Want to Build Wealth, and be Secure? Focus on Learning Instead of Earning!

I just finished reading Robert Kiyosaki’s book, Rich Dad’s Increase Your Financial I.Q.: Get Smarter with Your Money and the one major takeaway is that too many people never realize their true financial potential because the get in their own way! Many people focus on earning more money when they should be focuses their time and energy on learning and increasing their money I.Q..

* Note: Kiyosaki discusses 5 aspects of Financial I.Q. in his book, but I’m just going to focus on this one, general concept here.

The learning discussed in the book is not a formal education. In fact, that’s one of the mistakes that many people make – amassing huge amounts of debt going to college in the hopes of “finding a good job” and their place on the financial treadmill, only for some it’s more like a hamster wheel.

So what does “focus on learning” mean if not the traditional, middle class mantra “go to college to get a good job”?

It means taking risks and chances while you’re young, and always learning from your mistakes as well as your successes. People come into money all the time, sometimes mass amounts of it only to lose it all later. Think of lottery winners, famous athletes and performing artists. Suddenly rich, then suddenly broke. Why? Because they didn’t increase their 2nd financial I.Q. after mastering the 1st. They simply did what they loved doing and fell into their riches, but never learned how to manage and protect their wealth.

The first two financial I.Q.’s in the book are :

1. earning more money.
2. learning how to protect that money.

In the example of the star athlete or lottery winner, they mastered I.Q. #1 but failed horribly at I.Q. #2 – protecting their money.

Protection can mean many different things, and is usually referred to as “security” by many people. They may want to be secure in the knowledge that their savings are safe from loss, or maybe they want to protect their savings and assets from legal action. Whatever meaning you take, once you’ve earned it you must get educated on how to keep it or risk losing it all.

But even losing it all isn’t the end.

There are many well known moguls, like Donald Trump, who have built vast financial empires and lost it all only to come roaring back again. Why? Because they learned from their experience and were not afraid to fail.

” Those who cannot remember the past are condemned to repeat it.”
-George Santayana

If you do not learn from your mistakes, you will keep making them and make little or no progress in life.

I’ve always thought it’s important to learn from your own mistakes, but it’s also important to learn from other people’s mistakes as well.

Here are a few resources to help boost your financial I.Q.:

• Tips to avoid losing money to these common investing mistakes .
• Educate yourself at tax time to avoid common tax mistakes and save more money.
• Get educated on credit cards so you can know how bad credit mistakes can be and avoid even basic credit card mistakes that cost thousands.
• And if nothing else, learn from other people and avoid even basic money mistakes whenever you can.

Related Posts:

• Robert Kiyosaki Plays Loose With His Math in Financial I.Q.
• Who are The Rich in America Today? Introducing The Frugal Rich.
• MyFasterPC Review (Why It’s Not Worth the Money).
• Minimalism vs. Simplicity – Are You Missing the Point?
• Alternatives To Pet Insurance (Tips For Doing Without Pet Insurance).

Robert Kiyosaki Plays Loose With His Math in Financial I.Q.

Robert Kiyosaki, Financial IQ

I’ve been reading Rich Dad’s Increase Your Financial IQ: Get Smarter with Your Money, by Robert Kiyosaki and while I like the general gist of the book (especially the first half), Kiyosaki rubs me wrong way in several places. One of these is in his use of math to support his opinions on real estate.

Much of the second half of the book focuses on real estate as a means to grow wealth, but Kiyosaki does make an important distinction between speculating for growth or flipping a house, and buying property as an investment. In other words, Kiyosaki espouses buying real estate for the purpose of renting it out and creating a cash flow, not hoping for the market to rise and create capital gains. I’m not really interested in becoming a renter, but his approach makes a lot of sense to me, especially with the current economy, housing market and demographic changes.

The problem with Robert Kiyosaki’s math in Financial IQ

Where I have problems is when he gets into things like OPM (Other People’s Money). Here is one of his examples:

• He buys a rental property for $100,000 in cash.
• He is able to rent this property for an annual income of $10,000.
• He has made a 10% return on his investment.

So far, so good. He’s using very simple math and ignoring taxes, repairs, etc.. but that’s fine – he states that in the example. His problem is in his comparison to the same scenario but using OPM. Here’s his example using OPM (i.e. money from the bank – a mortgage):

• He buys a rental property for $100,000.
• He puts $50,000 down and the bank loans him the other $50,000 at 6% interest.
• He is able to rent this property for an annual income of $10,000.
• He has made a 20% return on his investment.

The problem is that he has not made a 20% return on his investment – unless he is a deadbeat and doesn’t pay his mortgage! While it is true that $10,000 in profit would be a 20% return on $50,000 invested he is ignoring the mortgage payment entirely!

Using the Mortgage loan payment calculator at BankRate.com, I plugged in a $50,000 mortgage over 30 years (I’m being generous in giving him a low monthly payment) at 6% (his figure in the book) I determined the monthly mortgage payment to be :

$299.78

This works out to be $3,597.36 annually, which makes his actually profit in the OPM example $6,402.64 not $10,000. That means his return on investment (ROI) in that example is 12.8% not 20%.

Granted, 12.8% is better than 10% but it’s a far cry from 20%!

This makes me wonder about the rest of his examples and stories. What if the mortgage were larger or the rent less? Someone reading this book may think it’s a slam dunk only to find that his property and mortgage alter the numbers to a point where he’s not profitable. Kiyosaki neglects to mention that part of the financial equation altogether.

Still, Robert Kiyosaki’s Financial IQ  book is quite motivating and offers much food for thought and for that alone it is worth the read in my opinion.

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MyFasterPC Review (Why It’s Not Worth the Money).

I don’t usually do software reviews, but software development is my day job and I know a lot of people are looking to save time and money by keeping their old PCs (or even newer PCs!) in top running condition. I’ve been seeing a lot of commercials for MyFasterPC.com and I was wondering if it was really worth the money, or even possibly an outright scam. So I tried it out, and here’s what I found…

The pitch.

The commercial is not the usual late-night infomercial types. In fact, you can watch one of their commercials here.. There are quite a number of fly-by-night operations just looking to sell you useless software, often for a subscription fee. This doesn’t appear to be one of those services. However, it also probably isn’t worth the money either. More on that later.

The claim of MyFasterPC is to remove unwanted spyware, malware and viruses and also de-clutter your PC by removing files that are no longer needed. They also offer some general maintenance and optimization features.

The program.

When you visit the website, you are prompted to “download now” to “get your free trial”. This sent a few yellow flags, if not red flags, up in my mind. “Free trial” usually means you’re going to get roped into some sort of subscription or at the very least a purchase after the trial expires.

After you download and install the trial application, you are greeted with this welcome message:

“Clean, optimize and speed up” my PC? Sounds great! Let’s go!

After clicking continue however, I was greeted with this seemingly friendly message to “help us find unwanted items”, but when I read further I saw it was a confirmation to send anonymous information to the website.

This is OK.

Many sites and products collect this kind of information, and as long as it truly is anonymous there is nothing wrong with it.

So what kind of information are they collecting?

According to the website, it’s the following:

• Installed applications
• Hard drive size
• Processor type
• Windows version
• Memory capacity
• Programs set to run at startup
• Browser add-ons
• Services

Having over a decade in the computer software industry working with the Windows operating system, I can tell you that every item in the list above is not only relevant but in some cases essential to optimizing and de-cluttering a Windows PC. However, it’s not essential that the information be collected – unless they are trying to improve future versions and they want to get an idea of what the majority of their customers have.

The result.

After selecting to Continue, the application ran for a few minutes then displayed this results window:

I should tell you that I ran this on a plain-Jane Windows XP test machine, with minimal programs installed. So why did it find so many issues if it was a clean installation?

Disk space.
Well, the short answer is that simply browsing an hour or so on the Internet can create enough temporary Internet files to account for the 182.48MB to clean entry, as would the download and install of the MyFasterPC.com application itself, since that was downloaded and run from the browser.

Optimizations.
Windows usually ships with the least common denominator of settings, meaning that certain settings are enabled or disabled simply because most PCs fit that configuration. This inevitably leads to a number of settings that could be turned on or off for any given Windows installation based on hardware and other factors that would result in better performance. Frankly, I’m surprised it only found 3 that could be optimized.

Registry issues.
Registry “issues” is a broad term. Many optimization programs count items that appear in a program’s “Recently Used” menu as unnecessary and hence are added to the “registry issues” bag. Other times it can be references to programs that no longer exist.

Disk defrag.
Lastly, disk defragmentation is almost always recommended by these kinds of programs, since most hard drive go without being defragged for ever. The problem with this is that Windows already has defrag software built into it.

This list of issues seemed reasonable, so I clicked “Repair Issues.” That’s when my suspicions were confirmed.

The upsell.

While the MyFasterPC trial software was able to repair a number of the issues, there were many more that required the upgrade.

This is pretty much what I expected when I set out on this test. I figured that it was either loosely disguised spyware masquerading as a repair and optimization program, or it would eventually lead to a heavy-handed upsell to the “full version.”

Just out of curiosity, I clicked the upgrade button and the program brought up the purchase page of their website. They seem to offer 3 options and the full version runs $29.95 (regularly $39.95).

Conclusion.

Cleaning and optimizing your PC is absolutely worth doing for most older machines, or machines that have had programs installed and uninstalled recently, but in my opinion MyFasterPC is not the answer. I don’t think there’s anything under-handed going on here, and MyFasterPC.com does not appear to be a scam. I’m just not sure it’s worth the money either. It seems to be a little light on delivering the goods for the price.

You can get similar programs for free (see below) or name-brand software that does more for about the same price – for example, Norton 360

Still, for some users who may not be computer savvy or want to be MyFasterPC may not be all that bad.

A cheaper alternative.

Being a father of 3 with a wife who is a stay at home mom, I’m always looking to cut costs where I can – and free is my kind of price point.

Here are 3 Free alternatives to MyFasterPC.com that don’t take a degree in computer science to use:

CCleaner . This handy tool essentially does what MyFasterPC does in terms of de-cluttering and optimizing, but also provides greater control. It too removes Windows temp files, temporary Internet files, browser cookies, and much much more. It also finds and repairs registry errors.

Avast! antivirus . Avast is an excellent -and free! – antivirus program that will keep your PC free of spyware, malware and viruses, which sill lead to less need to repair your PC.

Comodo Firewall. A firewall program is as essential as an antivirus these days. Comodo is an excellent alternative to the premium applications offered by the big name vendors.

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• Save Money with Free Software.
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Buying Life Insurance Online With Accuqoute (Review).

As I mentioned in a previous post I used AccuQuote.com to comparison shop for life insurance policies online for my wife and myself a while back. I had actually compiled a list of notes while going through the process with the intent of writing an Accuquote review. While it may have taken a while to finally get down to write, here is that review. I hope you find it useful.

Accuquote review.

For those unfamiliar with the concept of AccuQuote.com, it’s a one-stop shopping site for life insurance quotes. It allows you to search and compare offers from various insurers based on your own criteria.

Using the web site is really quite simple. For example, to get started, you simply go to the web site and click the “Get a Free Quote” button.

You then enter basic info like your first name, last name address, phone #, email, as well as your gender, DOB, height and weight.

Next, select the amount of coverage desired. (read: Life insurance: how much do I need?) and select type of insurance (read: Life insurance: what kind should I buy?). Then specify whether you’re looking to buy new coverage, additional coverage, or a replacement policy.

Next comes the most involved (and personal) part of the Accuquote process – your health history!

You’ll have to answer the following questions:

• Do you use nicotine?
• Do you take prescription medication regularly?
• Have you ever been diagnosed with diabetes, cardiovascular disease, cancer or depression?
• Have you had any major surgeries?
• Did any of your parents or siblings have cardiovascular disease or cancer, prior to age 60?

Then there are some questions that aim to gauge your lifestyle risk:

• Do you engage in any hazardous activities such as private piloting or scuba diving?
• In the past 10 years, have you had any DUI’s, or have you had more than 2 moving violations in the past 3 years?
• Have you ever been convicted of a felony?
• In the past 5 years, have you filed for bankruptcy?

It’s important to note that you would be asked these questions by any reputable insurance agent regardless of where you went to purchase life insurance, it’s not just Accuquote.

After the health history and lifestyle questions, you need to select your desired rate class: Preferred Plus, Preferred or Standard Rated.

The Accuquote site has plenty of easy to use references for how best to answer the questions, and how to decide the amount and type of insurance you need. These are interesting and helpful, but you should definitely do your own research before using the first value you see.

At the end of this section, all that’s left is submitting your information. After you click the submit button Accuquote reviews your application info. Next, you will be contacted by email with a list of 5 or so insurance providers detailing their rates, terms and conditions.

In the next couple of days I received a phone call (my preferred type of notification) during the time which I specified was best to reach me. The person on the other end was my AccuQuote agent. He discussed the options available to me and actually recommended the one I had independently chosen – and it was NOT the most expensive! It was the 3rd most expensive option, but the cheapest option with an AA+ rating (in fact it was cheaper than some A rated companies!)

The company rating was important to me because I wanted to be sure that if my wife and kids ever needed the insurance (i.e.: in the event of my untimely demise), they would receive payment in a timely and hassle-free manner.

After selecting the insurance company and policy I desired, it was time to prove that I was really as healthy as I said. This meant blood work. I was expecting to have to drive 20-30 minutes out of my way to the nearest hospital lab. I was wrong. AccuQuote employs local visiting nurses to drive to your home (or place of work if so desired) and do that vampire like voodoo that they do so well. So, a couple of CC’s (it felt like pints!) of blood later, I was on my way to work and verified preferred plus a couple of days later.

After all of that, they mailed out the application and once I signed it and returned it, I was fully insured in the event that I shuffled off this mortal coil. Provided, of course, that it was not by my own hand within 3 months of completing the process. Suicide, it seems, is only covered after the 3 month grace period. Who knew?

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