Rich Dad Poor Dad is a book that I’ve heard about for a while (partially because of the radio ads for seminars), so when I heard David’s parents had a copy I wanted to borrow it.
I expected it to be about the usual stuff, like saving and not living beyond your means. It did include some of that, but it wasn’t the book’s main focus.
The author’s (who grew up in Hawaii!) childhood friend’s dad, who is a local entrepreneur is the “rich dad”. His actual dad, who is a schoolteacher is the “poor dad”. The book’s main structure is that he and his friend want to be rich, so rich dad eventually gives them advice and shows them how he does it.
Here is the book’s advice, in descending order of goodness:
– Assets vs. liabilities: An asset is something that makes you money (stocks, business, income-generating real estate); a liability is something that costs you money or loses value. (cars, a house, jewelry, golf clubs) The main difference between the rich and the poor is that the rich spend money on assets and the poor spend money on liabilities. This is generally good advice.
– “Pay yourself first”: Every month you should save/invest first, before paying bills and expenses. It’s easier to do this if you’re not in debt. I like this idea, but what are you supposed to do if you can’t afford to do this? Apparently still pay yourself and then the pressure of not being able to pay your bills will inspire you to make more money. ?
– How to make money: The author’s passion is real estate, specifically buying at depressed prices. He tells a story of buying a house worth $75K from a bankruptcy attorney for $20K, and then selling it quickly for $60K. Which is good and all, but I’d be bothered doing this for a living – you’re not producing anything, you’re just being a middleman. (yeah, yeah, “reduce market inefficiency” but come on)
– Taxes: Rich dad (and the author) hate taxes. A lot. So he recommends forming your own corporation and having it own your assets. Then the corporation buys stuff for you (a “company car”, a vacation is a “board meeting in Hawaii”), and you don’t pay taxes on the corporation’s expenses. I suppose this legal, but it’s ethically wrong as far as I’m concerned. Taxes pay for things we all benefit from, like roads and schools, and avoiding them by ignoring the spirit of the law makes me mad.
– Rich dad is kind of a jerk: He explains most people take a job out of fear, and then: “Some people say I exploit people because I don’t pay as much as the sugar plantation or the government. I say the people exploit themselves. It’s their fear, not mine.” Also, it sounds like he was always so busy making money that he didn’t spend much time with his family. (although, to be fair, I think he retired early)
Overall, the book has some good ideas, but to really follow its advice I’d have to quit my job and become an entrepreneur. Which isn’t totally unappealing, but…no.
Posted via LJ for WebOS.