but the people who want their money do so if once you pay your cells for us the
people that scream at you can you give me the motivation to go out and find
someone money
and I was amazed at how fast that money would accumulate because you put it
aside you're not allowed to touch it it's for investing for charity and four
I'm savings and so we did not touch it but boy did a keenly quickly that's
actually
part in the AM how we got finance on our very first property right and if you
look you listen to most people who are really a rich
you know like some other really rich guys they say save fifty percent
for the call John Templeton service as he put 50 percent aside now
30 percent was hard enough but he says you keep increasing your produce under
50 percent gross a 60 percent to 70 percent
so today even though can I make millions and millions and millions of dollars
we're now reinvesting over eighty percent so the thirty percent kept
growing
simply because we establish good habits during this process of getting out of
debt
a bad debt in getting into good 21 the reasons we're getting richer faster
today as they were now investing millions and millions of dollars
but will still living on not frugal by any means we have nice house nice cars
and all the stuff
but we got into the habit of paying ourselves for us so 30 percent can grill
today for us eighty percent and I think there's one the biggest secrets about
paying yourself first
the said berry bless her soul paying her bills first
and I use my bill collectors and people hated me as motivation to go make more
money
bus stop it myself first and by the end of this program in a few
read their work but you're gonna find out the formula for how to pay off all
your debt
plus other the other objection we get as I don't have any money to invest so
you're gonna learn number one how to pay off all your debt and number two
you're going to have money to invest if you follow this formula so that's the
setup and just knows as
it mostly discipline and determination and please hear us I was 1984 to 1994
income in our financially free in 10 years never have to work again
for the Russell alive and still got out of all this debt so that's why this for
my works
so the scores for 52 steps 5-for-10 I will now go into the step-by-step
and this is where Kim is very good at this process cuz you
she primarily set the whole thing up to do it and again go to your workbooks
we'll see these diagrams and
is hard to follow if you don't have a diagram so please so
taken over Kim okay let's is a step number five and now that you've got a
list every debt that you owe
you're gonna make a visual picture above that debt and very simply what you're
gonna do you gonna
drop a quadrant for each Dept and in the
upper left-hand column other quieter you're gonna put the creditor so
for example it might be visa in the upper right-hand column goes the total
amount owed told balance owed
bottom left hand corner goes the minimum monthly
amount that you have to pay every month and in the bottom right hand corner
you're gonna divide your total amount due
into the monthly payments so example in the workbook
his visa minimum a hundred dollars a month
two thousand dollars total payments and that means the
number twenty means it'll take you 20 months to wipe out the state
now you basically take the total amount due which is 2000
divided by 100 and that equals twenty-month
so for every single debt that you have your gonna draw
this visual and again refer to the work but because
it's in there it'll make it very very clear but for every single day you're
gonna set up this quadrant
and you're gonna have the circle number that says how many months it will take
to pay these of so if you go to the diagram enough
with me I was a I had several Visa cards I
several MasterCard's wanna american express you know they
american express like it's nasty which was good but they believe came after me
hard
and then there was other things like school loans car loans
car loans and number two personal loans for all these deaths where to line up
plus I had creditors I owed money to
so as Robert said its it every single that and and a lot of times
you know as I said with Robert he wanted to tell me about this one guy in Hawaii
that maybe he has to pay
so the people that you owe money to even if you don't have a monthly plan set up
with them
make one up but put on your list in this list also includes your personal
residence if you own a house that you're living in
put that figure in there too okay so let's go to use
a step number six because when the reasons can I got soul rich
so much richer fast so as we paint over house everything because that's bad debt
in a lot people call your house an *** up a really a liability
is it a good investment yes but I do wanna make monthly payments to live
there for the rest michael's
that's bad debt to me so with this process you can get completely out of
debt
including your house and cars if you follow it step by step
so step number six is to determine the order for paying off each debt
and this is where that little circled numbers gonna come into play
you're gonna start with the smallest circled number you have
and if you look in the workbook that's not the visa payment that we just talked
about visa payment came in at number six but the smallest
circled number was number eight which was a department store credit card loan
it was eight hundred dollars owed and you had to pay one hundred dollars a
month so the circle number was 8
that's the smallest number in the example that were you so that's number
one that means you're gonna pay that debt of
first and people often say I wanna make one comment
this does not take into account the interest rate on
the debt and should I pay off my my
biggest interest rate first now we want to get them to the one with the highest
interest rate of the book's first
not necessarily in this formula in this formula you wanna start
you wanna see a result quickly you wanna know that this formula works
so we're gonna take the shortest debt that you have the one that you can pay
off the quickest
and when you see that result when you see that paid off you can see the
formula working you have a win
it'll encourage you to move forward so that's why we start with the smallest
number
so in this example in the workbook is def department store credit card
told their goals 800 minimum payment hundred dollars a month so we'll take
eight months
so is no as kim says it's not about the interest payment as the faeces one you
can wipe out immediately
right we want to keep it simple so go through every diagram you have every
dead and look at that Circle member and put them in
order from smallest to largest and that's the order you're going to be
paying off these debts
so if you look at the workbook you know number one was a department store
number two was a jewelry installment loan number three was
a home store credit card excedrin excel Excel
once you have all the numbers lined up then step number seven years
this is the key and this is really the one you only thing you really have to
put some effort into
and all you have to do is come up with an extra 100 or 200 dollars
per month and what do you do with a hundred twenty dollars a month
well for some up you gonna say are how do you come up with an extra hundred
dollars on strap them up to here I can't make any more money what do I do I do I
do
and so Rob and I were talking about what did we do
we went and started a little something or we had little summers 10 people
yes a once a month you know we put a little something aren't people would pay
like 300 dollars in all that a No
after all our costs actually start making quite a bit more millionaires to
avoid growing he came across like I said when you have those credits are
screaming at you thats
better motivation and those piggy banks who want to invest in on
so when they were screaming at us every month we will do it will summon are
still advertising
and he would show up no match for people are caused when a few extra dollars we
paid our taxes
and then there was extra money with which we went after the all the debt
that's it and that's all really you have to come up with I mean Roberts nephew
he goes on evening and he starts selling things you can go you could sell things
on e-bay make a hundred dollars a month
you could open up a lemonade stand on the weekends and make a hundred dollars
a month I mean it's not rocket science and you're gonna be amazed at how easy
it is
or get a job at a taco factory on you know part-time at night or
you know cans but just make that extra hundred dollars and whatever you make a
stand focused
onto that debt pile which goes up to step number eight
and this is where we're gonna start paying off that first debt which is the
eight hundred dollar credit card
from the department store now let me start here
whatcha gonna do except for a debt number one you are only going to pay the
minimum
amount do no more on all the other debts on
everything else and you're just putting this laser hawk like focus on
that number one which is eight hundred dollars yep and let me
let me guess that some love you as I was told
no no no you have to pay off a little bit more in every credit card and that's
how you're gonna get out of debt
and I did that a robert and I did that and we just never got ahead it didn't
seem to make a dent
in what we were doing so I knew that formula wasn't going to work so again
minimum monthly amount due on every other debt except that number one
and then because we stepped up to let's say two hundred dollars instead of
taking eight months
it took four months to put wipe it out entirely right because that number one
year minimum amount is a hundred dollars
you're now going to take that hundred dollars extra hundred dollars that
you've made
and you're going to apply it to that number one so instead a hundred dollars
you're gonna pay two hundred dollars so instead of paying it off in
eight months it's gonna take you for months BOM and it's got
and all the sudden ago holy moly now celebrate
yeah but now you have an extra two hundred dollars cuz he got a hundred
dollars that you are paying off on that credit card debt
or that %uh department store dad and have the extra hundred dollars you make
in a month we have two hundred dollars
and now you can go attack the next one and this is again why we start with the
shortest time period possible because buy outlook it works
alright I got rid of a debt and so that's one of the most important things
to keep your confidence up as you go through the process
to buy or sell for Diet Coke and sell their ego summer but to celebrate
okay so also when you pay off that first debt now that you have this visual
diagram in from you take a big red marker and put an X through it
and that one is of your charts it's done celebrate step number nine
time to move on to date number two now here's what you do
debt number one you've been paying two hundred dollars a month
so you go to debt number two if you look in the workbook that number two is a
jury installment plan
you all four hundred dollars your minimum payment is forty-five dollars
so instead of paying just forty five dollars every month
you're gonna pay $45 plus the two hundred dollars you are paying on
that number one so you're gonna pay 245 dollars a month
on Dec number two in guess how long that's gonna take you to pay that off
less than two months POF than gone gone
celebrate I so you cross that one off
now you take move on the debt number three look in the workbook and that is a
home store credit card
and at number three is a hundred twenty dollars minimum payment
and Ed the two hundred forty five dollars you are paying on that number
two
you're now paying 365 dollars
and their total debt is twelve hundred dollars so
it's gonna take you instead as it looks 10 months it's gonna take you much
shorter than that to pay that off
and you keep going through this process adding
every time to your new debt the amount you're paying from the last step
I ever said this is not gonna work if you pay off one day to go back into debt
or that you pay off one or two and then you go back to making the minimum
payments
what you doing is your laser focusing on wiping out each one of these
who debt so loans at your own until all wiped out
if you follow this process should take usurp seven to eight years to complete
wipeout even your home mortgage
him out most people tell me its 52 eight years to to get completely out of debt
and if you look at the example in the workbook this person was over two
hundred thousand dollars in debt
including their home their home was a hundred and fifty thousand dollars so
they had fifty thousand dollars in debt on top of that in going through this
formula
in just over three and a half years they had the fifty thousand dollars entirely
paid off
and it took them less than four and a half years
to pay off their house completely so in about
eight years they were completely debt-free of two hundred thousand
dollars
so again in about eight years they were entirely debt-free
the house payment alone was gonna take 'em over 20 years
so here they are eight years debt-free and
all they had to do was come up with an extra
hundred dollars a month to do that that's it
and a lot of discipline to keep rollin can allow to discipline
this would bury the bookkeeper for us all but it worked and I
and a the next step 10 is how we became financially free instead of going back
into debtors are spending their cash on dude ads and things like this
well those are very much Dad Poor Dad or play the cashflow game
you know what we do is we invest that money even faster
so in this case you know all that money instead of spending
which was kept by more properties stocks bonds
never buy mutual funds but we had money to invest in even greater rate a space
and that's how our investment rate
went from 30 percent up to eighty percent today and is now in the millions
of dollars were continuing to reinvest
and we love of our cash flow from our properties
so it's really interesting how this process starts a snowball
you know it's a compound ineffective getting richer and richer faster
so this process of getting out there was how it started in 1984 and I was really
in bad shape
and Kim applied some discipline and some truth-telling to the process
lol hole in my feet to the fire we had better to keep my conscience and remind
me
and 10 years when I only wear out a debt were financially free we're making about
ten thousand dollars a month
but 120 thousand dollars a year in our expenses were about thirty six thousand
dollars a year so we
every month amid about 10,000 from a rental properties and about 3,000 an
expense in sandwiches still to this day
ten years later a twenty years there was just keep doing the same thing and now
it's in the millions of dollars
same had that same process staying on a debt
getting richer and richer where we have a lot of good at life somewhat surreal
apartment houses and commercial buildings but that's good
and that's how we get richer and richer and reinvesting so as I said earlier
that
this formula was gonna show you how to get out a bad debt
and how to accumulate money to start investing so very quickly just going
back to the example
paying their very final dead they were paying monthly
over 20 eight hundred dollars a month to pay off their house
that house gets paid off they still have that twenty eight hundred dollars a
month
as Roberts said instead of going out blowing it in buying doodads in all
sorts of things
new power about if you have twenty eight hundred dollars a month
to invest and that's where that money comes from and again it goes back to
a hundred dollars a month is all you have to do and now you've got twenty
eight hundred dollars a month to invest without really doing anything different
so again this is the formula we've used this is how we've gotten outta bed that
this is what's what really got us moving forward to start investing
to accumulate the money to do that and to get us financially free
and we don't believe in living below your means I mean today
inadmissible when do we start enjoying our money today can I on about seven
cars
lot so how was urs arwood will travel by private jet and all that but we have the
cash flow from our investments doing that
another credit card is paying for that stuff and is not debts income coming
into us constantly
so our assets from our investments by our liabilities today
and the reason so many people get in trouble in the first place
is a by a liability is first and then they try and buy assets are kinda never
happens just keep I'm or liabilities like cars boats and things like this
by getting on a debt bad debt and then buying assets
now our assets by our liabilities so we still have a great lifestyle I'm
incredible lifestyle
the best thing is we don't have to worry about money we don't have to but worry
about
you know anything because we always have more more money coming in because the
process keeps going
so that is the 10-step process for getting out of debt and we were in
closing we just want to add a few more tips that really
have helped us stay on track keep focused financially and keeping
creasing are well which happens day and a
and a in and out so go to go into the workbook in the fuse few bonus tips
number one is it takes discipline and dedication remembered as a process
it is a process you know from going from where you are to where you wanna be
and if you don't have dedication and does a plan the process falls apart
not because it's about process because you lack discipline and dedication
the second point people ask me often is do you have to be debt free before you
invest
our answer is No that's a choice you can make but for me and Robert we were
investing even though we had quite a bit a bad debt
what we did is we stuck to this formula but we kept finding the money to invest
so no you do not have to be debt free
to begin investing for example while you're going through this process
but this time we had moved from California to Portland Oregon
and we found the smoking 18 unit apartment house
and back then I mean I can't believe how cheap it was but back then it was like
three eighty five thousand dollars
we don't have any money we're still paying off our debt
so the cash by understanding and assessing the evaluative alleyway in the
property we realize we can get 100 percent financing and still
make money from the deal so that's when you know I went knocking on bank doors
work and we finally found one bankers
name is David reform the greatest guys we ever met from US bank
and it gave us a hundred percent financing to buy
this apartment house 18 units for three five thousand dollars
and it put like a thousand dollars a month extrana pocket
so the answer is we never stopped investing because
that was part of the game anyway so we start we got richer and richer still
paying off our debt
and we still on a piggy banks filling up with the money we're putting in
with a ten percent ten percent 10% per cent so that's where we never stopped
could
wouldn't limit ourselves without limiting thoughts like all I can't
afford it or
this is too hard takes money to make money
yeah when I have money all invest all that right
so September 3 is that if you are married or a long-term relationship
in a go through this process together with your your spouse or significant
other
because it was this process that makes a happy couple today
you know you know people look at Kim and so is she a trophy wife is heaven Olson
and the for trophy husband yeah anywhere yes you are
I I know shouldn't marry for money and we actually grew together we got smarter
together we understand each other better
and the process of going from deeply in debt to
you next excessively rich has been a great process and the Maytals love each
other more
I really don't you're able to make their own choices were no longer guys here on
the second and third and fourth wives
and there was marry another one with no brains but looks good enough
if that's what you wanna do that's fine but that's not what I want to do
well as of: also a lot of women out there who just want to turn over all the
financial responsibilities to their husband or the partner
and I don't recommend that either because as Robert said the most
important thing in this whole process as we learn together
we learned a lot together and when we had to come up with extra money how we
gonna get it
it was a really a growing process and I see so many couples grow apart
here's an opportunity where you guys have as a couple can grow together
by solving a very big problem call getting out there and getting real and
getting rich that's the most fun
so number for number five yr steps 4&5 are
the tips are pretty similar keep it up keep your spirits up I'm in the hardest
thing I've tried to face all the debt was
I want to go eat and drink and spend more money they want a basic
I don't have a set and buried the bookkeeper was really good about this
cuz you really did she look back
my first grade teacher actually scolded me sometimes
so she was really good and she kept us going which is to number five you know
even though it looks bleak keep going because somehow lol was got through
I mean there were times we don't have money for three or four days but
something always happen
with does continue on so many people so I can to cling to this job work I can't
do this was something always happens
like why people believe in God but learn to trust in God and we kept doing
if we're going for the right purposes and doing being ethical and moral and
legal things kept working for us and some remember the two minds are better
than one in our case he was killed myself embedding
a bookkeeper boy she was really great for us he kept us going yes
and then we had a day before banker in all this and along the way we found
great people on
you know because Bobby ok cool a lot asleep in her basement on things like
those we love Bobby forever because of her cuz she took care of us when we were
really down
but in the process really made us stronger and build better relationships
for us I would say side say it's it was prolly
one of the toughest times actually the toughest time I've ever been through and
I would say but Roberts ever been through
and looking back in retrospect was pry the best thing that could happen to us
because it did make a stronger made a spacer problems
made us get through our problems handled the pressure knew we could make it and I
became through the other side
as number six is you to play the cashflow 101 games whenever we have
financial problems lot times a brain gets stuck in like a
there's no oil on the brain or something that goes into a jam
so get out the cashflow game play the game and what the game does as a kinda
loosens up your brains because the juices going is your new ideas
you can talk to the friends play the game if you don't have a game in a gozar
Rich Dad are common we have cash flow clubs all over the world
and you can join them and talk to them in love them like support group to help
you get through
your financial challenges you know donald Trump and I wrote a book together
was why we want you to be rich but if you know donald Trump
was a billion dollars and debt and I was only a million
and actually made us better people you know facing the problem in getting out
so all of us have money problems this is how you handle
so fine a cashflow game get together some friends play the game in
you know it I think your brain will come up with solutions that are unique for
yourself
so as I said at the start oversee day
that some %uh view today are facing a foreclosure which the bank taking your
home
or a personal bankruptcy or
you've already gone through a foreclosure in a bankruptcy and those
are kind of extreme situations
and think I don't have to go through it because I paid off my debts
so here is Scott McPherson i doing a short interview and thus
he is an investment bankers was a mortgage banker and he can give your
bankers point of view
on the subject so foreclosure and bankruptcy so welcome Scott
morning lover but what you have to say it too what would you say to somebody
who right now
fitness number of payments on their house or
there are they lost their job to sail the hospital bills I cannot pay off
well as a as a banker before they go into foreclosure or go into bankruptcy
what would you recommend well there's a ride a different things there's
the pre and post reaction to a foreclosure bankruptcy that we're going
to discuss all that fun
on the if it's a minute in you think you're going to lose your property and
you're gonna file bankruptcy
or you wanna go into foreclosure or in foreclosure currently
what I would recommend is to do maybe do a little bit the obvious do
and do the right thing go try to go get your self help with credit counselors
and so forth and do things that you can
try to help yourself prepare for I
year inevitable maybe I've losing your house number two I think you try the
best you can. is to
market your property do what you can do to try to sell it if you can but if you
sometimes you just can't do that in a falling market
and number three I would say have open communication with your existing lender
and try to work something out with them because there's a variety of different
things specially in the marketplace we're in today
that lenders want to try to do this they don't want a foreclosure either but I
would strongly suggest you have open communication in BR honest with the move
your situation
the final thing I would say robert is that you also need to described to him
there are certain conditions that occur in an
in in post bankruptcy oppose for closure they're very important
%uh extraordinary kind of circumstances like for example
a medical problem that has forced you into this condition or losing a job
something like that and again down the road that's going to really help you if
you've documented that you've gone in and tried it
solve the problem so what you're saying these are
challenges outside your normal control or something
completely and post bankruptcy or foreclosure
when you're back trying to qualify for loans those types of things that you've
already done
will help you dramatically in your credit score and dramatically in the
interest rate you get
after your bankruptcy or foreclosure so how is you document that
well I think what you would do is is you would have correspondence with your
existing lender and explain what the situation is to them very openly
and explain and show that you tried to work with them
and intend to resolve the issue on whether it's a two-way street or not it
doesn't really matter but you've tried
it's been an open door also I think by going to credit counselors and so forth
I think
that is you keep those records and their recommendations and act on and try to do
what you can do
even though its limited basis if you're going through a very tough financial
times
so what you do is you showing good intent and I'll
whole us completely know what happens as a baker let's say I came to you
I consider missed we stay together will have a bankruptcy or foreclosure against
me
although the nearly a million dollars to help
are what to you as a banker do
what's your response when you look onto somebody's credit application
or financial statement that they have a bankruptcy or foreclosure
what is your first response well let me but let me answer that in two ways
single-family home versus a commercial real estate transaction on
first evolves close best thing you can do is come in and tell me about it
because
I'm gonna find it same as will be open with me on so once we've done that
it is not impossible by any means to get a new loan on a single family home if
you file bankruptcy
or had a foreclosure affectively preclude you from certain type of loans
you will not be a
prime credit kinda borrower now you'll be like what's in the papers' now
subprime paper alt a borrower which means
simply you're a perceived higher risk which means
simply you're gonna be charged higher interest rate
so it's not possible so the world's not coming to an end but it's going to be
more difficult to do so with a foreclosure or bankruptcy could buy a
new house or could invest in commercial real estate you could
on now the one thing we talked about briefly before was if this
if the foreclosure or the bankruptcy was caused by
an external situation occurring loss a job medical emergency loss of a spouse
if you've documented and all that and you have a good
record in bookkeeping oh that and you bring it and that is going to help you
on your credit score
injure altman interest rate again you show the intent of trying to solve the
issue not
run from the issue that's what people are looking for on
on the commercial side robert it's a little different we're not so
zeroed in on fight ok scores and so forth
but what we really are zeroed in four on a commercial side is one disclosure
again we want to know about it
up front we also want to know the circumstances and I would strongly
suggest if you're in the commercial real estate business in your borrowing on
commercial loans
and have a foreclosure or bankruptcy your pastor going to have one
prepare a letter be prepared because every time you go and borrow money again
you're gonna have to explain that and explain it through it will not stop you
from getting a loan
but you're going to have to explain and the critical things there are
intent and watch you how you acted during these
ish in with these events I E in a bankruptcy
if you are a bad guy and took the money and more fraudulent
you're going to have a very difficult time getting alone if you were just in a
product dev
owning can rental homes in downtown Detroit right now for example
in the market when away from you completely lost your tenants blah blah
blah
you did everything you could that's a different situation
and that's what people are looking for is the type of person we're dealing with
not necessarily the cycle score like you would on residential
okay that's just good information so anything else you'd like to add or any
words of encouragement to the listening audience especially if they're facing
foreclosure bankruptcy
we are the only ones who encouragement one is life will go on hand it's
probably best to get this behind you
and there are many many people in today's world across the United States
they're going to exactly probably what you're going through so you're not alone
he may seem like it but you're not
get behind you move on with life you'll still be able to borrow money
also the other thing I would strongly suggest if you're going to go through a
foreclosure or bankruptcy
is go meet with a mortgage banker right now talk to them what it's going to take
to rebuild your credit score
because there are certain things that need to be done immediately and you need
to start on that the day after you file foreclosure the bankruptcy
so again this relationship since teams at seven good advice
not going into a shell in hiding taking better place that's exactly right
so I say thank you to Scott and thank you to camp thank you our
thank you and thank you for listening and vote russ has been very very helpful
and that to we wish you all world have no bad debt
and tons and tons a good fit and remember about facing this challenge you
gots modern bus most important thing that mister companies about giving the
financial education so you can handle bigger paula jones
thank you thank you