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Rich Dad Poor Dad review - Greg [entries|archive|friends|userinfo]
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Rich Dad Poor Dad review [Mar. 14th, 2010|04:56 pm]
Greg
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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 enterpreneur 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 it's advice I'd have to quit my job and become an enterpreneur. Which isn't totally unappealing, but...no.

Posted via LJ for WebOS.

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Comments:
[User Picture]From: yerfdogyrag
2010-03-14 10:52 pm (UTC)
"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. ?


I'm shocked at the number of people that I know that live paycheck to paycheck with little or no savings. When you're in that position, a small crisis (a car issue for instance) turns into an extra expensive nightmare (use credit card to pay for car problem, then don't pay it off resulting in large interest, etc.). Then they have to go into belt-tightening mode until that expense is paid off.

Now, think about it: if you belt tighten for a few extra months, you can get a buffer so that these things aren't crises. But these people go back to their spending once they're out of crisis, having learned nothing...

Pray forgive the rant - it's really agonizing to watch this sort of thing.
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[User Picture]From: gregstoll
2010-03-15 02:25 pm (UTC)
Yeah, I can imagine...sigh.
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[User Picture]From: djedi
2010-03-15 04:32 pm (UTC)
Yeah, I will graciously interpret the author's point as being that your priorities should be:
1)Savings
2)Pay off debt
3)Buy essential bills like food
4)Anything else
with the idea that you usually have enough for 1 and 2 and then you are "belt tightening" 3 and 4 to fit into your income.

If you instead do this...
1)Pay off debt
2)Buy food
3)Anything else
4)Savings
I bet you'll find that 3 uses up the rest of your income for most people and suddenly 4 gets nothing.
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[User Picture]From: mathjoker
2010-03-14 10:53 pm (UTC)
The part about taxes alone convinces me that I don't need to read this trash. "Rich dad gets rich by taking advantage of other people" is something I could have figured out by conjecture alone.

Thanks for your thorough review.
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[User Picture]From: gregstoll
2010-03-15 02:26 pm (UTC)
Yeah - like I said the book wasn't completely devoid of merit. But I was definitely rolling my eyes through a lot of it :-)
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[User Picture]From: flamingophoenix
2010-03-16 02:16 am (UTC)
Agreed. "They exploit themselves"? What the fuck, man. So not worth my time to read.
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[User Picture]From: gregstoll
2010-03-16 02:26 am (UTC)
That part made me angry (and it was in the first 40 pages)...
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[User Picture]From: copperwolf
2010-03-15 09:23 am (UTC)
Hey, thanks for the review! I saw that book a while ago but didn't read it, and recently I've been wondering about it. I think I've been seeing ads for it.
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[User Picture]From: gregstoll
2010-03-15 06:35 pm (UTC)
Hmm, I wonder if we saw the same ads? And no problem :-)
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[User Picture]From: gerdemb
2010-03-26 02:43 am (UTC)
I tried to read the book a while ago, but I didn't like it all. Later I found this web page which pokes tons of holes in the advice as well as basically exposing Kiyosaki as a schiester.

http://www.johntreed.com/Kiyosaki.html
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[User Picture]From: gregstoll
2010-03-29 04:16 am (UTC)
So first of all, holy crap is that a long page.

I think there's enough stuff in there to make me very suspicious of Kiyosaki, but the fact that this guy is also trying to sell a similar book plus he seems to call Kiyosaki on a lot of really really minor and insignificant points (some of the war stories...I guess these were in earlier editions of the book? and he seems really mad that Kiyosaki now goes by "Robert" instead of "Bob"), not to mention the weird rant at PBS near the end.
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