I am one of the most fervent followers of R. Kiyosaky in the educational aspect. It is absolutely necessary to modify the approach given to money in universities. The main goal pursued by each student in a classroom anywhere in the world, is to learn tools to earn enough money to make a decent living. The problem starts when they face real life...and realize that globalized age is killing the link between money and traditional academic training. Surprise!
I think money is a taboo subject in universities! I don´t know a college course, aimed to teach students to balance their budget, collect their fees, create alternative income sources, protect their investments ...understand how money works. .. Why? Simply because THEY DO NOT KNOW and / or because they don´t really believe in the financial paradigm shift. For educational system is very risky proposing such madness to students ... it is easier to train them as employees and deliver them to the jaws of the big corporations! In the best case, inculcate entrepreneurial tools to be slaves of themselves and their own business.
The world changed forever with the advent of the Internet... and the JOB definition also changed with him. Each time will be less companies guaranteeing lifetime employment, pension systems are being cut, and the global economic model is on the edge of the fracture. You have to think ... must be more intelligent. The world is moving much faster and interconnected now, and as quoted the Chinese proverb: "the flutter of a butterfly's wings can be felt across the world. " No one is indispensable in any enterprise, indeed .... no company is essential in the world ... there will always be someone better, faster and cheaper.
The contents of college programs (and why no elementary education), should incorporate as soon as possible courses for teaching financial education, and should combine these blocks with individual skills, so students can develop their own "financial intelligence ".
One of the first things society demands you, as part of pre-established financial framework in which we live, is you have to buy a house as soon as you are able to pay the deposit and mortgage payments. In other words, in today's society, having a house is a definite end and synonymous with success .. no matter if you can really afford. Buy your own house is important...But the question you must ask yourself is: Is the right time to buy it?
You should make a thorough analysis of your motives before you answer this question. Above all try to establish the reasons why you really want to do it:
1. You think owning a home allow you to fit in socially and have acceptance of your acquaintances, friends and family.
Social pressure is the most important factor that slows the achieving our financial independence. For most people, buying a house is synonymous with financial success in itself... Nothing is further from the truth!
2. You want to protect your money from devaluation and inflation:
Real estate market has been extremely beaten by the financial crisis. However, even when owning a house is a relatively safe investment (as long as there is no drop in prices), it can be seen as a huge amount of unproductive money tied up, that in other case would have a huge potential.
3. You have the money to pay the entry:
There are two main disadvantages from buying a house on credit. The first is the DEPOSIT, a significant amount of money that could otherwise be more profitable... The second is a huge bank debt call MORTGAGE, usually at a variable interest rate, that hits your finances in exchange for nothing... because your house doesn´t produce cash... just protects money. Also debt will last the rest of your productive life.
4. You prefer to pay monthly mortgage rather than rent even if the amounts are equal:
When you pay a mortgage, the bank owns your house, but it's you who pays for maintenance, taxes and insurance, and it is you who bears the risk of a fall in prices. When your accountant makes your balance sheet, your house appears as a huge liability, and this affects your credit rating for important things like investing in a good deal. When you rent, you can relax ... the owner is responsible... But this owner pays mortgage with your money and is financially free! Think about it!
If your reason is listed above...you should examine your priorities. Buying a house is driven by emotional issues, rather than logical. It´s a need created from scratch and fed by a sector in which there are only two beneficiaries: bankers and real estate brokers.
Time to buy your house will come sooner than later, if you spend your resources, time and energy to strengthen your financial independence. Then you will buy your house without affecting your financial stability.
Every beginning is hard. Use your potential to build your success...don´t ruin your future richness by an illusion that does not fit your actual reality. Liars budgets are the source of all financial evil.
Money is important but not everything in life. Excessive greed is bad, leading to speculation, the mother of the country's financial problems. All have heard that greed and fear are the main market factors... very simple, I sell because I have fear of losing and I buy because I'm greedy and want to win.
The lack of ambition is something else...a different subjet.
Financial freedom is just a term given to economic well-being based on creating multiple passive income. That´s all. We should all aspire it, in fact I consider it healthy as it is part of our human nature. We must focus on the way and technique to achieve good results, and one of the control parameters is our free time. It´s not just about earn 200.000 dollars in one year... it´s about the time spent to achieve it too. Time devoted to family, friends, leisure, etc., are the difference between being financially "stable", or be financially "free. "
The money in the end will be linked to good planning and good methods. But "freedom" will be linked to a different investment structure, in both time and money. That´s the real important about this philosophy of life.
Being successful in finance may come from many ways, but must be understood: there are rich people living a poor financial scheme, ie they work from sunrise to sunset, no time for his family, high debt, high consumption, long-term uncertainty, dependence of an entity. In the other hand we have technically poor people living their life with a rich person structure: their money works for them, their revenues exceed their expenses, reinvest their profits into new businesses, have enough free time for their families and friends, their debt is generally justified and "pays itself", and are less consumerist.
In the first case these people are doomed to follow in the "rat race"which is a vicious circle of working-profit-debt-consumption. In the second case, the potential for exponential growth is unquestionable.
Will agree with me that the process is more important and that viewing it from a systemic point of view, in the end...financial freedom is not just about money!
One of the most sinister statements I have discovered during my research about about money, is that MONEY DOESN´T EXIST!. To you reading this, it may sounds unbelievable... but unfortunatly it´s true. Most of the money in the world are just numbers on your statement or digits on your computer ... not real money. That is, if you count the real money that exists in the vaults of all banks in the world and it´s compared to the virtual money, could only cover 10% of it. The rest of the money doesn´t exist.
And worst of all is that this is permitted by the law of the countries through a mechanism known as "cash ratio." It is an economic fact that a bank only needs to have in its coffers 10% of all depositors' money ... it's a matter of "probability." What is the real chance that at any given time depositors withdraw more than 10% of funds from the bank? Well ... very low. Then the loan portfolio of a bank is based on the remaining 90%. It can be "borrowed" and charge interest on them.
But in real world, 9:1 rule doesn´t work like that. You make a $1000 deposit (according to 9:1 rule, the bank should keep $100 and lend $900) ... but what really happens is the bank keeps $1000 and lends $ 9000! How much money is in the coffers? ...Only $ 1000. How much for trading? ... 9000,oo new bucks that are now on the streets. The bank never had the money... They created it!...and they get interest paid as a plus. Besides that, money usually involves a warranty like a house, a company or a car. What happens if you do not pay? The bank takes it all: your house, your car, your whole life ... plus interests... in exchange for NO INVESTMENT!
Cool eh?
I do not want to create arrays with this opinion. Just considered it necessary to emphasize the role each part plays in money management. The debt to banks is dangerous and must be well managed. At the same time, investment papers, certificates, bonds, etc., must be balanced with investments lines that do not suffer the vagaries of inflation and devaluation, as precious metals, real estate (although the recent crisis, but go with care), productive investments, manufacturing, etc.
You have to have as much information as possible and build your own method to get to financial freedom... But we are all in it..isn´t it?
Some time ago I read the famous book by Robert Kiyosaki, "Rich Dad, Poor Dad"and I have to confess that I moved a lot. For those who don´t know it, the book is about the money, and how the author Robert Kiyosaki, who is American altough he seems to be eastern, compares the way in which both parents (his real biological father and his mentor) managed money and investments.
I am sure for many people this book has been awakening to financial freedom ... it´s not a technical book and I recognize that it is full of clichés. It´s not about teaching people to get rich ... it's about teaching us to see the right way to do it. Others of you have probably caught the bug of financial freedom by other methods.
In any case, this blog is intended to share information with you and be a meeting point for all those who are still in the "rat race" and struggle day to day with all kind of obstacles in their trip to economic tranquility.
So the advice and opinions should be directed to help those who are still in the "first phase"in the process of building our "financial freedom. "
I hope we have many lively discussions, solve problems together and exchange ideas on important issues related to personal finance and investment.
