Hi folks, today I would like to tell you about my favorite book. I love to read books. I have books everywhere in the house. I also keep one in my bedroom so I can read it when I go to the bathroom. I know TMI, right? Reminds me of that Seinfeld episode in which George goes to the library and takes a book into the bathroom. But one of the sales people sees him and she flags the book and makes him buy it. Anyway, I feel that I don’t devote as much time to reading as I should. It is said that successful people read one book a week. I think I read a book once every four weeks. I have read books on many subjects. By far the most books I have read are related to business, finance and self-help type books. I am not too much into fiction books or romantic books. Nonetheless, I have a favorite book. It is Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert Kiyosaki. It became a New York Times best seller. Just to give you a brief summary. Robert Kiyosaki was born in Hawaii. His real father was a teacher in the State of Hawaii education system. Every time his dad got a promotion, they would buy a bigger house or a better car instead of investing the money. His dad thought that stock market was a bad investment. But because of what his dad did, they always found themselves in debt. His dad used to drive all over town trying to find cheap gas or save a few cents on groceries. Robert calls these habits poor people’s habits. On the contrary, the father of Robert’s close friend in school is the one that he calls his rich dad. His friends dad owned a grocery store. He always invested the profit back into the business. He was not as educated as Robert’s real dad. He spent time getting financial education. But because of that his friend’s dad ended up buying some of the best real estate in Hawaii. He used to teach Robert and his friend how to become business owners. One of the things that his rich dad used to talk about was the cash flow quadrant. Imagine four squares like in tick tack toe. The top and bottom squares on the left had side were for E and S respectively. The top and bottom squares on the right hand side were for B and I respectively. E stands for employee, who are most people like you and I. We trade our time for money. Our employment is at the mercy of the person who owns the company. S stands for self-employed, it is slightly better than being an employee because you are in charge of your earnings. But they are dependent on you. If you stop working, you stop making money. The left side of the quadrant is where the poor and middle class people are. The objective is to move to the right side of the quadrant where B stands for a business owner. This person has employees working for him. I stands for investor. These people invest in other people’s business and also have multiple streams of income. Robert has quite a different definition of an asset. Accountants call assets that have a monetary value for example, a car, a boat, a house. But these things go down in value (a house could appreciate in value, but given the housing crisis in 2007-2008, I wouldn’t say so). According to Robert, an asset is something that goes up in value and puts money in your pocket. Now if you have a rental property, even if it goes down in value, you are still getting rental income and the interest you are paying is tax deductible. So it can still be considered an asset. Things like cars and boats are called do-dads.  Robert also talks about the difference in philosophies between rich and poor people. He says that poor people buy do-dads and rich people buy assets. There is also a difference between how the people on the left and right side of the quadrant pay taxes. An employee or self-employed person has to pay taxes up front on his gross income. But business owners and investors can get deductions for their earnings and pay taxes on their net income. I have tried to apply many of the principles in Robert’s book but I am not quite on the right side of the quadrant yet. Hopefully soon. What is your opinion?