How to Once and For All Escape the Rat RaceNov 24, 2020
With: Robert Kiyosaki, Kim Kiyosaki, John MacGregor, and Chief Business, Economics and Technology Correspondent for ABC News and the host, creator and managing editor of Real Biz, Ms. Rebecca Jarvis
Robert Kiyosaki: Hello, hello, hello. Robert Kiyosaki, The Rich Dad Radio Show, the good news and bad news about money. And today, we have a very exciting show for you as well. We do. Are you prepared for the apocalypse? You know, are you prepared for possible— I'm not saying it's going to happen. It's not a zombie apocalypse. It’s really, really a financial apocalypse. And for those of you who listen to Rich Dad, you know that every 10 years there’s generally a major, major setback. And the question is are you prepared? So, Kim, why don’t you introduce our guests?
Kim Kiyosaki: Well, we have two experts and they are really in the field when it comes to financials and talking to people about their financial situation, their economic situation. And our first guest is Rebecca Jarvis. She is the chief business economics and technology correspondent for ABC News. I'm sure you've seen her on the news. She’s at a lot of the major programs of ABC.
Robert Kiyosaki: And she just recently had me on her program. So, I want to say thank you to her.
Robert Kiyosaki: And being in person with her, I can say she has a face for television. I have a face for radio.
Rebecca Jarvis: Very kind of you. Thank you.
Kim Kiyosaki: Rebecca Jarvis’s also the creator and managing editor of Real Biz with Rebecca Jarvis. And our other guest is our good friend, John MacGregor. He's a CERTIFIED FINANCIAL PLANNER. His new book “The Top 10 Reasons the Rich Go Broke” is coming out soon. I also want to mention, he has a free guidebook titled, “The Ultimate Guide to Selecting a Financial Advisor”. A great book for those of you looking for the right Financial Advisor.
Free Resource: How to Select a Financial Advisor
Robert Kiyosaki: So could be a very exciting show because, again, we're talking about the coming apocalypse. And if we’re grown adults, we all know markets crash. I mean, so, why pretend, you know? John MacGregor and I grew up in Hawaii and he knows I always jump on financial planners who say to invest for the long term. And the question is do you have a plan B? That's really the question. You know, what happens if the market crashes and your long-term plan goes down the toilet? And for those who ever listened to Rich Dad, you know that crashes make people like us richer. So, in the 2008 crash, it was fantastic because the rich used debt to buy assets. So, when the markets crashed, the banks’ interest rates dropped, which was fantastic. Savings got wiped out. People lost their homes, but they gave people like me— I got about $300 million to buy stuff. So, it's a different philosophy and that's why we have these two experts, Rebecca Jarvis is and John MacGregor , who are going to talk to you about how do you prepare if there’s gonna be a crash. Are you prepared? So, John MacGregor, let's start with you because this is one of your rants all the time. When you deal with people in real life every day on the streets, how many people are prepared for the zombie apocalypse?
John MacGregor: Oh, very few, if any, at least in the world that I'm dealing with. Most people have the strategy I call H-I-T-S, HITS, HEAD IN THE SAND. That's a tragedy. I think we're facing a train wreck that's gonna get even worse. Even with the stock market at an all-time high, I think frankly that's giving people a false sense of security in their financial situation when they see their 401(k) balance is up a little bit. And that's allowing them to go out and spend money that they don't have, which is causing even more problems. But you know, the feedback that I'm seeing for most people out there, it’s less about what they're saying and more about what they're not doing. And I recite these statistics all the time. You know, as a result, 78% of people are living paycheck to paycheck. And the big one, 63% of people could not come up with $500 for an emergency expense. It’s crazy.
Rebecca Jarvis: I would add to that, John MacGregor. It's not just about looking at your 401(k) and feeling like maybe you have a little extra cash on the side. The reality is that most people aren't even putting money into a 401(k). Most people aren't saving for tomorrow in the slightest bit. And they are living paycheck to paycheck. I see this in surveys all the time. And I talk to people, our ABC News viewers, all the time who are facing— when that new medical bill comes up, when a new problem in the family comes up that's a financial problem. Those are the things that whether or not the markets sell off tomorrow, you can bet you're going to have those. Every family faces these setbacks financially. And to not put any money aside and to not be prepared in any way is a huge mistake and an unfortunate one that a lot of people are making.
Kim Kiyosaki: So, Rebecca Jarvis, when everybody says “save money”, “you know, put money aside”, why don't people do that? What's happening?
Rebecca Jarvis: Well, I think there's two things. One, there is the argument among many that I just can't put any money aside. I'm going paycheck to paycheck. I got to cover my bills. I got to cover my childcare. I got to make my car payment. I got to make my mortgage payment.
People are overextended. They also are not making it automatic. And that's something I recognize that here at Rich Dad you guys— you sometimes take a counterpoint to this. But in my experience, when you make it automatic, when you put the money automatically into the 401(k) or you take money automatically out of your paycheck, you set it into a savings account so you have the cushion there, that’s what keeps you from thinking “Oh, I’ve got to set the money aside.” Instead, it’s like you don’t have the money in the first place. Think about it as something that you don't get to spend day in and day out and keep those short term. This is what I grew up learning from my mom who's also a financial journalist. You have to think about the long-term goals before you think about the short-term gains that you want in that moment.
Robert Kiyosaki: Well, John MacGregor, you’re the guy that deals with them on the street every single day. That's why you're on this program and, you know, that's good advice. That's like advising me to go on a diet, cut out the chicken wings and beer, but I'm not I'm never going to do it, right, John MacGregor?
John MacGregor: No. I mean that’s what led to great frustration in my own practice doing this for over 20 years. I poured information, graphs, charts, fancy financial plans, and leather-bound books. And as soon as they walked out the door, it was back to status quo on their way to Best Buy to pick up their new 60-inch flat screen on a credit card. The financial community has failed in delivering what the people need in order to make the necessary changes around their financial situation.
Robert Kiyosaki: Okay. So, we’ve all heard this. We all know the standard thing. Set some money aside and save, save, save till it hurts and all that. And of course, everybody knows I don't do any of that stuff. Why save money when the banks are giving me money? That makes more sense to me. But anyway, the point is when Kim Kiyosaki and I were watching the markets go up and down around 2004 when everybody was jumping in to real estate because the real estate was at all-time high, you and I were getting out, right?
Kim Kiyosaki: We were getting out. We saw the writing on the wall when we went into— When people could not even qualify for a 600-dollar a month rent yet they could qualify for a nothing down, 250,000-dollar home, we knew something was wrong. And Rebecca Jarvis, you did something on this in 2005. You saw all this debt that was being given out like candy, right?
Rebecca Jarvis: Yeah. One of the very first stories that I ever pitched— I started my career in finance. I studied economics and constitutional law. And I made a decision to go into finance initially so that I could pay off my student loans before taking a journalism job, which I knew wasn't gonna pay me anything. One of the very early stories that I pitched to Crain's and ultimately wrote for them was this idea that companies were taking on more and more debt because hedge funds wanted to own that debt. There were various investors that wanted to buy it. And as a result, the banks that were helping to underwrite the debt were working with companies and they were making the covenants. Those are the things that a company has to live up to. They were making all of those restrictions lighter and lesser. And in some cases, they were stripping them away altogether so that a company— and we saw this with individuals as well— so that companies could go out, take on debt and not really have to live up to the principles that they once did, making them much riskier debts.
Previously on John's Blog:
The Real Reason You Were Educated to Be Financially Illiterate
Kim Kiyosaki: Which is what happened with the real estate market and all the people—
Rebecca Jarvis: Exactly.
Kim Kiyosaki: …that couldn't qualify for rents.
Robert Kiyosaki: So, John MacGregor, my question is this. You know, if you know it’s coming, if you know this crash is coming, even if they don't listen to you, what could a person do?
John MacGregor: Well, that's a tough question because, I mean, people can be doing things right now and it's not rocket science. The problem is motivating people to do it.
Robert Kiyosaki: Do what? So, that’s the whole thing, John MacGregor. I think one of the worst pieces of advice is invest for the long term especially today with HFT (High Frequency Trading). And as Rebecca Jarvis says, these corporations are floating on debt. They basically have done huge stock buyback programs. It's a balloon in the stock market. Everybody knows it, but nobody says anything about it. Now, to me, as a professional investor, I see this as the biggest opportunity in history. This next crash, if it comes, will be the biggest in world history. And if you're not prepared for it, what are you going to do? And really that's what today's Rich Dad show is about. And once again, our guests are Rebecca Jarvis. She's a chief business economic technology correspondent for ABC News. And then John MacGregor , personal friend for years of my wife, fellow rugby player, CERTIFIED FINANCIAL PLANNER, a frustrated CERTIFIED FINANCIAL PLANNER. And his new book out. And I just wanna know what you tell the poor and middle class because I think they're gonna be toasted.
Kim Kiyosaki: And isn’t the biggest part of a problem that you talk about the poor, middleclass, and the rich, there’s all different mindsets?
How do you get a poor person or a middleclass person to even think this way? I mean what we do is totally opposite of what most people do.
Robert Kiyosaki: So, how many stocks do we own, Kim Kiyosaki?
Kim Kiyosaki: None. Very few.
Robert Kiyosaki: How much debt do we have?
Kim Kiyosaki: We have a lot of debt. We're opposite.
Robert Kiyosaki: Yeah. And how much tax do we pay?
Kim Kiyosaki: Very little to none.
Robert Kiyosaki: And so, that's a whole different mindset, and strategy, and skillset. That's the big difference. And so, when I talked to John MacGregor— John MacGregor and I sit around ‘cause we’re drinking beer, fellow rugby players. And he goes “I don't know. What would you tell those people?” So really, that's the question. That's the same question I'll give to Rebecca Jarvis. Everybody knows they should save for retirement, but most don't. And if there is a crash, rather than seeing it as the greatest opportunity in world history that's gonna wipe ‘em out like a tsunami or else like that guy, Mr. Wonderful, on Shark Tank says, “I’m gonna crush you like the cockroach that you are.” You know? I sit listening to this stuff, but still people don't do anything. So, when we come back, we'll be discussing with Rebecca Jarvis and John MacGregor if there is the biggest crash in world history coming now every 10 years, the last one was 2008, what can you do.
We're talking about are you prepared for the next financial meltdown? You know, is it coming? Who know? I think it is. The difference is I am prepared for it. I'm just not knocking on wood. I'm prepared for it. So, you can listen to The Rich Dad Radio Program any time anywhere on iTunes and Android, and you can listen to our podcast. You can listen to this podcast at richdadradio.com. We archive our programs because repetition is one of the ways people learn. And by listening to this podcast or radio program again, you might pick up a few more details you might have missed. And more importantly, if you have friends, family, and business associates who are knocking on wood rather than doing something, this is the program for them. Our guests today are Rebecca Jarvis (chief business economics and technology correspondent for ABC News) and dear friend John MacGregor (a CERTIFIED FINANCIAL PLANNER). He's the guy that's really on the street dealing with those people. And he’s the author of a new book, which will be released in 2017 called “The Top 10 Reasons the Rich Go Broke: Powerful Stories that Will Transform Your Life Forever: which sounds like the perfect book for this day and age.
Kim Kiyosaki: This is great ‘cause we have two very, very special experts. And as we went into the break, we were talking about these people— People out there know what they can do to better prepare, but they don't do it. Let's start with Rebecca Jarvis. What can they do that's easy that might make a little impact when this thing crashes if it crashes?
Rebecca Jarvis: Well, first of all, I think history is an important— I always look to history for lessons. And one thing that we know from history is that if you sold, if you did have your money, that nest egg in a 401(k) in the great recession and you sold at the height of the great recession, you lost half of those savings. Those who held on had made their money back and then some with 3 years. And no matter where you are in your life, ideally, you've been also setting aside some funds in a place where they're not necessarily in the market because when you put them in the market, they can lose, they can gain, but you've got some money basically under the mattress that you can rely on. And some people will tell you 3 to 6 months. I think you need a year's worth of what you would make in the span of a year so that you have that as your cushion. Now, that said, I realize a lot of people listening are gonna say, “That's impossible. I don't have that money set aside.” The other thing that I personally have always valued in my own life is investing in myself and that means education. And now, there are a number of ways that people can invest in that education and learn a new skillset that will help you in the job force in ways that even 10 years ago we didn't have access to these things. So DuoLingo, Coursera, Khan Academy. These are all apps and websites that you can go to and for free or a very nominal amount of money you can learn a new skillset. For free or a nominal amount of money, you can go on the internet right now and learn to program computers, one of the most in-demand skillsets among the workforce. And I get it. That’s a hard thing to do, but it also is something that if you really do care about this, I would say investing in yourself is one of the very best things and lowest cost things you can do with your time.
Robert Kiyosaki: So, find a new job skill.
Rebecca Jarvis: A new job skill. Something that's in demand right now. We know that retail and a number of other industries right now are suffering and they've been shedding jobs for a long time now. And you've got robotics and automation coming in and taking jobs. There's obviously other issues at play as well. But for those who are staring down that reality, the good news about all of that new technology, which is potentially harmful to your job, is that the technology that's out there can also train you and help you. At no other time in our history has humankind had access to the type of educational materials that exists right now on the Internet, on apps, in the palm of your hand, in your phone.
Robert Kiyosaki: So, John MacGregor , what do you say to people? I mean you deal with them every single day. You actually see their numbers most of the time, don't you?
Robert Kiyosaki: You know, the key here is this, all right? In 2005 when we saw the real estate market climbing and prices kept going out of sight, rather than getting happy, we became afraid. And being afraid, we changed our reaction and got prepared for the crash. So, right now, Kim Kiyosaki and I are not in real estate. We're not buying. We're in a pullback position waiting for the stock market crash. So, we’re cashed up, we're not sticking our neck out right now, and we're very excited about the future. But what do you say to other people who may not have a nest egg or anything? I mean they don't listen to you first of all, but what could you say? What would you say?
John MacGregor: Yeah. Well, first and foremost, I just wanna echo what Rebecca Jarvis said. I couldn't agree more. There are so many opportunities at people's fingertips to essentially put the accelerator pedal on their income ‘cause frankly there's two things that you can do if you really boil it down. Make more money or spend less. What would you rather do? I think we'd all rather—
Kim Kiyosaki: Make more money.
John MacGregor: …make more money. And the thing that I always recommend and I’m not prompted, this is not a commercial, but I always tell people play the Rich Dad cash flow game. That is an excellent way to get started and get your mindset rolling in that direction of making more money and the possibilities of making more money. But the education is absolutely critical. But from a practical standpoint in terms of what I deal with every day, a typical scenario is a client, a couple will come into my office with what I refer to as a junk drawer full of financial statements that they've accumulated over time based on products and services that they purchased over the years that they have no idea what they do, what they're invested in, or how much they cost.
So, the first thing I always recommend is organization. That's almost half the battle because people have no idea what they own. In fact, a recent study came out showing that 40% of couples don't even know what their spouse makes in terms of their income. So, there's a complete lack of awareness out there in terms of their current financial situation.
Robert Kiyosaki: John MacGregor, does it take a lot of time and effort to organize if you're not organized? I mean do you do that for people? I mean that's not profitable for you, is it?
John MacGregor: Oh, no, I absolutely do that because it makes my life a lot easier frankly.
Robert Kiyosaki: Do you charge them for that service of going through that shoebox of—
John MacGregor: No, no, no. And I give them guidance. A lot of it is on them to come back with— And frankly, that’s another problem, is there will be missing statements. And we’ll schedule that follow-up meeting and they’ll never come back with those statements. They forgot or they postponed the meeting or what have you. But that makes my life a lot easier. I help them get financially organized.
Robert Kiyosaki: That’s a lot of work in that case.
John MacGregor: It is a lot of work.
Rebecca Jarvis: Yeah.
John MacGregor: And I have a filing system that I can offer your audience as well that helps guide people into organizing their finances. But once they set that up, it makes it so much easier. It's really effortless going forward. There is a little work upfront, yes.
FREE Resource and Download: The One Page Financial Filing System
Kim Kiyosaki: And don’t you also find— I mean the first step is people don't even wanna talk about their finances. They don't wanna even look at it. They don't wanna open up those bills. It's like you've got to overcome this hurdle that finances is like the devil, their own financial situation.
John MacGregor: Yes.
Robert Kiyosaki: So, Rebecca Jarvis, how do you address people exactly what John MacGregor says? You know, you have to be organized. And Kim Kiyosaki and I being on the other side of the equation, you know, we don't do that. We have full-charge bookkeepers and accountants doing that for us. What does the average guy do?
Kim Kiyosaki: But also, let me just add because we have all that now. The very first thing we did when we had nothing was we hired a bookkeeper—
Robert Kiyosaki: Yeah.
Kim Kiyosaki: …because that bookkeeper held us accountable and made us face those numbers even though we had more going out than what was coming in at that time, but that held us accountable. I mean one thing people can do and they say “well, I can't afford it” and, yeah, you can't afford it, you can figure out how to afford it, but to start where with somebody is, you know, making you look at those numbers I think is crucial.
Rebecca Jarvis: In a similar vein, I’ve done a lot of stories over the years about how to get the best tax return, you know, how to get the biggest amount back on your taxes. And time and time again, it comes back that if you work with a professional accountant, while you’ll pay a lot more upfront, a professional accountant tends to get you the biggest refund on your taxes. So, I think to that same point, having a professional can be very useful. Of course, finding the right professional and somebody who is trustworthy is really key. Back to my original point about technology being useful, there are now a number of apps. Again, free apps. And I don't work for any of these companies or get kickbacks or anything like that. I've just covered them over the years. For example, there's one called ShoeBox. And that helps you store and organize your receipts. Evernote is another one that I personally use. It helps you track a lot of information and it's a way of being able to keep track especially if you're a small business owner of good way to keep track of your expenses and being able to differentiate between what you're spending on your home, in your life versus what you're spending on your business.
Robert Kiyosaki: That’s great advice. And you know, I think that's the best way in my opinion to start to prepare for what's about to come. So, once again, it’s Robert Kiyosaki Kiyosaki, The Rich Dad Radio Show, the good news and bad news about money. We’re talking about are you prepared for the financial apocalypse that's coming. And I'm quite sure it is coming. Let's hope it doesn't. But if it comes, Kim Kiyosaki and I are pretty much excited about it because when the crash comes, that's like Wal-Mart or Whole Foods having a sale and that's when you buy. But unfortunately, stock market went up today and that's when people buy. It doesn't make sense to me, but that's where most people are at.
Kim Kiyosaki: Which is a really good point because where most people are at— And if I can ask Rebecca Jarvis real quick, when I watch the news, they're saying, “Oh, the economy is great. The economy is booming. The stock market’s up. Everybody is happy.” Yet when we look behind the curtain and we see what's really going on, it's a pretty scary scenario financially and economically what's going on in the U.S. Your listeners, are they— have any awareness—
…or your viewers and your listeners on your— Are they optimistic? Are they afraid? Are they worried? What's the feeling?
Rebecca Jarvis: Well, I think it's not a straightforward question to answer.
And I'm not sidestepping it, but I would say that it really breaks down between what people's jobs are. I mean I talk to people who are in industries that basically no longer exist. And even if they do, for example, people who have worked in retail for many years, even if they have their retail job today, they know that job 3-5 years from now is not gonna look the way that it does today. Then you have people who are playing in the technology field where a lot of opportunity is growing and expanding. And they feel much more optimistic. So, you have these different pockets, but I think there is an overall awareness. And I even hear this from seasoned professionals on Wall Street. Everybody is kind of holding their breath and waiting to see what might happen next because valuations have gone so high. The market has climbed so much so quickly. I mean I was just thinking about this this morning. Bear Stearns, you know, that was almost 10 years ago now, was the fall of Bear Stearns and I covered it all throughout the financial crisis. I covered the crisis then and most people at that moment almost 10 years ago now were thinking about the previous financial crisis. And I think that there is this feeling of we've come a very long way in terms of the stock market. Overall, the jobs figures as an average look good, but what's happening below the surface is a concern for a lot of people.
Robert Kiyosaki: Once again, we’re talking to Rebecca Jarvis, chief business economics and technology correspondent for ABC News and host of The Real Biz with Rebecca Jarvis and No Limits with Rebecca Jarvis, and dear friend John MacGregor . He's a CERTIFIED FINANCIAL PLANNER. And John MacGregor has the pleasure of dealing with these people on the frontline every single day and looking at the real deal, what's really going on. I mean you can tell people— like you can tell people to go on a diet, but you know most of them won't, so that's the problem with money. The same thing. The best bit of advice that I agree with is that you've got to have your numbers organized, you know. And Kim Kiyosaki and I do that because we're not good at it. So, we hire a bookkeeper. Well, it costs 8 bucks an hour or something and sure was a lot better than us doing it, but a lot of people are “Well, I can’t afford one.” So, they do nothing. That's the problem. They do nothing. So, step 1: Get organized. Know where your numbers are at. What’s your assets, liabilities, income, and expenses and foreseeable future expenditures? And we come back, then we'll go to how would you prepare for the crash. You see, the crash could be the best thing that ever happened to you if you're prepared.
Kim Kiyosaki: What I see coming up— You know, there's a lot of talk out there about income inequality. And unfortunately, when this crash does happen, the rich are gonna get richer and the poor and the middle class are gonna be struggling and many are gonna be wiped out.
Kim Kiyosaki: And this is the difference because the mindset that we use— Okay. So, Robert Kiyosaki, you talk about we get into a lot of debt. Most people only know that there's bad debt, debt that makes them poor, debt that they have to pay for. I mean the debt we get is good debt that makes us richer, you know.
Robert Kiyosaki: Well, if I could explain something and plug my book again, Why the Rich are Getting Richer, financial IQ in very simple terms is if you had to write a check today, how big a check could you write? In other words, if Kim Kiyosaki and I had a million-dollar problem, could we write a check for it?
Kim Kiyosaki: Yes.
Robert Kiyosaki: Donald Trump can probably write a check for 50 million probably. You know what I mean? That's your financial IQ. As John MacGregor said, the average person in America can't write a check for 400 or 500 dollars. So, they have very low financial IQ. Not that they’re bad people. They just mismanage their money.
Kim Kiyosaki: And a lot of that financial IQ is understanding the vocabulary of money and starting to think differently.
Robert Kiyosaki: Again, thank you for plugging my book because— You know, Kim Kiyosaki hasn’t seen my book, Rebecca Jarvis and John MacGregor, you know, but it's about financial literacy. How do you read a financial statement? The average person can’t read a financial statement.
Kim Kiyosaki: An average person when you say “I don’t pay taxes” goes ballistic. “Oh, he’s evil. Oh, he’s a crook. Oh, he’s a criminal.” But if you look at taxes and you understand them, there's incentives for what we do. We provide housing. We provide oil.
Robert Kiyosaki: But you can't do that as an employee. That’s the problem.
Kim Kiyosaki: Yes. But if you wanna get a different mindset with this coming crash, even just learning the vocabulary of money could make a huge difference.
Robert Kiyosaki: So, John MacGregor, you've known us for a long time now. You know, we're neighbors in Hawaii. You know I use debt and taxes to get richer, so does Donald Trump, right?
John MacGregor: Very effectively. Absolutely.
Robert Kiyosaki: Yeah.
John MacGregor: Quite the opposite—
Robert Kiyosaki: Yeah. It's high financial IQ to take debt to acquire assets. You always take a liability to buy an asset. That takes high financial IQ. And when the crash hit in 2008, I thought I died and went to heaven. You know, John MacGregor knows Ken McElroy. Kim Kiyosaki and I, we just borrowed 3 to 5 million dollars and went after it.
Robert Kiyosaki: And then the next financial IQ is how you not pay taxes. And this is the key, how to use taxes to buy more assets. That's in my upcoming book, Why the Rich are Getting Richer. It's on your bookshelves soon and all that stuff. But that's the difference. Kim Kiyosaki and I have prepared for this for years. So, John MacGregor, what do you say to people? How would an average person prepare if there are—
John MacGregor: Well, first and foremost, I think your book is very timely given what's going on in the economy and there's no better master at the art of debt as you guys and Ken McElroy. Couldn't agree more. There's two types of debt though. The healthy debt that you guys are using and the bad debt that most people are using in their households. And that's what's driving so much anxiety and financial stress in households, which is leading to all kinds of problems. Mental and health problems.
Robert Kiyosaki: Again, John MacGregor is a CERTIFIED FINANCIAL PLANNER. He actually deals with these people face to face. I don't, you know. That's my weakness. So, I don't know what's going on with them. But John MacGregor, when you see somebody with very low financial IQ and that means they can't even write a check for 400 or 500 bucks, what do you say to them about preparing for the future? Punt?
John MacGregor: Well, it's a lot of handholding I will tell you and it starts with some financial education. But also, it starts with awareness, awareness of where they are today versus where they wanna be. A lot of people really haven't taken the time to think about that and they really haven't taken the time to think what’s deeply meaningful to them and attach their financial situation to that. And a lot of times when we go through that exercise, which is frankly what my book is about, is there's an aha moment where people go “oh, my gosh, I had no idea what I was doing, how I was living, where I was spending my time and who with is gonna lead me to Pain Island” as I call it. And I don't mean to pick on the middle or lower class in terms of income. Frankly, I don't think it’s really their fault. I think the education system, criminal as I call it, has done just an incredible disservice to most Americans by completely ignoring financial literacy in the school system.
When you consider 65%— A study I just read found that 65% of Americans age 25 to 65 were financially illiterate. I think it's criminal what we're doing when you consider that money is interwoven in virtually every aspect of our lives, everything. And it's the source of pleasure, but it's also a huge source of pain.
It is completely ignored in our school system and I'll just leave you with this last most classic and most telling example. And this happened the 1980s. A&W released a new burger to rival the McDonald's quarter pounder. It was a third of a pound of beef. So, A&W burger had more meat than the quarter pounder. Taste test showed that people prefer it over the quarter pounder and yet it was cheaper. This great new burger was snubbed by customers. When they determine why, they realize that customers misunderstood fractions. The saw the 4 in the quarter and thought that was bigger than the 3 and the third—
Kim Kiyosaki: Oh, my gosh.
John MacGregor: …and therefore went back to the quarter pounder.
And I just witnessed this myself two months ago at a restaurant. Someone didn't know the difference between a quarter and a third pounder. So, I think that's a very telling example of where people are in terms of their financial literacy. It’s scary.
Robert Kiyosaki: John MacGregor, I hate to tell you. I don't know the difference, but anyway. I like whoppers anyway. So, Rebecca Jarvis, you know, if somebody has— in my vernacular— low financial IQ, it means they have no room. You know, they can’t write a check for 400 or 500 bucks. You know, in my opinion, that’s when you should go talk to Suze Orman because she's your teacher. You know what I mean? If you can’t control your spending, Suze Orman will scold you, which is good.
Rebecca Jarvis: Right. She's a phenomenal teacher and she tells it like it is.
Robert Kiyosaki: Yeah, for poor people.
Rebecca Jarvis: She doesn’t candy coat. She doesn't candy coat reality.
Robert Kiyosaki: I would never do what she does, but some people need to do it. And one more is very, very good. If you're a person who has a lot of, say, consumer debt, bad debt, then Dave Ramsey is your teacher. And so, the Rich Dad philosophy is depending on your position, depending on your financial IQ and your literacy. Choose your teacher wisely. If you can't cut up, you can't stop your spending, Suze Orman, she should go there and give you a scolding. You know, that's necessary. What do you say though Rebecca Jarvis?
Rebecca Jarvis: Absolutely. No, I completely agree. If you are swimming in credit card debt, if you can't make the payments that you need to make in order to survive the very basic ones, then absolutely it's time to cut back. And unfortunately there's no easy solution. It's not like a poof silver bullet it’s gone. And if anybody is swimming in that kind of credit card debt right now, one of the things that I recommend that people do is— And it goes back to this point that John MacGregor made earlier. You need to know what kind of interest rate you're paying on that debt in the first place. Start paying off the highest interest rate debt because that's the stuff that's costing you the very most and eating into your future.
Robert Kiyosaki: Right. So, anyway, the biggest point here Rebecca Jarvis and John MacGregor are saying, you better take stock, find out where you're at, which just means organize your finances and then come up with a plan. I know that's easier said than done, but Kim Kiyosaki and I have been working the same plan now for 30 years.
Kim Kiyosaki: We've been working the same plan. There was a time where we had a lot of bad debt. We had a lot of credit card debt when we were starting out.
Robert Kiyosaki: Yeah. We understand.
Kim Kiyosaki: Actually, I'm just gonna plug a product that we have because it's what we did. It's a formula that we use and it's called How to Get Out of Bad Debt. And it's a formula that Robert Kiyosaki and I used. And all you have to do— All you have to do is you don't have to change your lifestyle. You just have to not put any more money not put any more debt on your credit cards and come up with an extra $100 a month. If you can do that, you can get out of debt.
Robert Kiyosaki: Rebecca Jarvis and John MacGregor , they're both caring people. We’re worried about the future of people here. But you’ve got care about yourself. Take stock on where you are and come up with a plan. So, I wanna thank both Rebecca Jarvis and John MacGregor . Thanks for being great human beings, and caring, and doing your best to talk to people.
Kim Kiyosaki: And doing your best to educate people and to wake them up. Thank you.
Robert Kiyosaki: Because the love of money is not the root of evil. It’s the ignorance of money that is. So, Rebecca Jarvis, thank you very much.
Kim Kiyosaki: Thank you, Rebecca Jarvis. Thank you John
Robert Kiyosaki: John MacGregor, thank you very much.
Kim Kiyosaki: Thank you, John MacGregor.
John MacGregor: Thank you so much. Always a pleasure.