馃攳
HOW DEBT CAN GENERATE INCOME -ROBERT KIYOSAKI - YouTube
Channel: The Rich Dad Channel
[0]
(upbeat music)
[5]
- Okay I'm here with Alexandra
[8]
and we're doing another Millennial Money.
[12]
And very excited about this program
[14]
so thank you for tuning in.
[16]
This will be one of 10 and we don't know
[18]
which order they're comin' in so.
[20]
What are some of your
questions when people say
[22]
get out of debt, what comes to your mind?
[24]
- When people say get out
of debt, I think about
[25]
credit card debt, the student loan debt,
[29]
all that negative debt that people use
[30]
for shopping and personal things.
[32]
- And is your idea of debt good or bad?
[35]
- I have a very negative idea
or connotation towards debt
[39]
and that's because that's
what we were taught
[41]
in the school system and the
traditional education system,
[44]
that it's not so great.
[46]
But because I have, I work
here and I have these resources
[49]
and I've gone to your seminars,
[51]
I understand that debt can be powerful
[53]
and it can be used in a good way
[55]
and it can generate you money.
[56]
- So for those listening, debt is
[59]
a four letter word for most people.
[61]
There are many people in my position,
[63]
so called financial gurus who
say live totally debt free.
[69]
And there's other people who
say cut up your credit cards.
[72]
And you know that's good advice
for certain types of people
[76]
so you should definitely
cut up your credit cards
[79]
if you don't know, you
can't control your spending.
[82]
You should definitely.
[83]
But I don't know how people
live without credit cards,
[85]
I don't know how you
can check into a hotel,
[87]
rent a car, or go shopping, go
out for dinner, you know, so.
[92]
But you should cut up your credit cards
[94]
if you're a shopaholic,
that's good advice.
[98]
And the other thing about debt,
[100]
there's good debt and bad debt.
[103]
So this is gonna be the lesson today,
[105]
is there's good debt and bad debt.
[106]
And if you only have bad debt,
[109]
which I classify student
loan debt as bad debt.
[112]
The main reason it's bad debt is
[113]
because it's the worst
possible type of debt.
[116]
You see if I get into trouble
as a business man with debt
[120]
I can declare bankruptcy and I'm clean.
[124]
But the trouble with student
loan debt, you can't do that.
[128]
You know, it hangs around your neck
[129]
for the rest of your life.
[132]
So if you're a student,
you shouldn't take on
[135]
student loan debt unless you
absolutely 100% guaranteed
[140]
that you will commit to graduating.
[143]
Have you seen a lot of
kids drop out of school?
[145]
- Oh yeah.
[146]
- And so the problem
with student loan debt
[148]
is a person has to know what
are they going to study.
[151]
- You know I have two friends,
they're both medical doctors.
[154]
And they came out of school
with $500,000 in medical debt,
[158]
I mean in student loan debt.
[159]
But they paid it off in five years
[161]
because they're medical doctors.
[163]
They had high paying jobs.
[166]
And so they delayed having
families and all this
[168]
and they're whole objective was
[170]
to pay for becoming a doctor.
[173]
But I think you have friends who have
[174]
no idea what they're going to school for.
[176]
- Yes I have this friend
and she's changed her major
[179]
like three different times,
from business to now nursing
[182]
and it's a lot of money
and she still has no idea
[186]
what she wants to do and she tells me,
[187]
she's like Alex I want to
change my major from Nursing
[190]
but I'm already practically done
[193]
and I can't pay back this debt
[195]
so she's stuck with the nursing career
[197]
and she doesn't even like it.
[198]
- You know when I was your age,
like I think I said earlier
[203]
is that my classmates were
making like 110, 120,000 a year.
[207]
Which is not much money,
but for my generation
[210]
if I made 20,000 that was a lot of money.
[214]
Do you know what I mean?
Is this out of proportion?
[216]
So we were the highest
paid graduates in the world
[219]
and my starting pay was
about 47,000 a year.
[222]
My classmates were making
three times as much as me.
[225]
But it's a choice we make,
[226]
I didn't really want
to do what they did so.
[229]
I had to join a labor union.
[231]
As ships officers we had to join the MM&P,
[235]
Masters, Mates, and Pilots.
[236]
Which meant we were labor union guys.
[238]
So labor union guys make more money
[241]
and nothing personal but I
don't want to be a union member.
[247]
So I joined Standard Oil of California
[249]
as a shipping officer and then
[251]
I didn't have to join the labor union.
[253]
But I only got 47,000 a year,
that was the difference.
[256]
The difference is standard
oil was still sailing
[259]
and a lot of those labor
union jobs are gone
[261]
because the pay got too high.
[263]
- You know what I mean, so
there's always a good and bad
[265]
and it's hard to understand
that when you're younger
[268]
but I knew when I was 22 years old,
[271]
I didn't care if they
paid me 100,000 a year,
[273]
I wasn't gonna join a union,
it was just principle.
[276]
My father, poor dad, was
head of the teacher's union
[280]
and for what I saw (laughs) I
didn't want to be a teacher,
[285]
I didn't want to be a union member,
[286]
so it was kinda youthful
exuberance on things.
[292]
But anyway, today it's
harder because you don't know
[296]
what is this mysterious high paying job.
[300]
And even lawyers today
are having a hard time
[303]
because they don't need that many lawyers
[305]
which is a good thing and
there's artificial intelligence
[309]
which is replacing a lot
of the high end jobs.
[311]
Like even accountants today,
they don't need accountants
[314]
because artificial intelligence can do
[317]
a lot of the work for them.
[319]
So that's why for your generation,
[321]
student loan debt I would say is possibly
[324]
one of the most important
things you need to decide
[327]
before you take on the debt.
[329]
Number one are you going to graduate?
[331]
And number two what are
you going to graduate as?
[333]
- [Alexandra] Exactly.
[334]
- Any comments on that,
anything you want to talk about?
[336]
- So my dream and passion
[337]
has always been to be an entrepreneur.
[339]
But when I started studying it,
[341]
I told my dad it was the
last thing I would ever do
[342]
because I thought that
what they were teaching me
[346]
was what I was gonna be
doing on a day-to-day basis.
[349]
But these teachers don't,
aren't actually practicing
[352]
what they're teaching and so they give you
[354]
this wrong conception
of what you're studying
[357]
and reality is the traditional
education, it's obsolete.
[361]
What mattered back then does not apply
[364]
to how you're gonna run your business now.
[366]
- You know today, if I
was in your position,
[370]
you know I was pretty
clear when I was about 15,
[373]
I wanted to sail the
seas, I sailed huge ships
[377]
you know throughout the world.
[379]
But that was a dream of a kid, you know.
[383]
By the time I was 22, I
was tired of it, you know.
[386]
I didn't want to sail the world anymore.
[388]
So I understand you know
what it's like to keep,
[392]
what they call it is finding
your way in life, right?
[395]
- [Alexandra] Yeah.
[395]
- That's not easy.
[397]
So I commend you guys and
that's why we're doing
[399]
the Millennial Money is because
as these programs progress
[403]
you're gonna find out, in my opinion,
[405]
you guys have a harder road
to go through than I did.
[408]
For me it was really easy,
there was a lot of jobs,
[410]
economy was booming and all this.
[412]
And it was easier so you guys
have got to be smarter, okay?
[417]
So as far as the subject of debt,
[419]
there's good debt and bad debt.
[423]
Again it goes back to
the financial statement,
[434]
income, expense,
[438]
asset, liability.
[440]
So debt falls in here.
[443]
So I'll review, let's say I'm gonna buy
[446]
you know everybody says
I'm gonna buy a house.
[448]
And everybody says my house is an asset.
[450]
That's not true, your
house is a liability.
[455]
I don't care if you put
no debt on it or not,
[459]
a house is a liability.
[461]
Same as if you have a car.
[469]
A car is a liability and
the reason for that is
[472]
as we've talked about earlier,
[473]
the six words that are basics
[475]
of financial education,
financial intelligence,
[478]
income, expense, asset, liability.
[481]
And the two other words are cash flow.
[484]
So when you look at the average person
[486]
to have a job, money comes in here,
[491]
they pay for their house,
and the money goes to a bank,
[497]
through a mortgage, so it's not an asset
[501]
because the cash is flowing
out, so it's a liability.
[505]
So the definition of liability,
[507]
does it take money from your pocket?
[510]
And for an asset does it
put money in your pocket?
[514]
So when I have a rental property here,
[518]
it puts money in my pocket.
[521]
So if I live in the house it's a liability
[524]
because even if I have no debt on it,
[526]
I still have taxes, depreciation,
[528]
repairs and upkeep,
insurance and all this.
[531]
When I rent a property, I've
done a good job buying it
[534]
and structuring it, every
month it sends me money.
[537]
So I started off when I was 25,
[541]
I had a little one bedroom condo
[545]
and it put 25 bucks in my pocket,
[549]
it was a start.
[551]
So this was good debt, you see,
[555]
the debt also went out and paid
[558]
but it also put $25 in my pocket.
[561]
So net, net, I was making
money from my little house.
[566]
So today my wife and I own 6,500 of 'em.
[572]
And every month 6,500 houses
put money in my pocket,
[577]
my people who live in
'em love me and all this
[579]
because they have a place to live.
[580]
But all of this comes from debt.
[584]
So we don't, we have they're
[587]
100% financed there, it's all debt.
[589]
So this is good debt.
[596]
And what makes it good debt is
[598]
are the two most important words,
[603]
cash flow. Does that make sense to you?
[604]
- [Alexandra] Yeah.
[605]
- Any comments on this?
[607]
- So numerous people my age
actually think debt is horrible
[610]
and you just showed us a
perfect example of cash flow
[613]
and how debt can generate income.
[616]
And many entrepreneurs use this formula
[618]
to make money on a day-to-day basis.
[621]
- So what most people do is
they have student loan debt, SL,
[626]
and that debt is going out this way.
[629]
You know it doesn't put
any money in your pocket.
[631]
You can say well I have a job,
[633]
well there's still you working for it.
[634]
So I don't work for
any of this money here,
[638]
I do this job once, set the deal up.
[641]
Every year I add more
and more and more in it,
[643]
I'm borrowing money from here,
[646]
it's coming here, and going this way.
[649]
So the debt is putting money in my pocket
[652]
and bad debt is taking
money from my pocket.
[656]
So the problem is, if
you're gonna use debt
[659]
you've got to be much smarter
than this person here.
[663]
You've got to be very, very smart.
[665]
That's why I took real
estate classes when I was 25
[668]
and I've never stopped
taking real estate classes.
[671]
Because you buy a piece of real estate
[673]
and you make a mistake,
this turns into a liability.
[678]
And this, if I get, the
renter leaves the place,
[682]
this goes here that fast
and the cash flows that way.
[688]
And it's going out of my pocket.
[690]
So it has nothing to do with real estate,
[691]
nothing to do with the car,
that there was student loan.
[695]
It has to do with these two words here.
[698]
So good debt again, is
debt when I borrow for this
[703]
and it puts money in my pocket.
[705]
If I had a car and I
borrowed money from it
[708]
and somebody rented from me
as an Uber driver or something
[711]
and I put money in my
pocket it would be an asset.
[714]
My wife and I have a boat and
you know most boats lose money
[719]
but our boat makes money
because it's in a charter,
[721]
you know people rent my boat all the time.
[725]
So it has nothing to
do whether it's a boat,
[727]
student loan debt, a
house, a car, or whatever.
[730]
It has to do with these two words here.
[733]
And so most of the time,
[735]
you know you've had accounting classes,
[737]
they don't talk much about this do they?
[739]
- This is something they've never
[740]
mentioned to me in college.
- Why is that you think?
[742]
- Like you mentioned before, I mean,
[743]
there's people that are
actually teaching students
[746]
something that they don't
apply in their daily life,
[749]
something that they barely
have knowledge about
[751]
and they only learned through a textbook.
[752]
- But you have, you've taken
accounting classes right?
[755]
- Yeah exactly, I did.
[758]
- You made A's in it?
[759]
- Well I did finally get
[760]
a high grade the second time around
[762]
but that was because I had a
real accountant teaching me
[765]
the real applications of accounting.
[767]
As opposed to a fake teacher, right?
[770]
So your advisor, Tom Wheelwright
taught me in one hour
[774]
what I could have learned
the entire semester
[775]
with this one teacher that wasn't even
[778]
an accountant in his real life.
[779]
- A big lesson for you is
that it's nothing to do
[782]
with the house, the car, the student loan,
[784]
it has to do with
where's the cash flowing.
[787]
If the cash is flowing in
to your income statement,
[790]
into your pocket, it's
an asset, it's good debt.
[794]
But if it's taking money from
your pocket, it's bad debt.
[798]
About debt, there's
good debt and bad debt.
[801]
Any comments on that?
[802]
- Well I think just like Trump,
[803]
you know how to apply the rules of debt
[805]
and he calls himself
the king of debt, right?
[806]
- If you're gonna be successful at
[808]
whether you're employee or entrepreneur,
[810]
you've got to control the
direction of your cash flow.
[814]
So like most people here,
we've talked about earlier,
[817]
they got a job and the
cash flows out here,
[820]
it goes to the government, called taxes.
[828]
Trump doesn't do this, I
don't do this, legally.
[832]
The reason's 'cause we're
entrepreneurs, not employees.
[834]
Employees have this, entrepreneurs don't.
[839]
Because it's a type of asset.
[842]
Any other thing?
[844]
- [Alexandra] I'm good.
[846]
- So what would you like to say
[847]
to the young millennials
listening to this?
[850]
- I'd say don't be afraid of debt
[852]
and if you know how to use it, use it.
[853]
- Good debt puts--
[854]
- Money in your pocket.
[856]
- Could a credit card be good debt?
[857]
- Well it just depends what
you spend the money on, right?
[859]
So if you spent it on something that's
[861]
gonna produce income for you,
[863]
like an asset then it's good debt
[865]
but if you spend it on let's say
[867]
a jacket that you wanted
from Burberry, then it's not.
[870]
- First property there, it was
in Maui, Hawaii, the 1970s.
[875]
I bought it with a credit card.
[876]
- Wow.
[878]
- Property was $18,000 my first,
[881]
but I've taken several real estate classes
[884]
and so I knew what to look
for, I found this one property.
[886]
It took a long time, when I found it,
[888]
I just broke out my
credit card and bought it
[891]
and it put $25 in my pocket.
[893]
It went from this little,
janky little thing.
[896]
This was years ago, $25.
[902]
It was good debt, I wish
I had never sold it.
[905]
I don't, you know it was
a big mistake to sell it
[908]
because today it's probably
worth four or 500,000
[912]
and that's a whole 'nother story.
[915]
That's why I don't flip properties,
[917]
you know, I don't like to do that stuff.
[919]
So anything else, so good debt, what?
[922]
- Money in your pocket.
[923]
- And bad debt what?
[924]
- Takes money out of your pocket.
[926]
- That's all there is.
- Yeah.
[927]
- Thank you.
Most Recent Videos:
You can go back to the homepage right here: Homepage