| How We Got |
| Out Of Debt |
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| By Kim Kiyosaki |
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| Kim Kiyosaki started in the business world in an advertising agency and today is an accomplished real estate investor and businesswoman. She is also an educator & partner with Robert Kiyosaki & Sharon Lechter in The Rich Dad Company.
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 ore and more people are getting buried in debt. I'm sure you've read and heard many of the statistics and stories in the news.
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| One of the keys to financial independence is to get rid of your bad debt and acquire good debt. Bad debt is debt that makes you poor, such as credit card debt and car loans - this is consumer debt. Good debt is debt you acquire that actually works for you. The best example of good debt is a mortgage loan on a rental property that throws off positive cash flow every month. Good debt is money that you borrow to purchase assets that put money in your pocket. |
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In 1985 Robert [my husband] and I had a good deal of bad debt. And even though we kept making payments every month we never seemed to make a dent in the amount of debt we owed. Each month we paid a little over the minimum on each one of our credit cards as well as on our car loan. There had to be a better way to get ourselves out from under our creditors. And, sure enough there was. Robert and I followed a plan to pay off our debt. You'll find that if you follow a plan you will be out of debt much quicker than you imagined. Most people find themselves "bad debt" -free within 5 to 7 years. The key is to stick with the plan. You will not get ahead if you say "I'll just skip this one month," and then two, and then three. If you stick with your plan it then becomes a habit you follow for a lifetime.  |
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| Need free financial assistance? Help with developing a budget? Free financial materials? Contact our Financial Education Advisor at 1-800-745-3884.
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| Excerpt from a new book in the Rich Dad's Advisors Series: |
| The ABC's of Getting Out of Debt |
| By Garrett Sutton, Esq. |
From Chapter Three...
The Health Effects of Debt |
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| Sick of Debt |
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 veryone in debt knows that debt can make you feel sick. You plan around it; you think about it; you worry about it. Many of us can trace our level of stress right back to our level of debt. A study at Ohio State University found that people who reported higher levels of stress in regard to their debt showed higher levels of physical impairment and reported worse health than their counterparts with lower levels of debt. The study also found that the level of credit card debt compared to income also played a role, with those with higher percentages of debt to income reporting a higher level of physical impairment.
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| Debt stress impacts our relationships as well as our physical and mental health. The divorce rate is well over 50% and reportedly the number one reason for divorce is financial trouble. Couples argue more about money than any other relationship issue.
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| Stress, anxiety, and depression are common for those with uncomfortable amounts of debt. Feelings of guilt, shame, and failure all impact self-esteem and lead people to feel as if they are out of control or powerless. Add to this the fears of what will happen if the bills are not paid, the aggressiveness of many creditors and debt collectors, and the constant pressure to continue spending. ~ Continued under 'Hot Tip'.
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| Featured Guest Contributor |
| Robert Kiyosaki |
| Robert Kiyosaki is an investor, entrepreneur, educator, and author who wrote the #1 NY Times bestselling book Rich Dad Poor Dad, which to date has sold over 20 million copies worldwide.
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| Security vs. Freedom... |
| It's Your Choice |
| By Robert Kiyosaki |
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| ost of us would like to believe we can have both security and freedom. But in Rich Dad® terms, these are two opposing values. My rich dad said, "Freedom and security are not the same ideals. In fact, in many ways, freedom and security are exact opposites. The people who have the most security are people in prison. Prisoners have the least freedom and the highest security. People in prison do not need to provide housing, food, recreation, health care, or education for themselves. They have a lot of security but at the price of their freedom." |
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| One advantage of living in a free society is the freedom to make choices. There are two big choices according to my rich dad: The choice of freedom and the choice of security.
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| Both choices have appeal, both have strengths and weaknesses, and both come with a price. If you choose freedom, the price is paid up front, at the beginning of your life. If you choose security, you pay a huge price in the form of excessive taxes and interest payments. Often the price is paid later in your life.
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| Look at the bankruptcy debacle of Enron, one of the world's largest corporations. The price the loyal, hard-working, security-seeking employees paid is very high: They lost their jobs and their retirement plans. Unfortunately, many are paying this price at the end of their working years, just when their options diminish because of age or health.
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| Today, many employees are learning their jobs are not secure and neither are their retirement plans. In the coming years, 75 million baby-boomers may discover that their stocks and mutual funds were not as secure as they thought, forcing them to retire to a lower standard of living than their parents enjoyed. With the prospects of downsizing looming over their heads, some have taken the initiative to start their own businesses. Should you be one of them?
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| My rich dad said, "Somewhere along the way, people become more desirous of security and have paid the price by selling their freedom. You may have noticed that schools today focus primarily on job security rather than financial freedom. The problem is most people do not know that the cost of that security is their freedom." He continued to say, "If you choose security, someone is always telling you what hours to work, how much you make, and even when you can eat your lunch. That is the price of security."
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| Freedom means you have more choices, but not security. You have a choice to be poor, middle class, or rich. If you choose to be rich, then you need to learn a whole new game. But it requires a different mindset and financial intelligence. You will be free to work or not to work. Your knowledge will bring you freedom from work because you will learn how to make your money work for you. The choice is yours. |
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| » HOT TIP « | A new federal law allows consumers to get a free copy of their credit report once every 12 months. Access to free credit reports started being phased in on December 1, 2004, rolling from the West Coast to the East Coast. To check whether your state has been phased in yet and/or to request a free copy of your credit report, go to: www.annualcreditreport.com, or call 877-322-8228. |
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| Sick of Debt - Continued |
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| | Debt stress has also been linked to substance abuse and the accompanying health problems (including an increased risk of violence) associated with this illegal activity. On the legal side of substance abuse, many people react to stress by abusing alcohol or legal prescription drugs. Spending has become such a problem for some people that the pharmaceutical industry has taken notice. Shopping has long been recognized as an addiction for those whose spending interferes significantly with their lives. In fact, it is estimated that 8 percent of American adults (90 percent of those being women) suffer from this addiction. Research has shown that this compulsive spending is linked to low serotonin levels in the brain. Drugs that increase serotonin are now being tested to treat compulsive shopping. Financial stress also leads to job stress. It accounts for reduced job productivity in an estimated 15% of workers and as high as 50% at some jobs. And it isn't only stress over having enough money. Stress can accumulate as an individual continues to make bad financial decisions. |
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| The Rich Dad Company materials reprinted with permission. Additional resources can be found at www.richdad.com or at bookstores everywhere.
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