”I Was $800,000 in Bad DEBT” | Robert Kiyosaki | How To Pay Back Your Debt Fast
In this video, famous author of ‘Rich Dad Poor Dad’ and millionaire businessman Robert Kiyosaki explains how he paid back his bad debt fast.He also shares his insights on what one must do to pay back their debt and what is good debt and bad debt.
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🔈 SPEAKER : Robert Kiyosaki
Robert Toru Kiyosaki is an American businessman and renowned author. Kiyosaki is the founder of Rich Global LLC and the Rich Dad Company, a private financial education company that provides personal finance and business education to people through books and videos.
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Kim and i have been married for 30 Something years now But we started off with nothing you know People think well she married me for my Money That wasn’t true because i was kind of Between businesses i had lost my first Second business Not only did you not have money we were Like in a lot of debt Eight hundred thousand debt yeah so Shouldn’t matter Bad that not good then well it was just A learning experience It was a great learning experience and We paid it all back yeah A lot of people are saying cut up your Credit cards I think that’s really ridiculous because A credit card is not the problem In fact i love my credit cards You know to develop yourself to be as The army says to be all you can be I have no idea what it feels like to pay Off your investors when you screw up So i was cringing oh we just crowdfunded That and going Well how are you going to pay them back That’s the key that’s the key And good debt is debt that somebody else Pays for you but the reason getting rid Of bad debt was so important for us In our starting our lives together was That it’s
It’s easier to get good debt i.e loans And things like that on Apartment houses and commercial Buildings and rental property if you Have no bad debt And so we had no blemishes by the time We came through this process we never Stopped investing by the way But we did pay off the bad debt and get Into good debt so good debt is very Simply debt that makes you rich And somebody else pays off for you i.e Your tenants and bad debt is debt that Makes you poorer every month and you Have to pay for So we’ll start with steps of getting out Of debt so step number one Is you gotta tell yourself the truth and I think that’s one of the hardest things I had to do because you know kim had Never met a financial disaster like me Before She couldn’t believe anybody could be Driving a mercedes and living in a nice Hotel right on the shores of diamond Head and be flat broke but also deeply In debt And i kept pretending i was rich and That was you know i was faking it till i Make it and You know i was praying to god and jesus And buddha and hoping that money would Come by and Pretending i had i had no debt and i was
Looking good and lit You know eating in the best restaurants And flaunting the cash and But i was flat broke you can fake your Girlfriends but you can’t fake your wife And so the first thing i have to do with Kim was sit down and eventually tell her The truth that i wasn’t as rich as i Looked But it’s true you i mean you’ve got to Tell yourself the truth because if you Have a goal of where you want to go You’re not going to be able to get there If you don’t know where you are Step number two is you’ve got to stop Accumulating The bad debt yes and what that meant is Sometimes you might have to make a Little bit of sacrifice And when kim and i moved from hawaii to California and we went homeless right Away And we were living in the garage Basement apartment There was sometimes i had to run off we Had no money so kim had like two bucks To get through friday saturday and Sunday till i came home sunday night Hopefully got paid for what i was doing Number three is make a list of all and The key word is All the debt that you owe and she’s Still giving me a dirty look when she Says the word all because
You know i had so much debt i didn’t Want to tell her and i kept sneaking off And paying bills here and sneaking Around there and finally she says You know because i didn’t want to tell Her how bad the titanic was that i ran Around called my last business And finally we had to sit down and write I had to write down all the investors i Owed money to All the friends and family i would money To and everybody i felt bad about you Know that i was still Not paying and things like this so she Had me sit down and write And even the credit card companies and They get really nasty when you don’t pay Them So she was she i had to show her the Envelopes i was receiving from the angry Credit card companies and all this stuff And Basically tell the truth and face the Music step number four is a very Important step And all you guys out there who are Deeply in debt and all this i’d like to Say this is probably A very or the most important first Real step you can go through or them a Major commitment And that is hire a bookkeeper if you Look in the workbook You know i talk about a bookkeeper as
Part of your team And there was times you know i was just Trying to do my own books and You know when i’m stressed out and Embarrassed and upset that i owe so much Money i would not Really confront the truth my plus i’m Messy i’m not very detail-oriented So kim and i finally went out and my Rich dad talked to me you know and Talked We’re talking over with him he says you Have a bookkeeper and i said no because It cost too much money and he says look Rich people have bookkeepers poor people Don’t you have got to keep accurate Records Okay well this is step number five and Now that you’ve got a list of every debt That you owe You’re going to make a visual picture of That debt and very simply what you’re Going to do is you’re going to Draw a quadrant for each debt and in the Upper left hand column of the quadrant You’re going to put the creditor so For example it might be visa in the Upper right hand column goes the total Amount Owed total balance owed bottom left hand Corner Goes the minimum monthly amount that you Have to pay every month And in the bottom right hand corner
You’re going to divide your Total amount due into the monthly Payments So in the example in the workbook it’s Visa Minimum 100 a month 2 000 Total payments and that means this Number 20 means it’ll take you 20 months To wipe out this debt yeah you basically Take the total amount due which is 2 000 divided by 100 and that equals 20 months so for every single Debt that you have you’re going to draw This visual and again Refer to the workbook because it’s in There it’ll make it very very clear But for every single day you’re going to Set up this quadrant And you’re going to have this circled Number that says how many months it will Take To pay these off when kim and i met we Had nothing It took us 10 years to go from nothing To financially free Wow so she was 37 i was 47. But that’s the power of focusing on Assets versus liability most people are So Busy working for money so Busy trying to pay their bills and so Busy Buying liabilities i think are assets so My first gift to kim was
The counting game to get her head in Here and today we’re financially free And that’s the whole thing so everybody Can do it It’s a matter of putting your head into The right column And for me it was in 73 I took my first real estate investment Course here I’m free you know i lost money get made Money back But i never i never got out of the asset You know there’s a lot of people who Can’t make a thousand bucks And the reason they can’t make a Thousand bucks is because Mentally emotionally spiritually and Physically They’re not capable of making a thousand Bucks whatever the case is So kim and i today are in the Multi-millions of dollars In making money but we wouldn’t have Gotten there because one time we were Having trouble at a thousand bucks so Every time we had a problem We had to get bigger than the problem For many people out there with a Thousand dollar problem They’re not going to solve the problem Until they personally develop themselves Mentally emotionally spiritually Physically to be bigger than a thousand Dollar problem
So step number six is to determine the Order for paying off each debt And this is where that little circled Number is going to come into play You’re going to start with the smallest Circled number you have And people often say i want to make one Comment This does not take into account the Interest rate on The debt and shouldn’t i pay off my my Biggest Interest rate first don’t we want to get The one with the highest interest rate Off the books first Not necessarily in this formula in this Formula you want to start You want to see a result quickly you Want to know that this formula works so We’re going to take the shortest Debt that you have the one that you can Pay off the quickest And when you see that result when you See that paid off you can see the Formula working you have a win It’ll encourage you to move forward so That’s why we start with the smallest Number So it’s nothing as kim says it’s not About the interest payment is the Fastest one you can wipe out immediately So when you look at the average person They 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 flying 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 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 this the debt also went out and Paid But it also put 25 dollars in my pocket So net net i was making money from my Little house so today my wife and i own Six Thousand five hundred of them And every month six thousand five Hundred houses Put money in my pocket my my people who Live in them love me and all this
Because they have a place to live But all of this comes from debt So we don’t oh we have a hundred percent Finance here It’s all debt so this is good debt And what makes a good debt is are the Two most important words Cash flow we became financially free Instead of going back into debt or just Spending that cash on doodads and things Like this For those of our rich dad poor dad or Played the cash flow game You know what we do is we invest that Money even faster So in this case you know all that money Instead of spending it we just kept Buying more properties stocks Bonds never buy mutual funds but we had Money to invest even greater rate of Space and that’s how Our investment rate went from 30 Up to 80 today and is now in the Millions of dollars we’re continuing to Reinvest And we live off of our cash flow from Our properties so it’s really Interesting how this process Starts to snowball you know it’s a Compounding effect of getting richer and Richer faster So this process of getting out of debt Was how we started in 1984 and i was Really in bad shape
And kim applied some discipline and some Truth telling to the process And while holding my feet to the fire And we had betty to keep my conscience In and remind me And in 10 years we not only were out of Debt we were financially free we’re Making about ten thousand dollars a Month 120 000 a year and our expenses were About 36 thousand dollars a year So we every month we made about ten Thousand from our rental properties And about three thousand in expenses and We just still to this day Ten years later or twenty years later we Just keep doing the same thing and now It’s in the millions of dollars Same habit same process staying out of Debt Getting richer and richer where we have A lot of good debt lots and lots of Apartment houses and commercial Buildings but that’s good debt And that’s how we get richer and richer And reinvesting and We don’t believe in living below our Means i mean today you know if you say Well when do we start enjoying our money Today kim and i own about seven cars Lots of houses Uh we travel by private jet and all that But we have the cash flow from our Investments doing that
And not our credit cards paying for that Stuff and it’s not debt it’s income Coming into us Constantly so our assets from our Investments By our liabilities today and the reason So many people get in trouble in the First place Is they buy liabilities first and then They try and buy assets second and never Happens they just keep buying more Liabilities like cars boats and things Like this But getting out of debt bad debt and Then buying assets Now our assets buy our liabilities so we Still have a great lifestyle i mean Incredible lifestyle The best thing is we don’t have to worry About money we don’t have to but worry About You know anything because we always have More and more money coming in because The process keeps going It takes discipline and dedication and Remember it as a process It is a process you know from going from Where you are to where you want to be And if you don’t have dedication and Discipline the process falls apart Not because it’s a bad process but Because you lack discipline and Dedication
