In today’s economic conditions, more and more people are swimming in debt.  At last check the average American household is carrying over $8,000 in credit card debt. 

You may be one of those people carrying the debt however you are still entitled to some dignity in how you repay your debts.  In other words you have rights and you cannot and should not be pressured into the manner in which you repay your debts.  The Fair Debt Collection Practices Act(FDCPA) is what gives you these rights.  If you are in debt and are being called by creditors then keep reading to make sure your rights are not being violated.

Did you know?

The FDCPA was created to counteract the abusive practices of collection agencies.

The FDCPA applies to all types of debt incurred by a household including mortgages, auto loans, credit cards and even retail store cards.

The FDCPA applies only to 3^rd party collection agencies.  For example if you have a huge medical expense and someone from the hospital calls you regarding repayment, that is not covered under this act.  If they send this to a collection agency or law firm for collection then this act goes into effect.  By the way it is very rare you would get abusive treatment directly from a store or credit card company because they want to keep you as a customer.

What can’t they do?

They cannot contact any 3^rd party about your debt.  They can’t call your cousin, mother, father, neighbor or anyone else.

They can’t make idle threats to intimidate you.  For example they can’t say we are going to repossess the items you purchased unless they actually intend to do it.

They can only call you during reasonable contact hours.  Those hours are between 8:00 AM and 9:00 PM.  They also cannot continuously call your phone number over and over.

They can’t call you at work unless you give them permission.

They can’t insult you or use any type of profanity, or racial or ethnic slurs.  So calling you cheap, lazy or a bum is out of the question.

They can’t ask for a post dated check and threaten you if it bounces.  Well my question is why would you want a post-dated check anyway?  If I’m in debt I don’t like the odds that the post dated check will clear.

They can’t charge you any excessive collection fees.  This has always puzzled me about debt repayments.  If I can’t pay the original bill how is adding fees and penalties going to allow me to pay it off any faster

They can’t lie to you by pretending to be something they are not, even though we will often lie to them by saying I’m not home right now when I am the one they are talking to.  They can’t pretend to be a lawyer or a court official or any type of misrepresentation.  They can’t use any type of documents that look like they are official court documents.  They also can’t pretend to be taking a survey to get information about you.

Finally they can’t threaten to have you arrested if you don’t pay the debt.  By the way I don’t know how you can repay if you are in jail.

So those are your rights, know and use them if you must.  By the way companies face serious penalties and legal action if they violate these rules.   So if you are in debt and are working to repay them don’t be afraid to enforce your rights if they are being violated.

Rich Dad, Poor Dad” author Robert Kiyosaki shares with SkyQuestCom how being fully educated about money matters can lead to financial freedom.

Here are excerpts from the interview.

SQC: SkyQuestCom RK: Robert Kiyosaki

SQC: It is my honour and privilege today to introduce our guest, Mr. Robert Kiyosaki, who is a millionaire, investor, entrepreneur and author. He is the bestselling author of the book Rich Dad, Poor Dad, which struck a chord with readers, selling millions of copies and topping the New York Times Bestseller’s list.

Robert retired as a multi-millionaire at a very early age and travels the world as a motivational speaker teaching people to become millionaires. According to Robert, the main reason people suffer financially is because people work hard for money instead of making money work for them. So let’s get some insights from the man himself on how to improve financial literacy. Thank you Mr. Kiyosaki for joining us today.

RK: (Robert smiles) Thank you!

SQC: First of all, could you tell us what your definition of wealth is and is it possible for anybody in the world to attain financial mastery?

RK: Well, that’s a very, very big question. Wealth is many, many things to many people but I think wealth is primarily what you know. The definition of wealth I subscribe to, financially, is that, wealth is the number of days you can survive without working while also maintaining your lifestyle.

For example, let’s say, it costs you 3000 dollars a month to live as your lifestyle and you have $12000 in the bank. That means your wealth is measured in days or in this case, 4 months. You know, (Robert pauses) 3 into 12000 means you can survive 3 months. (Robert pauses) 3 into 12 is 4 months, you can survive 4 months.

So what I mean by “wealthy” is that my wife and I, we have more than enough money coming in without working from our assets, from our properties, from our stocks, from our businesses so that we never have to work again for the rest of our lives. So that’s what wealth means. Wealth means simply the number of days you can survive without working while maintaining your lifestyle.

SQC: How can one develop financial literacy?

RK: I’ve always wondered why the school system doesn’t teach people about money, I mean, too many school teachers like my poor dad treat money as an evil subject. Whether we’re rich or poor, we all use money, whether we’re the government or business, we use money. Whether we’re employer or employee, we all use money.

They don’t teach us about money because too many people think it’s dirty. When I read my financial statement, it tells me the story of somebody’s life. Are they going to be rich or poor? A quick check on reading the financial statement will tell whether they’re going to be rich or poor that quickly because it tells a story.

The second thing about financial literacy are words. In my new book, where I talked about how my bankers asked me for my report card. The bank wants to see my financial statements. So the thing I learned earlier on is my poor dad has a vocabulary of a school teacher, he spoke words of a school teacher, whereas my rich dad spoke the words of a capitalist.

So if you want to be wealthy, you know you must know the words that the rich use. So what I’m saying is basically how to read and how to understand the vocabulary of becoming rich.

SQC: Having written so many books and done so much research, can you summarise your best strategies for helping an ordinary person on the street to achieve financial independence?

RK: A poor person starts with poor thinking. They say, “I can’t do that, I’m not interested in money, I’ll never be rich.” The worst thing a poor person says is, “I can’t afford it.” If you say “I can’t afford it”, you become poor. You become your thoughts and your actions. If you say, “I can’t do that”, you become poor, because you have a loser’s sense of mentality.

So words again are probably the most important thing you need to be in constant check of yourself. You know, don’t say “I can’t afford it”, rather, say “you can’t do something”. That’s where it all begins and then begin to learn the vocabulary of what the rich know. Words have the power to make you rich or poor.

SQC: Can you explain what the rich dad’s “cash flow quadrant” is?

RK: The quadrant was my rich dad’s way of explaining to me the four different types of people that make up the world of business. They are “E”, “S”, “B” and “I”. “E” stands for Employee. “S” stands for Self- employed or Small business. “B” stands for Big Business and “I” stands for Investors.

So guys like Bill Gates, Richard Branson, they would be “Bs”. The guy who owns the local chicken shop on the street is an “S” – small business owner. The difference between a small business owner and a big business owner is this; when the small business owner, like a doctor or attorney or retailer, stops working, their income stops also.

The big business owner; their income just keeps increasing whether they work or not. Employees are people who look for jobs. They are always looking out there for safe and secure jobs that pay better. They want security. A self-employed person’s theme song is, nobody is ever better or if you want a better life, you live by yourself.

That’s why their way is to stay by themselves. The “E” and “S” are completely different people. A business owner, a big business owner, is different from the small business owner. An investor is purely looking for a very low risk, high yield returns and with as much safety as possible. So there are four different people.

If you want to be successful in the world today you need to be more that just one. In other words if you want to be an employee, it might also be good that you become an investor also. Because there’s a shift of core values. Many times, an employee who wants security is looking for safe investments and that’s why they make the worst investments.

SQC: If one were to start out in financial investments, what advice would you give to somebody who is new in the game?

RK: If you want to understand financial investments, it’s many. Number one is to start small and don’t worry about the money. Worry about your education.

In other words, one guy whom I met at the airport in Auckland, New Zealand the other day said he’s bought six houses. I said, “What have you learned?” He said, “What I’ve learned is it gets easier and easier. So the first one was hard, the next one was easier, by the fifth one, it was easier.” So what increases is actually your knowledge more than your money.

If you haven’t made a penny yet, of course it’s not going to be easy. That’s one of the most important things about starting.

The second most important thing is an exit strategy. Every “I” from the “I” quadrant, cash flow quadrant, has an asset. So if I’m going into a deal, I want to know if it goes bad, how do I exit? If it goes well, how do I exit?

The average investors just go in and I call it “buy, hold and pray”. Let’s say they buy a stock, say for 10 dollars, goes to 50, it crashes down to 20, then they hold it and they just pray until goes back up again. That’s not too intelligent.

SQC: Let’s move from the first-time investors to the really astute and sophisticated investors. Are there any special investment strategies that the rich apply that differs from ordinary people on the street? ”

RK: Yes, many differences. Like I was saying when I was at the National Achievers’ Congress (NAC) conference just recently, that the average middle class person thinks it takes money to make money, and thinks investing is risky. That reality is what keeps them stuck.

If you want to shift the reality to a whole new concept, you will find out that it takes no money to make money and there is no risk in investing. Once you can shift that reality, bam (Robert snaps fingers)! What I tell people is this, “If you knew you couldn’t lose and if you knew it took no money, what would you do, I mean how wealthy could you become?”

Well, until a person is willing to pay the price which is you know, go through the trial and errors to learn, to shift their dimensions thoughts or shift their reality, they say, “working at a job” or “looking for job security”, “trying to save money”, “pay up the bills”, stuff like that. It’s very hard to flourish financially.

You may lead a good life and all that but I’d rather have financial freedom. And as financial freedom goes, I don’t have to take any risks and I can make as much money as I like and it doesn’t take money to make any money. Different reality. But there’s a price I pay to being in that reality.

SQC: Thank you very much Mr. Kiyosaki for your time. We appreciate you coming by and sharing that with us.

Have you heard of the theory of pay yourself first? Many of you may been thinking that almost everyone is paying for our own bills or buying something for ourselves is considered as paying yourself first but this is not actually the case. The first time I had heard of this method was actually through a book called Rich Dad Poor Dad by Robert Kiyosaki. Initially, I do not really grab the idea of what does it actually means to pay yourself first when you are earning the money through working for others but I slowly get to know it clearing through reading books, attending seminar and listening to audio books.

You will get a better idea if you really keep on learning through the journey of success in life and I should say that I am slowly starting to understand the true meaning of paying yourself first. From the Rich Dad Poor Dad book, it mentioned that people normally pay their bills, fees, mortgages and other payment first whenever they received their salary from their job. What they will do next is buy what they want with whatever left over and save the leftover money after spending. This usually become a cycle as they do it every month and almost every year without much money left to try and make a difference in their life through becoming their own boss or even making any significant difference in their financial status.

The next great mentor that I learned about the pay yourself first method from is T.Harv Eker. I have read his book “Secrets of The Millionaire Mind” and attended his Millionaire Mind Intensive (MMI) Seminar where he taught how to set up different set of money jars where you can manage your money better. Personally, I have implemented his money jars method and trying to fine tune my finance as I have quite a few debts that I need to settle but I can say it is very useful to me as it motivate me to check on my own finance along my journey to success.

Another place I got to know about this method is through the audio book “The Richest Man in Babylon” where it mentioned to save 20 percent of your salary every month and pay off your debts and bills after paying yourself first. I got to know this theory more in dept after listening to the audio book “The Law of Success” where it mentioned the importance of consistently saving a percentage of money every month as this will helps us build more confidence in ourselves and our sub-consicious mind will feel motivated also when we consistently see growth in our financial portfolio.

The most recent reading that I found that really stunned me is another book by Robert Kiyosaki, “Increase Your Financial IQ”, where he mentioned that the amount of money he pay himself first is about 80 percent of his monthly income. Can you imagine how much money that is to a multi-millionaire? He started with a small percentage of 10 to 20 and now is 80 percent. It is mentioned in his book that the purpose of paying yourself first is to let you create the opportunities for yourself by preparing your money in advance and it will somehow build up your confidence in a way. Robert Kiyosaki also mentioned in his book that it is important that we start with a percentage that will make us feel uncomfortable so that we will not sit in our comfort zone and stop thinking about making more money to grow our own financial mean. Remember no matter how small the amount is, set a percentage that will make us feel uncomfortable with and once you feel comfortable with it, increase that amount as this proof that you have managed to find ways to counter the problem of not having enough to use.

As I have shared with you so many sources of great successful people mentioning about the importance of paying yourself first, you should start building your own financial freedom account and no matter how small the amount is, make sure it stretch your mind and create some stress in your monthly finance. This will make you think twice about spending the amount of money you have left behind after saving and let your mind think of more ways to grow that dollar.

Personally, I have set about 23 percent of my salary in my saving account and you may be thinking why I have such a weird figure. The reason behind it is I do set aside some money with my girlfriend for our joint account and I do have my personal saving portfolio which I put money into. I will update again on this topic in future if I do make any significant increase after creating a permanent passive income stream.

Dan Mangru’s interview with Rich Dad, Poor Dad Author Robert Kiyosaki!

Something struck me while reading Robert Kiyosaki’s latest book, “The Conspiracy of the Rich“. As usual, his new books always have resemblance in terms of content to his previous books. But I did not remember coming across this concept while reading “Rich Dad Poor Dad” or “Cash Flow Quadrant”. Maybe this is what people mean by learning new things from revisiting books that you have read. The concept that I am talking about is ”investing for cash flow” rather than the commonly accepted “investing for capital gains”.

Investing for cash flow means that you are investing in assets that will generate a regular and sizeable income stream to your wealth. While for capital gains, you buy an asset that will go up in price in the future. Robert is saying that most people invest for capital gains which is more risky due to the uncertainty of the future. This is especially so in the stock market where the probability of losing the value of the assets during a market crash is too high. Rich Dad’s analogy will be the game of Monopoly where every player aims to increase cash flow by owning more properties, houses and hotels and collecting rent from them. There is no aim of capital gain involved.

As he gave a few examples vaguely, I am not clear what are good cash flow generating assets to invest in. Robert’s cash flow assets are:

1) Business
2) Real Estate – rental collected every month
3) Oil – Partner of oil drilling. A discovery will entitle a part of the oil and gas sold monthly
4) Royalties – from his books, games and financial education products

Out of the 4 cash flow generating assets, it seems like real estate is more likely the choice for ordinary investors, at least for me. Firstly, it enables you to get the biggest loan from the bank which translates to biggest leverage that you can ever get from controlling an asset. Secondly, the interest for the debt is the lowest. Thirdly, there is potential capital gains alongside with regular cash flow.

Other than the four examples, I cannot really think of what other good cash flow generating assets available for investment.

Dividends from stocks? You probably have to own alot of stocks to generate a decent cash flow.

Coupon payments from bonds?

Lend money and collect interest via Prosper?

Are there other good cash flow assets you can think of?