HOW DEBT CAN GENERATE INCOME -ROBERT KIYOSAKI

Video Transcript

Are you ready it to the next level?
Investing into sound investments like big money does.

(upbeat music) – Okay I’m here with Alexandra and we’re doing another Millennial Money. And very excited about this program so thank you for tuning in. This will be one of 10 and we don’t know which order they’re comin’ in so. What are some of your questions when people say get out of debt, what comes to your mind? – When people say get out of debt, I think about credit card debt, the student loan debt, all that negative debt that people use for shopping and personal things. – And is your idea of debt good or bad? – I have a very negative idea or connotation towards debt and that’s because that’s what we were taught in the school system and the traditional education system, that it’s not so great. But because I have, I work here and I have these resources and I’ve gone to your seminars, I understand that debt can be powerful and it can be used in a good way and it can generate you money. – So for those listening, debt is a four letter word for most people. There are many people in my position, so called financial gurus who say live totally debt free. And there’s other people who say cut up your credit cards. And you know that’s good advice for certain types of people so you should definitely cut up your credit cards if you don’t know, you can’t control your spending. You should definitely. But I don’t know how people live without credit cards, I don’t know how you can check into a hotel, rent a car, or go shopping, go out for dinner, you know, so. But you should cut up your credit cards if you’re a shopaholic, that’s good advice. And the other thing about debt, there’s good debt and bad debt. So this is gonna be the lesson today, is there’s good debt and bad debt. And if you only have bad debt, which I classify student loan debt as bad debt. The main reason it’s bad debt is because it’s the worst possible type of debt. You see if I get into trouble as a business man with debt I can declare bankruptcy and I’m clean. But the trouble with student loan debt, you can’t do that. You know, it hangs around your neck for the rest of your life. So if you’re a student, you shouldn’t take on student loan debt unless you absolutely 100% guaranteed that you will commit to graduating. Have you seen a lot of kids drop out of school? – Oh yeah. – And so the problem with student loan debt is a person has to know what are they going to study. – You know I have two friends, they’re both medical doctors. And they came out of school with $500,000 in medical debt, I mean in student loan debt. But they paid it off in five years because they’re medical doctors. They had high paying jobs. And so they delayed having families and all this and they’re whole objective was to pay for becoming a doctor. But I think you have friends who have no idea what they’re going to school for. – Yes I have this friend and she’s changed her major like three different times, from business to now nursing and it’s a lot of money and she still has no idea what she wants to do and she tells me, she’s like Alex I want to change my major from Nursing but I’m already practically done and I can’t pay back this debt so she’s stuck with the nursing career and she doesn’t even like it. – You know when I was your age, like I think I said earlier is that my classmates were making like 110, 120,000 a year. Which is not much money, but for my generation if I made 20,000 that was a lot of money. Do you know what I mean? Is this out of proportion? So we were the highest paid graduates in the world and my starting pay was about 47,000 a year. My classmates were making three times as much as me. But it’s a choice we make, I didn’t really want to do what they did so. I had to join a labor union. As ships officers we had to join the MM&P, Masters, Mates, and Pilots. Which meant we were labor union guys. So labor union guys make more money and nothing personal but I don’t want to be a union member. So I joined Standard Oil of California as a shipping officer and then I didn’t have to join the labor union. But I only got 47,000 a year, that was the difference. The difference is standard oil was still sailing and a lot of those labor union jobs are gone because the pay got too high. – You know what I mean, so there’s always a good and bad and it’s hard to understand that when you’re younger but I knew when I was 22 years old, I didn’t care if they paid me 100,000 a year, I wasn’t gonna join a union, it was just principle. My father, poor dad, was head of the teacher’s union and for what I saw (laughs) I didn’t want to be a teacher, I didn’t want to be a union member, so it was kinda youthful exuberance on things. But anyway, today it’s harder because you don’t know what is this mysterious high paying job. And even lawyers today are having a hard time because they don’t need that many lawyers which is a good thing and there’s artificial intelligence which is replacing a lot of the high end jobs. Like even accountants today, they don’t need accountants because artificial intelligence can do a lot of the work for them. So that’s why for your generation, student loan debt I would say is possibly one of the most important things you need to decide before you take on the debt. Number one are you going to graduate? And number two what are you going to graduate as? – [Alexandra] Exactly. – Any comments on that, anything you want to talk about? – So my dream and passion has always been to be an entrepreneur. But when I started studying it, I told my dad it was the last thing I would ever do because I thought that what they were teaching me was what I was gonna be doing on a day-to-day basis. But these teachers don’t, aren’t actually practicing what they’re teaching and so they give you this wrong conception of what you’re studying and reality is the traditional education, it’s obsolete. What mattered back then does not apply to how you’re gonna run your business now. – You know today, if I was in your position, you know I was pretty clear when I was about 15, I wanted to sail the seas, I sailed huge ships you know throughout the world. But that was a dream of a kid, you know. By the time I was 22, I was tired of it, you know. I didn’t want to sail the world anymore. So I understand you know what it’s like to keep, what they call it is finding your way in life, right? – [Alexandra] Yeah. – That’s not easy. So I commend you guys and that’s why we’re doing the Millennial Money is because as these programs progress you’re gonna find out, in my opinion, you guys have a harder road to go through than I did. For me it was really easy, there was a lot of jobs, economy was booming and all this. And it was easier so you guys have got to be smarter, okay? So as far as the subject of debt, there’s good debt and bad debt. Again it goes back to the financial statement, income, expense, asset, liability. So debt falls in here. So I’ll review, let’s say I’m gonna buy you know everybody says I’m gonna buy a house. And everybody says my house is an asset. That’s not true, your house is a liability. I don’t care if you put no debt on it or not, a house is a liability. Same as if you have a car. A car is a liability and the reason for that is as we’ve talked about earlier, the six words that are basics of financial education, financial intelligence, income, expense, asset, liability. And the two other words are cash flow. So when you look at the average person to have a job, money comes in here, they pay for their house, and the money goes to a bank, through a mortgage, so it’s not an asset because the cash is flowing out, so it’s a liability. So the definition of liability, does it take money from your pocket? And for an asset does it put money in your pocket? So when I have a rental property here, it puts money in my pocket. So if I live in the house it’s a liability because even if I have no debt on it, I still have taxes, depreciation, repairs and upkeep, insurance and all this. When I rent a property, I’ve done a good job buying it and structuring it, every month it sends me money. So I started off when I was 25, I had a little one bedroom condo and it put 25 bucks in my pocket, it was a start. So this was good debt, you see, the debt also went out and paid but it also put $25 in my pocket. So net, net, I was making money from my little house. So today my wife and I own 6,500 of ’em. And every month 6,500 houses put money in my pocket, my people who live in ’em love me and all this because they have a place to live. But all of this comes from debt. So we don’t, we have they’re 100% financed there, it’s all debt. So this is good debt. And what makes it good debt is are the two most important words, cash flow. Does that make sense to you? – [Alexandra] Yeah. – Any comments on this? – So numerous people my age actually think debt is horrible and you just showed us a perfect example of cash flow and how debt can generate income. And many entrepreneurs use this formula to make money on a day-to-day basis. – So what most people do is they have student loan debt, SL, and that debt is going out this way. You know it doesn’t put any money in your pocket. You can say well I have a job, well there’s still you working for it. So I don’t work for any of this money here, I do this job once, set the deal up. Every year I add more and more and more in it, I’m borrowing money from here, it’s coming here, and going this way. So the debt is putting money in my pocket and bad debt is taking money from my pocket. So the problem is, if you’re gonna use debt you’ve got to be much smarter than this person here. You’ve got to be very, very smart. That’s why I took real estate classes when I was 25 and I’ve never stopped taking real estate classes. Because you buy a piece of real estate and you make a mistake, this turns into a liability. And this, if I get, the renter leaves the place, this goes here that fast and the cash flows that way. And it’s going out of my pocket. So it has nothing to do with real estate, nothing to do with the car, that there was student loan. It has to do with these two words here. So good debt again, is debt when I borrow for this and it puts money in my pocket. If I had a car and I borrowed money from it and somebody rented from me as an Uber driver or something and I put money in my pocket it would be an asset. My wife and I have a boat and you know most boats lose money but our boat makes money because it’s in a charter, you know people rent my boat all the time. So it has nothing to do whether it’s a boat, student loan debt, a house, a car, or whatever. It has to do with these two words here. And so most of the time, you know you’ve had accounting classes, they don’t talk much about this do they? – This is something they’ve never mentioned to me in college. – Why is that you think? – Like you mentioned before, I mean, there’s people that are actually teaching students something that they don’t apply in their daily life, something that they barely have knowledge about and they only learned through a textbook. – But you have, you’ve taken accounting classes right? – Yeah exactly, I did. – You made A’s in it? – Well I did finally get a high grade the second time around but that was because I had a real accountant teaching me the real applications of accounting. As opposed to a fake teacher, right? So your advisor, Tom Wheelwright taught me in one hour what I could have learned the entire semester with this one teacher that wasn’t even an accountant in his real life. – A big lesson for you is that it’s nothing to do with the house, the car, the student loan, it has to do with where’s the cash flowing. If the cash is flowing in to your income statement, into your pocket, it’s an asset, it’s good debt. But if it’s taking money from your pocket, it’s bad debt. About debt, there’s good debt and bad debt. Any comments on that? – Well I think just like Trump, you know how to apply the rules of debt and he calls himself the king of debt, right? – If you’re gonna be successful at whether you’re employee or entrepreneur, you’ve got to control the direction of your cash flow. So like most people here, we’ve talked about earlier, they got a job and the cash flows out here, it goes to the government, called taxes. Trump doesn’t do this, I don’t do this, legally. The reason’s ’cause we’re entrepreneurs, not employees. Employees have this, entrepreneurs don’t. Because it’s a type of asset. Any other thing? – [Alexandra] I’m good. – So what would you like to say to the young millennials listening to this? – I’d say don’t be afraid of debt and if you know how to use it, use it. – Good debt puts– – Money in your pocket. – Could a credit card be good debt? – Well it just depends what you spend the money on, right? So if you spent it on something that’s gonna produce income for you, like an asset then it’s good debt but if you spend it on let’s say a jacket that you wanted from Burberry, then it’s not. – First property there, it was in Maui, Hawaii, the 1970s. I bought it with a credit card. – Wow. – Property was $18,000 my first, but I’ve taken several real estate classes and so I knew what to look for, I found this one property. It took a long time, when I found it, I just broke out my credit card and bought it and it put $25 in my pocket. It went from this little, janky little thing. This was years ago, $25. It was good debt, I wish I had never sold it. I don’t, you know it was a big mistake to sell it because today it’s probably worth four or 500,000 and that’s a whole ‘nother story. That’s why I don’t flip properties, you know, I don’t like to do that stuff. So anything else, so good debt, what? – Money in your pocket. – And bad debt what? – Takes money out of your pocket. – That’s all there is. – Yeah. – Thank you.

Welcome to @BigMoneyInvesting3529 – Your Ultimate Destination for In The Money Facts!

🌴 Discover the Big Money Investing Strategies on Metals and Real estate Investing. 🌊

Experience the world of finance with @BigMoneyInvesting3529

We bring you the latest and greatest from Big Money Investors, showcasing the why’s, how to’s and best steps.

Whether you’re planning a short of long term investment, preparing is the first step and most important one.

The Big Money Investing channel is a great go-to source for your investing advice.

🔥 What You Can Expect:

  • Exclusive Financial and Big Money Investing How-To’s
  • Big Money Financial Traits: Learn how to mix and match your perfect investment portfolio to match the planned out time horizons.
  • Financial Learning Is A Lifestyle Change: Stay financially fabulous with our expert investing tips, real estate pratices, and healthy lifestyle advice.
  • Behind-the-Scenes: Get a sneak peek into how the Big Money Investors spend some of that return, from photoshoots, to interviews with the experts.

👙 Why Subscribe to @BigMoneyInvesting3529?

  • Stay Updated: Be the first to know about new investment ideas and most importantly what not to be part of in todays age.
  • Inspired Goals Lend Motivation: Get inspired by our Big Money Investors vibrant and diverse lifestyles, a perfect view at times.
  • Engaging Community: Join a community of financial enthusiasts and wealth producers that love to share their passion for life with others.

🔔 Subscribe Now: Hit the subscribe button and turn on notifications so you never miss an update from @BigMoneyInvesting3529!

Join us on this fabulous journey and transform your financial situation with the latest trends and tips from Big Money Investing.

Thank you for being a part of our amazing community.

We can’t wait to see you shine finanically!

🔗 Subscribe here!

#BigMoneyInvesting #big #money #investing #lifestyle #investors

Support Big Money Investing Sponsors

Leave a comment on this content and future topics you would like us to cover on Big Money Investing!

Share this post

Comments (22)

  • @natefiver6623 June 13, 2024 Reply

    Dont trust a fat guy, even if he is a billionaire 😂

  • @FunSourceRentals June 13, 2024 Reply

    Puts $25 in your pocket ONLY ONLY ONLY if they pay you. If covid happens and the government says ppl dont have to pay you – YOU ARE SCREWED!!! This is a complete shell game.

  • @MESSY-AF June 13, 2024 Reply

    god, he is teaching same crap for decades now. one trick pony

  • @marorerimeraremaro2533 June 13, 2024 Reply

    If you have debt how on earth are you generating income when that income has to pay off the debt to begin with? These absurd phrases are a huge red flag to me, just like drivel such as "let your money work for you", empty vague one liners with 0 substance.

  • @TrueImage93 June 13, 2024 Reply

    Did she just reference the criminal DJT as a good example of money management??

    Ok, I'm done listening. She's s nut. 😂 😂😂

  • @theresarhodes8142 June 13, 2024 Reply

    If u turn your land into a cemetery your home is tax free for life. Use solar panels for energy. Asset for life

  • @gibsonhansen8604 June 13, 2024 Reply

    Statement of cash flows is 1st year accounting stuff. What do you mean you've "never heard of cash flow"?? 12:15

  • @samoansojah3886 June 13, 2024 Reply

    Dude said 120k a year isn’t a lot of course it isn’t to you your rich asf😂

  • @user-xn7ex2nd8t June 13, 2024 Reply

    The host sucks

  • @Fasthebaker June 13, 2024 Reply

    This was super insightful

  • @carolraymond18 June 13, 2024 Reply

    There are so many opportunity now but I think AMS120X is the best option

  • @RuthThomas-gr4dt June 13, 2024 Reply

    Bought AMS120X at 1$, I will keep it until 2025 when it reach 250$

  • @siennakvdm June 13, 2024 Reply

    💖 Big thanks for the insights into PEPE and AMS120X. Both seem like solid picks for the future 💖

  • @matthewavantika14 June 13, 2024 Reply

    My investment portfolios are Bitcoin, ETH and AMS120X

  • @vuong43ho June 13, 2024 Reply

    It is funny that not everyone knows about AMS120X

  • @kennethscarlet June 13, 2024 Reply

    Can anyone explain AMS120X?

  • @woodelle June 13, 2024 Reply

    Coinbase, OKX and Binance will list AMS120X very soon. We do not have much time left

  • @keenarobinson31 June 13, 2024 Reply

    Just watched your video discussing AMS120X and I am very excited about this

  • @jason0uy687 June 13, 2024 Reply

    Thank you for sharing AMS120X💗 I really appreciate it

  • @vaidehiuu5m June 13, 2024 Reply

    AMS120X is still extremely undervalued

  • @aubreciasmith June 13, 2024 Reply

    Why everyone is talking about AMS120X?

  • @fawziyaar4g June 13, 2024 Reply

    Thanks for sharing PEPE and AMS120X. 💯

Leave a Reply

Your email address will not be published. Required fields are marked *