Kim Kiyosaki: Helping Women Gain Financial Control

The Lange Money Hour: Where Smart Money Talks
James Lange, CPA/Attorney

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Kim Kiyosaki: Helping Women Gain
Financial Control
Jim Lange, CPA/Attorney
Special Guest: Kim Kiyosaki, Author of Rich Women
Episode 13

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TOPICS COVERED:

  1. Kim’s Personal Story of Financial Hardship
  2. 3 Types of Investments: Bad Boys, Nice Guys and Wimps
  3. Selecting Your Asset of Choice
  4. Step #1: Ladies - Educate Yourself!
  5. Kim’s Biggest Investment Mistake
  6. Buying Real Estate in Your IRA
  7. "Cash Flow" - The Real-Life Board Game

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Welcome to The Lange Money Hour: Where Smart Money Talks with expert advice from Jim Lange, Pittsburgh-based CPA, attorney, and retirement and estate planning expert. Jim is also the author of Retire Secure! Pay Taxes Later. To find out more about his book, his practice, Lange Financial Group, and how to secure Jim as a speaker for your next event, visit his website at paytaxeslater.com. Now get ready to talk smart money.

Beth Bershok: Thank you so much for joining us we are talking smart money tonight. And especially tonight smart money for women. I’m Beth Bershok, Jim Lange CPA, Attorney, best selling author of two editions of the book Retire Secure! Pay Taxes Later, and a very special guest joining us tonight Kim Kiyosaki who is the author of Rich Woman. She also hosts the PBS special Finding the Rich Woman in You. And she founded the Rich Dad company with her husband and business partner Robert Kiyosaki who is the author of Rich Dad Poor Dad and thank you so much for joining us tonight Kim.

Kim Kiyosaki: Thank you for having me on.

Beth Bershok: I do want to I’m going to open the phone lines tonight too and after I give the phone number 412-333-9385, I want to mention that if you call in with a question tonight if you get on the air with your question, we are going to send you a free copy of Jim’s book Retire Secure! Pay Taxes Later. That’s a special offer just for tonight. So it’s 412-333-9385. A copy of Retire Secure! if you get on the air with a question. Now Kim you claim that there’s a rich woman in every woman.

Kim Kiyosaki: That’s correct.

Beth Bershok: You think that’s true?

Kim Kiyosaki: I think that’s absolutely true.

Beth Bershok: We just need to find it.

Kim Kiyosaki: Where do you find it?

Beth Bershok: Where do you find it?

Kim Kiyosaki: Well, it’s interesting because I think the main problem regarding women and money is that so many of us have not had the financial education and don’t know how to take care of ourselves financially in many ways. If I can quickly share some statistics with you which were pretty startling to me.

Beth Bershok: They are startling I know which stats you’re about to put out and they’re really shocking.

Kim Kiyosaki: Yes and this is in the U.S. and actually I travel all over the world and I’m finding these statistics, the trend is very similar in most other countries, but 47% of women over the age of 50 are single, meaning most of these women have got to take care of themselves financially. Many of us have heard the divorce rate, 1 out of 2 marriages ends in divorce, who usually ends up with the children? The woman, so now she has to take care of herself and her children. And it’s the on average the first year after a divorce a woman’s standard of living drops 45%.

Beth Bershok: That’s incredible.

Kim Kiyosaki: It is really shocking to me and one of the most shocking stats is that of the elderly living in poverty 3 out of 4 are women yet 80% of these women were not poor when their husbands were alive.

Beth Bershok: So we need to do something about the stats.

Kim Kiyosaki: Yes, exactly.


1. Kim’s Personal Story of Financial Hardship

Beth Bershok: Now before we get into all of this you have an absolutely fascinating personal story, can we go back to when you and Robert were first married and you were literally living in your car?

Kim Kiyosaki: We were. We met and fell in love in 1984 and 1985 was the worst year of our life. What happened is we sold everything we had - we were living in Honolulu Hawaii at the time, Robert shut down his factory, I quit my job and we sold everything we had and we moved to California to build a business. In about two to three months we had run out of our money, and we were still building the business and we were flat broke and it was a very tough time we really were struggling financially. We slept in the car sometimes, we were homeless for a short period of time, we slept on people’s floors, there were times where I had like $1 to get me through a weekend. And I think probably the toughest thing of all is during that time my self esteem took such a pounding because I started to doubt myself, I started to doubt Robert, I started to doubt the relationship, I started to doubt my ability to produce anything. So looking back on that time I would say that was probably the toughest time I’ve faced or one of the toughest times I’ve faced, but in retrospect it was probably one of the best things that could have happened for me and happened for me and Robert because to get through that time and to persevere made me a stronger person individually and made us a stronger couple together.

Beth Bershok: And it was shortly after that you guys started to build your well you built an empire and then you retired and then you built another one.

Kim Kiyosaki: We did and it’s interesting people think when we say we retired, I was 37 at the time, Robert was 47. When we retired people think we had millions and millions of dollars which we did not. The whole key for us is what we started doing is we didn’t live in the big house, we didn’t have the expensive cars, we lived pretty basically. But what we did with all the money we didn’t put into the big house we started buying assets, and we started buying primarily real estate and rental real estate, real estate that every month would put cash in our pocket. So we would buy a property, we’d collect the rent, we’d pay the expenses, we’d pay the mortgage, and if we managed it correctly at the end of the month we’d have a positive cash flow or profit. So when we retired back in 1994 we had $10,000 a month coming in every month from our properties. So you know its not Donald Trump money, it’s not billions, its not millions, it’s $10,000 a month, but the beauty was we only had $3000 a month in living expenses. So at that point we had more money coming in from our real estate and our assets that was then going out in living expenses, so at that point we were financially free.

Beth Bershok: Kim, Jim has been reading your book what did you call it Jim gave it the Sex and the City kind if spin.

Kim Kiyosaki: I like that, I like that a lot.

Jim Lange: It’s hard for me to believe I’m the first person that came up with that.

Kim Kiyosaki: I’m going to use that okay.

Jim Lange: Because I write in a lot bit of a more type thing, I try to put case studies in, but yours was more like this conversation and I just pictured you and your flashy girl friends in restaurants. Actually as long as we’re on that I’ll tell you to me one of the most fun things in the book and maybe you could expand on this is that you said that there were three different types of guys, there were bad boys, nice guys, and the wimps.

Kim Kiyosaki: Yes.

2. 3 Types of Investments: Bad Boys, Nice Guys and Wimps

Jim Lange: And then you used that terminology to describe investments and I thought that might be a terrific place to talk to some of our listeners to talk about bad boys, nice guys, and wimps, and how that relates to the investment world.

Kim Kiyosaki: Oh sure. And first of all I want to say Jim I have read not all of your book because I do like your book a lot because it is so jam packed full of information and it’s the kind of book I don’t have to read from start to finish I can look at the piece that’s applicable to me at the time so it’s really a fantastic resource. I just want to let you know I have seen it and I have read parts of it and I think it’s exceptional.

Jim Lange: Well, I appreciate that.

Kim Kiyosaki: Of course. Yes, my girlfriend once said to me there are three types of men in the world and I said you’ve got to be kidding there’s more than three types. She said no let me tell you and you see if you can come up with another one. She said first there’s the bad boys, the bad boys want to break the rules, they make life difficult, they’re a challenge and you have great highs and you have great lows but you’re never ever bored, but they are a lot of work. Those are the bad boys. Then you have the nice guys and these are your friends, your buddies, the guys you just like to hang out with and go have a beer or a glass of wine with and you can talk to these guys and they’re really a friend and somebody that you can count on and you know that they’ll be there for you when you need them. Then there are the wimps and these are the guys you just want to kind of grab around the neck and shake to wake up and do something.

Jim Lange: Now what kind of guy is Robert.

Kim Kiyosaki: Oh, I have to say he’s a bad boy. Oh yes. I haven’t been bored since the day I met him. But relating that to investments I see it very similar because you have your investments that can be really a challenge and they can be more work - such as - let’s say you have a rental unit that has a ton of deferred maintenance and its got bad tenants and so you’re going to have to work more, you’re going to have to put more into it, you’re going to have to pay more attention to it, but if you do a good job the rewards are going to be that much higher, so those are your bad boys. Your nice guys are the ones you don’t have to put in so much effort, you don’t have to put in so much time and they will return money to you consistently like a stock or dividend might, or a rental property that just kind of operates on its own without a lot of maintenance and property management. And then there are your wimps and for me today I would call a savings account a wimp, I would call a CD a wimp because with the rate of inflation you’re actually going negative every month.

Beth Bershok: Would you ever invest in a wimp?

Kim Kiyosaki: I would not. Well, actually that’s actually a great point, Beth, because if you don’t have the financial education then you’re better off investing in the wimps because they’re going to be a lot less risk for you. But if you get the financial education which is what I’m all about getting financially educated and becoming an active investor, then I’d much rather have the nice guys and the bad boys because they’re going to give me greater return if I know what I’m doing.

Beth Bershok: Right what if you don’t know what you’re doing and you pick a bad boy?

Kim Kiyosaki: Right, if you pick a bad boy and you don’t know what you’re doing you’re going to be in big trouble, you’re probably going to want to divorce real quick.

Beth Bershok: Can you divorce a bad boy investment?

Kim Kiyosaki: You run away, cut your losses early and run. And actually you know a lot of people they got in trouble because what they were doing especially with real estate when this whole thing came crashing down, with real estate they were buying property to flip, so they were looking for capital gains and they were looking for appreciation but they didn’t have the financial education to know what to do if the market turned. So for a lot of people when they were buying properties to flip, hoping that the market would keep going up they were actually I would say they were investing in the bad boys because they didn’t have the education to understand what to do when the market turned.

Jim Lange: And the consequences for that can be lethal. I had a client who basically borrowed money to purchase a property to flip, the property went down drastically in value, now they have these payments and they couldn’t even sell the property even if somebody bought it because they couldn’t go to closing. And they came in to see me and I hated to say this but I actually recommended they go bankrupt so they could preserve their IRA and their retirement plan so at least they won’t be in the street.

Kim Kiyosaki: It’s going to be difficult because the price of real estate is so high so some places will be more difficult to find cash flow properties. As a matter of fact when the markets were so high and properties were so over valued we were still finding cash flow properties but you did have to do your homework you did have to look harder, it wasn’t as easy as it used to be, which is why I’m very excited unfortunately a lot of people are in a lot of trouble right now with the real estate, a lot of people are losing their homes, they’re losing the properties that they purchased. On the other hand it’s starting to be and I think there’s going to be a lot more opportunity to find those cash flow properties because now the price of real estate is coming back down to what makes sense and what a home really is valued at versus people flipping it flipping it until the last person is left standing

Beth Bershok: Have you ever done that have you ever flipped a property?

Kim Kiyosaki: We have and we flipped it into a cash flow property. But we typically do not buy property to flip. There was this one opportunity where we bought ten units and we were going to rent it and all of a sudden the price was so ridiculously high we said well let’s just sell it and move the money somewhere else and that’s what we did, so now we have a nice apartment building that cash flows. But our plan is always to when we buy in fact to Jim’s comment, when we buy a property when I buy a property it either has to cash flow the day I buy it or I have to know what I need to do to make it cash flow down the road. You know I might need to put in repairs, I might need to move out tenants and bring in new tenants, I might need to increase the income in other ways like putting in washers and dryers or covered parking. So I always look at what do I need to do so that it will cash flow.

Jim Lange: What type of education or training because I’m picturing a lot of our listeners and in particular women who are saying gee I don’t know much about the rental business, and there’s all these guys on TV selling their systems and I’ve certainly seen a lot of that and in my own practice even though I have quite a few clients who’ve done quite well with real estate I’ve had quite a few people mainly non-professionals, people who don’t really know real estate kind of just jump on the bandwagon and they got hurt.

Kim Kiyosaki: Yeah.

Jim Lange: So I kind of think that real estate is almost, investing in real estate is almost a business in and of itself. Can you tell me who you think would be appropriate for it and who would not and you know what kind of people and what kind of training they should go through?


3. Selecting Your Asset of Choice

Kim Kiyosaki: Sure and I’ll be real quick. My asset of choice is real estate; I don’t recommend people go into real estate necessarily. There’s two things you can invest, you can invest time and you can invest money. And whatever investment you’re looking at doing I would say first invest the time to get educated, whether it’s real estate, whether it’s business, whether it’s stocks, bonds, mutual funds, whether it’s commodities because everybody you know for example when I started out I didn’t know anything about money, I didn’t know anything about finance, I didn’t know anything about real estate. Robert started to teach me what his rich dad taught him specifically about real estate and he said okay now you’re on your own. So I’m out there struggling trying to make things work and I had all the fear and doubt and all of it and finally did that first deal. So then I continued on with real estate. So I would talk to my girlfriend about real estate for two years I’d be talking to her and she never wanted to do it, she didn’t enjoy it. But she was an accountant and she loved she took a course on stock trading. So she was on the computer and she loved stock trading, she actually was trading options and she learned how to do that and studied and became educated.

Beth Bershok: She did it herself?

Kim Kiyosaki: She did it through classes, through books, and through some individuals who were very successful at it. So she found people who were successful at it and they worked with her. So she basically had a mentor or a coach. But she loved paper assets, she wouldn’t touch real estate. And then my other girlfriend went into Laundromats, coin operated Laundromats.

Beth Bershok: No kidding how did that work out?

Kim Kiyosaki: She did very well. She bought the first one and it was just a little cash flow machine and then she took the cash flow from that and bought a second one. So the most important thing is to find the asset class that most interests you, what are you interested in, what do you want to learn? And then from there that’s where you’ll have your greatest success in my opinion.

Beth Bershok: We are going to take a quick break Jim and Kim our guest tonight is Kim Kiyosaki who is the author of Rich Woman and host of the PBS special Finding the Rich Woman in You. We’ll be back in just a minute.  It is the Lange Money Hour: Where Smart Money Talks.

Beth Bershok: Talking more smart money thank you so much for joining us tonight I’m Beth Bershok along with Jim Lange and our guest Kim Kiyosaki who is the author of the best selling book Rich Woman and host of the PBS special Finding the Rich Woman in You. And that’s what we’re trying to do tonight find the rich woman in you. I want to mention real quick about the seminar we were just talking about. The workshop that’s coming up this Saturday at the Pittsburgh golf club on August 29th, we have two events one from 9:30-11:30 and then one from 1:00-3:00 in the afternoon but we are almost at capacity. We only have a few spaces left so if you want to attend the one this weekend you really should call the toll free number tonight so let me give you the number again it’s 800-748-1571, again we are almost filled up. We do have some more coming up in the fall you can find those on retiresecure.com but if you want to attend this Saturday I would call, get signed up tonight, 800-748-1571. And by the way if you have a question for Kim tonight 412-333-9385, anybody that gets on the air we’re going to toss you a free copy too of Retire Secure! Pay Taxes Later. And Kim before we get into the solution to all of these problems for women I have a question that I wanted to toss out, I didn’t see this in your book and I’m just wondering what you think. Do you think that some of the problems with women being uneducated about money are generational? And by that I mean I know some women that are in retirement age bracket who have never written a check.

Kim Kiyosaki: Shocking.

Beth Bershok: And then most women that at least I know my age have a fairly good handle, handle their own finances, know how to do investments, I’m just wondering what you think about that.

Kim Kiyosaki: I definitely think the younger generations are more in the especially the women young women and as women in their 20s and 30s I think they do have a better handle on things because they’ve seen a lot of the you know jobs disappear and no job loyalty and couples and divorce and all of that so I think they do have a bit of a better understanding that you really cannot necessarily depend upon a husband, a job, or even a family member to take care of you. I still though on the other side of that I still to this day hear I just heard it the other day heard about a mother who’s talking to her daughter about finding the prince charming and you know…

Beth Bershok: This was an actual conversation?

Kim Kiyosaki: Yes it’s about well maybe the best thing is that she find a rich man. I’m like are you kidding me?

Beth Bershok: Yeah are you kidding me?

Kim Kiyosaki: In this day and age what’s the number one thing couples fight about is money, what’s the leading cause of divorce is money. But I do think women are waking up to the fact that women do have to take care of themselves financially, that’s why I think it’s so important what you and Jim do is because you are educating people and I think that education is not taught in school they don’t teach money in most schools, they don’t teach people how to invest, how to manage and how to grow their money, they don’t do that in school. So you having the seminars I really encourage people to attend your seminar because the very first gift Robert gave me after we met was an accounting course.

Beth Bershok: That’s romantic.

Kim Kiyosaki: Yes, very romantic. He wanted to make sure I know my assets from my liabilities. But I’m a seminar, not a seminar junkie, but I get such value from attending seminars, I learn something from every one I attend. So if you’re sitting there listening and saying maybe this is for me, I would really recommend it because this kind of information is not taught in most schools. The people who are really “educating” us are banks, brokerage firms, you know people that are just there to sell you something they’re not really there to educate you as Beth you and Jim are in my opinion.

Jim Lange: One of the things that you mentioned when you talked about some of the statistics that were pretty eye opening and it relates back to something that I see in my practice so let’s even say that you married or are married to somebody who you thought was prince charming and you’re going along and you’re seeing your and let’s even say that there are some investments and one of the things that I have found and maybe I have a lot of cheap clients but two of the things that I have found is that let’s assume that one of the spouses is working and the other one is not. And I know that you want to change that and you want to get the non-working spouse either investing or doing something to provide for themselves but I found people are very reluctant to spend money on life insurance and I think often the surviving spouse and this often happens in second marriages is not provided for and that’s usually women. And the other thing that I see is when I see a husband retiring and choosing to accept a pension a lot of times he’ll do it for one life, and I’m thinking what happens when you die if you predecease your spouse and then there she is older presumably more difficult to find a job at that stage in her life without an income. And it just bothers me and I think if now at that point you know I try to actually stick up for the financially dependant spouse and say hey no we either need more life insurance or we need to make this pension a two life. I don’t know if you run into that type of thing in your discussions and in your you know when you’re on your TV show, but I think that’s just kind of basic stuff that a lot of people miss.

Kim Kiyosaki: Yeah, I don’t get that type of detail, that’s your forte and that’s your expertise, I do get something very similar though in that the million dollar question is I want to start investing, but my spouse isn’t interested. So somebody, and I hear this more from the women because women tend to want to include their family in what they’re doing. So, if a woman wants to start investing or wants to start managing the money and wants to start growing her money or is money or the family money or I’ll say the household money she wants to often include her spouse in it and if he’s not interested some times that holds her back. The men will invest and manage the money regardless of if she’s involved or not and that’s one difference that I see. My advice to the women is simply you just got to start and you just got to do it. I mean you provide a very valuable service Jim in that you are really encouraging women to start looking after their money and start taking care of themselves financially because so often I mean as you were saying Beth you know I just heard a story a 57 year old woman and just as you said she doesn’t even know how to write a check and she’s 57 years old.

Beth Bershok: That just boggles my mind, I don’t understand it.

Kim Kiyosaki: The statistic about if after divorce - first year after divorce a woman’s standard of living drops an average of 45%. You know the married women that are out there ask yourself if you were to divorce or if you husband were to pass away do you know what you have?

Beth Bershok: Well, actually I think that’s why some people stay married.

Kim Kiyosaki: Absolutely. They’re afraid that they won’t be able to provide for themselves.

Beth Bershok: Yeah or they haven’t worked in 20 years and they just think there’s no way they could pull it together.

Kim Kiyosaki: I think that’s the biggest crime of all to stay in an unhappy marriage because of money.

Beth Bershok: Now if we go back do you think this goes all the way back to when these women were girls? Why is it that women are not educated financially, but a lot of guys seem to just know it off the top of their head?

Kim Kiyosaki: I don’t know the answer to that, I do see there’s a lot of conditioning for women to you know they’re almost taught instead of being taught to you know take care of themselves financially we’re actually many of us are taught to be dependant on somebody, to depend on somebody else. And again I do see that changing now with the younger generation coming up but I do think it’s partly conditioning and I think its partly all the stories that are told, the advertising that’s out there it’s still keeping in many respects its got the women in the traditional role.

Jim Lange: I think you’re absolutely right and part of it isn’t necessarily that men know all that much more they just have a little bit more bravado and are willing to do it. So I sometimes see clients come in and the husband even though he thinks he knows something he’s really kind of clueless, and the wife is…
Beth Bershok: But he thinks he knows something. You know you slipped that in there, even though he thinks he knows something he’s really clueless.

Jim Lange: Well, maybe that isn’t fair, but a lot of times he’ll have some bravado and he’ll say things with such certainty and I’m sitting there thinking no you’re absolutely wrong, and then I would sometimes turn to her and say what do you think and she says well I go along with whatever he says and I’m thinking oh this is really bad.

Kim Kiyosaki: Yes you know it’s funny because sometimes I’ll be talking to a real estate agent and they’ll start throwing out all this jargon, they’ll say the derivative here and the P ratio and the cap rate and all this stuff and I stop them and I say would you explain what all that means. And they can’t, they just start talking they can’t give me just a concrete answer. So I think one of the first things in terms of educating yourself one of the first things you need to do is learn the language of investing, learn the language of money because they’re just words.

Jim Lange: And I thought one of the great things about your book is that you have a glossary at the back. So if somebody is reading and they don’t understand a term they can just go to the glossary and read it. Another thing that is pretty interesting is that your glossary does not read like Black’s Law Dictionary, it read like a straightforward here’s what’s going on. Cash flow is having more money coming in then going out and it was refreshing not necessarily, obviously not written by a lawyer.

Kim Kiyiosaki: It’s got to be simple so I can understand it that’s the rule.

Beth Bershok: Now Kim what if you’re listening to this show tonight and you’re a woman and you’re listening to the show and you realize we’re talking about you. We’re saying you need to get educated and somebody’s listening tonight and thinking boy that’s me I really have no idea what’s going on I need to get a clue. Where can they even start?

Kim Kiyosaki: Well, you could start at the library; I mean I would probably start with a book, your book or my book to be honest.

Beth Bershok: Well, you know what Kim let’s go with both books.


4. Step #1: Ladies – Educate Yourself!

Kim Kiyosaki: Just to be blunt here. Yeah I would start with a book or I would go online and even online it’s confusing a little bit there’s a lot going on but there’s a lot of websites out there. I would just take it step by step, just read a book, get an audio tape, get a DVD, attend a seminar, attend a meeting, just start getting yourself in the world of money. And I’ll give you one tip that just works really well. For me if I put a little money down my interest level soars. So one thing I say to people is one thing that they can do is today you can go out and buy a one ounce silver coin. You go to a precious metals store there’ll be one in many corners of Pittsburgh and most major cities. If you go out and you buy a ounce silver coin today it’s going to cost you about $16 or $17, and because you’ve put that $16 or $17 down and you’ve parted with that money all of a sudden your interest level in silver goes up. So you go online as the price of silver goes up, is it down, what’s it doing, why’s it changing? You’ll start to see articles in news papers and magazines about silver and gold and precious metals. And just because you put a little money down you become this quasi expert on this commodity called silver. So that’s how I like to sometimes play the game is just put a little bit of money down you know $10 or $20 and that alone will get your interest going.

Jim Lange: I think that makes a lot of sense. By the way in terms of which book I actually think that your book is terrific for getting women in the right mindset to realize it’s up to them don’t count on anybody. Rich Dad Poor Dad I think is really good for people who are somewhat interested or have an interest in positive cash flow real estate. My book is more the type of thing for IRAs and retirement plans. I guess when it comes down to it I’m a nice guy and not such a bad boy.

Kim Kiyosaki: Nice guys are good.

Jim Lange: In practice, but I actually liked what you said that real estate isn’t for everybody because I was thinking gee there’s a lot of people that it just isn’t appropriate for, and I liked your characterization of different types of investments and different purposes.

Kim Kiyosaki: Yes and they all do have a purpose, as a matter of fact I’m liking silver and gold right now because they’re printing so much money.

Beth Bershok: So did you go out with $17 and buy a coin?

Kim Kiyosaki: I bought a few. But I just like it because it’s insurance against inflation and I’d rather I actually would rather hold my money right now in silver or gold than in a bank.

Beth Bershok: Have you ever made an absolutely huge mistake with an investment?

Kim Kiyosaki: Oh yeah oh yes I’ve made a lot of mistakes. As a matter of fact though the biggest mistake I actually write about it in my book. The biggest investment mistake I made ended up turning into my very best deal.

Beth Bershok: Which was what tell the story.

5. Kim’s Biggest Investment Mistake

Kim Kiyosaki: Well the reason was I had found this property and it was in Florida many years ago and it was a big property and a lot more money then I had ever dealt with and I just got scared and I started doubting myself and kind of didn’t trust myself to get the deal done and because of that I brought in the attorneys, I brought in the accountants, I brought in all these people who really didn’t have the real estate expertise. A long story short after many months of negotiations I lost that deal and I was really really angry, and first I was angry with the seller, and then I was angry with the brokers, and then I was just angry at me for not trusting myself to know how to do a real estate deal. And I was so upset because I had spent all this time and all this money and because I didn’t trust myself and called on the people who knew how to get this deal done because I didn’t do that long story short I found this property the next day, made the call and instead I live in Phoenix Arizona so instead of buying this property in Florida it was almost the exact same type of property, less money, better cash flow, and three blocks from my house.

Jim Lange: And that’s what you recommend is closer to home because I have a friend in Pittsburgh and he thinks that right now Florida real estate is the place to go, he said right now nobody in Florida can get a mortgage so he’s going down.

Kim Kiyosaki: In Florida yes right.

Jim Lange: So he’s going down with some cash and he says he’s buying up you know rental units on 10 cents for a dollar where presumably you couldn’t do that in Pittsburgh but Pittsburgh did not go down nearly as much as the national rates, and I know Phoenix was hit pretty hard.

Kim Kiyosaki: Yes Phoenix was hit, Vegas, Florida, yes and that’s why I’m saying and I don’t think it’s stopped yet I still think there’s quite a ways to go. they still have all of these loans that are resetting coming up so I think there’s still going to be more too but I like what your friend did he saw the opportunity and exactly right in Florida it’s very difficult to get mortgages, and in many places it’s difficult to get mortgages and cash is king in that regard.

Jim Lange: Would you basically say that if you can’t get a property that’s going to be cash flow positive that you’re more likely to walk away from the deal?

Kim Kiyosaki: If I can’t figure out how to make the property cash flow within six to twelve months yes. If I don’t know the day I buy it that I’m going to be able to make it cash flow I won’t buy it.

Jim Lange: Well and at the risk of sounding too technical if you’re getting cash flow positive properties whether it’s commercial or even residential real estate, and I take it you’re a buy and hold type person in other words.

Kim Kiyosaki: That’s correct.


6. Buying Real Estate in Your IRA

Jim Lange: Do you have any opinion on buying real estate within your IRA? That’s a...

Beth Bershok: That’s a tricky one.

Jim Lange: It’s a little tricky, before it was frowned upon. I have a lot of clients who are IRA heavy, so for example they worked in a traditional job, I have a lot of University faculty, a lot of engineers, and Pittsburgh’s kind of a working town and a lot of my clients didn’t make huge salaries but they were kind of prudent type people and they put money in their retirement plan and over time it grew. I have quite a few people with seven figures in their IRAs and the their retirement plan and that’s their major asset. For them to get involved in real estate one of the ways they can potentially do it that has not been historically popular but I think is growing is actually having the IRA buy the real estate. I don’t know if you have any experience in that area or if you have any advice for people in that area.

Kim Kiyosaki: I don’t have much experience in that. Are you talking about the IRA would actually buy an individual property?

Jim Lange: Yes.

Beth Bershok:  Can it be rental?

Jim Lange: Yes.

Beth Bershok: It can be rental okay.

Jim Lange: Yes there’s certain restrictions and you have to be careful and you have to get some professional guidance.

Kim Kiyosaki: That’s where you come in and that’s your expertise. I would say I would do that because I understand real estate but you really still want to understand what you’re buying and understand the income and the expenses and the debt involved, it’s the same amount of knowledge you would need but with extra knowledge, with your expertise on how you do it within an IRA.

Jim Lange: The other thing that might not work is there’s certain restrictions on the amount of input that you have. In other words you really can’t do this if you are the hands on manager.

Kim Kiyosaki: Oh okay.

Jim Lange: Alright so there’s some restrictions. I don’t know how personally involved you are with your properties or whether you get agents to do the leasing and to take care of some of the maintenance.

Kim Kiyosaki: Well that’s actually the key of real estate is your property management. So I do have properties that I manage and then the larger properties I have property managers. But I’m always looking at, I’m always going to the properties and I’m always looking at the numbers every month and I think to be in any asset class whether it’s paper assets, whatever asset class it is you’ve got to be that diligent and you’ve got to be looking at your numbers on a regular basis and paying attention to what you have bought. I’m sure that’s what you recommend in your classes is to not just blindly turn your money over and let somebody manage it for you but to really be prudent and be diligent I think that’s a key.

Jim Lange: Yeah I hate to say this Kim but that doesn’t sound like being retired to me. That sounds like you’re doing a little bit of work for this money.

Kim Kiyosaki: I tell you people say to me you know you’re the hardest working retired person I know.

Beth Bershok: You said you wanted to get another 500 units before the year was out.

Kim Kiyosaki: I know I’m running out of time I’ve got really hurry.

Beth Bershok: What do you do you travel around the country looking for things?

Kim Kiyosaki: No I have people that are looking for me now. When I started out I didn’t know anybody so I had to you know keep out there and keep looking and looking and now that I’ve been doing this for 20 years I have people and they know what I want and they know what I’m looking for.

Beth Bershok: do you have property everywhere?

Kim Kiyosaki: Not really I really do stay close to home, which is what I recommend. So I have a lot of property in Phoenix and Tucson, Arizona, Flagstaff, Arizona, and then I do have property in Oklahoma that again kind of fits in with Robert and his oil wells because you want to buy property where there are jobs. So that works, Texas we’re looking at right now as well. But no I pretty do stay close to home whenever possible and plus the Arizona market is a good market for rental properties.

Beth Bershok: Our guest tonight Kim Kiyosaki who is the author of the best selling book Rich Woman. And you just mentioned Robert he is the author of Rich Dad Poor Dad. Do you two ever collaborate on projects like that?

Kim Kiyosaki: We do, we do. We’re a very good team and we started the Rich Dad company back in 96 and we still today are pretty hands on with it as well because we enjoy it so much, we enjoy business and that’s so much of our conversation is around business and around money.

Beth Bershok: Like you’re sitting around and having dinner?

Kim Kiyosaki: Yeah and we’re talking about…

Beth Bershok: You’re talking about oil wells?

Kim Kiyosaki: Yeah, I’m afraid so.

Beth Bershok: That’s fascinating conversation.


7. "Cash Flow" – The Real Life Board Game

Jim Lange: I think one way to get people thinking about investments is actually a game and I understand that you and Robert are both really gamesters at heart and you came up with your own game and that might be a very interesting way particularly to get young people, I know my daughter is a gamester, she does virtually any game that you can think of she really enjoys. And I can actually picture her enjoying that.

Beth Bershok: How does it work, how does the game work?

Kim Kiyosaki: Well, thank you for bringing it up because this is also a way that people can get educated and they can get educated for free and I’ll explain that. We created a board game called cash flow simply because when Robert and I did “retire” which really isn’t the right word but once we became financially independent people kept asking us how we did it. So instead of us travelling all over the world explaining what we did we created this board game that shows you the different strategies, talks about capital gains and cash flow, actually have different kinds of deals, all sorts of stocks, mutual funds, real estate, businesses, all the different asset classes are on the game board.

Beth Bershok: You buy it up as you go around?

Kim Kiyosaki: Uh huh you do and the you keep accumulating your cash flow. And just as we did in real life once you have more cash flow and passive income coming in from your investments then you have living expenses you are officially out of the rat race.

Beth Bershok: Do you ever place this game with Robert?

Kim Kiyosaki: We play it every day in real life.

Beth Bershok: This could be one of those things that sound like the game you know when people get really testy when you play monopoly and they buy up all the properties and then you build hotels and they get crazy? It sounds like a similar kind of a deal.

Kim Kiyosaki: You know what’s interesting about it is you get to see people’s behavior when it comes to money. Do they hang on with their money, are they risky with their money? Especially if you’re about to get married you should play this game.

Beth Bershok: Yeah good idea.

Kim Kiyosaki: But what’s happened now and this happened not through our company it just happened spontaneously, but people all over the world started forming these cash flow clubs. And so people get together on a regular basis and most places do this for free and they get together and they play the game and the purpose of the game was for people to teach other people and that’s what’s been happening. So you can even go to our website richdad.com and some of the clubs that were you can go and find these clubs all over and I know Pittsburgh has them and you can go play the game for free. So that has been happening over the last few years and we’re really excited about it because that really was the purpose for the game was to educated people, teach people, and have people teach other people.

Beth Bershok: And can you get the game on richdad.com?

Kim Kiyosaki: You can get the game and we purposely have not priced it not like monopoly its $195 because if you’re going to pay $195 you’re going to play the game.

Beth Bershok: I’m going to play the game every night if I bought that for $195.

Jim Lange: I actually think that’s smart because that means you have to have literally skin in the game and just like you don’t want to have pretend investments you actually want somebody even just plunk down $17 that means that they’re actually making an investment.

Kim Kiyosaki: That’s right and the beauty of the game is you get to make all these mistakes with play money.

Beth Bershok: Yeah that’s the best way to make mistakes. We’re going to take a really quick break here. We’re with Kim Kiyosaki the best selling author of Rich Woman. It is the Lange Money Hour: Where Smart Money Talks.

Beth Bershok: Talking more smart money and its Beth Bershok along with Jim Lange author of Retire Secure! Pay Taxes Later. And we have Kim Kiyosaki with us who is the best selling author of Rich Woman, host of the PBS special Finding the Rich Woman in You. Her husband and business partner also together they founded the Rich Dad company. Robert the author of Rich Dad Poor Dad. And we were just talking about the website Kim because you have a game on their called Cash Flow. What other resources do you have, we were talking about one of the biggest things is to get women educated, that’s the starting point really huge point, what other resources can they find on your website? It’s richdad.com.

Kim Kiyosaki: Well, we actually have a Richwoman.com website right now. And your timing is perfect because in about one week or six days from now we are launching a fully new richwoman.com website, and it will be more interactive, it will be where women can come together to learn from one another, to teach one another. We’re going to have a lot of discussion forums, there’s going to be exercises, quizzes, things like that. So I’m really excited about that and I really want to turn it into a gathering place for women to come together, learn, mentor, really take charge of their money and ideally become financially secure and ultimately financially independent because so often the only time women start to pay attention to their money is when they’ve had a wake up call.

Beth Bershok: And sometimes that’s later in their life.

Kim Kiyosaki: Yes, exactly it’s later in their life and it’s tougher to turn around at that point so I say prepare now if that wake up call happens you’re going to be better off and if it doesn’t happen you’ll still be in great shape.

Beth Bershok: Do you think that is the biggest financial mistake women make is not getting educated?

Kim Kiyosaki: I do. Number one they sometimes they don’t even know to get educated, and then once they get that idea it’s where do I start, how do I begin, what questions do I ask? I just find you just take the first step whatever that might be for you. It might be learning how to debt, it might be learning how to open an IRA account, it might be how to start paying more attention to the money coming in, what are you doing with that money, where’s it going? So you just get started I think is the most important thing because there’s such a wealth of information out there. I was just in Honolulu and there was a great saying and they said especially in this economic time you can’t stop the waves but you can learn how to surf.

Beth Bershok: Oh that’s a great one.

Kim Kiyosaki: I thought that was cute especially for our time in history.

Jim Lange: And is it fair to say having some “nice-guy” education like 401(k)s and Roth IRA conversions which Roth IRA conversions by the way that might even qualify for bad boys because for some guys lets even take you and Robert I assume you guys have some money in IRAs and retirement plans and this would be an opportunity for you to make a Roth IRA conversion and have that money grow income tax free for the rest of your lives. If you leave money to any private heirs whether it be in other people’s cases children or maybe niece’s nephews or friends or whatever, have it grow income tax free for generations but then also I think what you’re saying is get educated in the let’s call it investment environment, IRA, 401(k), 403(b), Roth IRA, Roth IRA conversion, that kind of thing. But you’re also saying get educated in the actual investment whether it be stocks, bonds, tax lien certificates, real estate, or whatever seems to be the most interest to you.

Kim Kiyosaki: Exactly. To be aware of what you’re investing in, to understand if you are going to go into whatever the asset class is to really study it, do your homework, learn it so that you are prepared to make smart decisions. Now we also have people in our lives that do what you do Jim and advise us on our estate planning and how best to prepare for our future and that’s key because you’ve got to have people around you who really are looking out for your interests because I always say be careful who you take financial advice from. I want people who really are going to truly educate me which is what you do. You’re an educator versus somebody that’s just out there to sell you something they’re not really there to give you financial advice.

Beth Bershok: That is a huge difference.

Kim Kiyosaki: It is a huge difference and I’ve seen lots of people especially women get hurt by thinking they’re getting advice when they’re getting a sales pitch. So the key is just to get people around you that do things such as you do who really are looking out for your best interests.

Jim Lange: And part of that also is a matter of training. If you basically let’s say have a degree in sales or marketing then your financial background is you know lets say the internal education at a particular brokerage company or at a particular insurance company then basically you’re learning how to sell. Whereas you know let’s say as opposed to CPAs and attorneys and people who are in the service business it’s a little bit of a different orientation if you will.

Beth Bershok: Who always analyze as well.

Kim Kiyosaki: Right I think the most important thing is for people to feel they’re in control because right now people feel so out of control with this economy, they kind of feel like they’re at the mercy of it instead of understanding what’s happening, understanding what investments and what money you have and how it’s working for you so that whichever way the economy goes you’re going to be okay I think that’s the key.

Beth Bershok: Hey Kim I want to thank you so much you’ve been a wonderful guest.

Kim Kiyosaki: Thank you its been really enjoyable.

Beth Bershok: I want to give the website again it’s Kim Kiyosaki who is the author of Rich Woman. And the new website coming very, very soon richwoman.com it. It sounds great it sounds like it’s going to be a wonderful website. So please check out the website, check out her book Rich Woman. And thank you so much for joining us Kim.

Kim Kiyosaki: Thank you Beth, thank you Jim I really enjoyed it.

Beth Bershok: What I do want to say is we have a workshop coming up this Saturday which is almost full. Jim you were just talking about Roth IRA conversions - that’s going to be a big part of this workshop on Saturday. It’s at Pittsburgh Golf Club in Squirrel Hill 9:30-11:30 and 1:00-3:00. We have very limited space.

Jim Lange: And what if somebody calls and they can’t get into that?

Beth Bershok: There is one coming up September 19th that is going to be in Monroeville at the Holiday Inn on Moss Side Boulevard. So you can register by calling 800-748-1571. Also go to retiresecure.com because we have all of that info on the website and in our last few seconds here I do want to make an offer for a free financial physical. Here’s the scoop, you can call the office at 412-521-2732. If you call tonight my extension is 219 I will call you back and set this up and basically what happens here is Jim does a very thorough review with you looking at estate planning and your retirement planning, your insurance needs, your investments, a Roth IRA analysis, but he is willing to do this free if you call the office and you listen to this show, 412-521-2732 call my extension 219. We will be back again in two weeks. The Lange Money Hour: Where Smart Money Talks.

 

James Lange, CPA/Attorney

Jim is a nationally-recognized tax, retirement and estate planning attorney with a thriving registered investment advisory practice in Pittsburgh, Pennsylvania.  He is the President and Founder of The Roth IRA Institute™ and the bestselling author of Retire Secure! Pay Taxes Later (first and second editions) and The Roth Revolution: Pay Taxes Once and Never Again.  He offers well-researched, time-tested recommendations focusing on the unique needs of individuals with appreciable assets in their IRAs and 401(k) plans.  His plans include tax-savvy advice, will and trust preparation and intricate beneficiary designations for IRAs and other retirement plans.  Jim's advice and recommendations have received national attention from syndicated columnist Jane Bryant Quinn, his recommendations frequently appear in The Wall Street Journal, and his articles have been published in Financial Planning, Kiplinger's Retirement Reports and The Tax Adviser (AICPA).  Both of Jim’s books have been acclaimed by over 60 industry experts including Charles Schwab, Roger Ibbotson, Natalie Choate, Ed Slott, and Bob Keebler.

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