Things I Learned from Playing the Cashflow Game

Few days ago, my officemates and I played the famous Cashflow game from Robert Kiyosaki - author of the book Rich Dad, Poor Dad. It was my first time to see the board, the rats and cheese and the other components of the game.

Kiyosaki said that the game is the reflection of who you are. It reflects your attitude towards money and towards the opportunities that come your way.

Life they say is a series of opportunities - big and small. Sometimes when the opportunity is small we tend to let it pass. But when the opportunity is big we are afraid to grab it, most of the time we move away from it.

I was a sectary in the game earning a meager salary of 880usd and who has a total savings of 710usd. In short I started with 1590usd. This amount is small compared to my co-players who are earning more than a thousand each and who has a lot of savings.

After the game I ended up with 23,570usd. Far better than the performance of the doctor who has a few thousand dollars and the truck driver who has a few hundred and a mountain of debt.

How did I do that? Having little amount of money and presented by a good opportunity, I sold a good property for 500usd. I also acquired some mutual funds that I bought low and sold high. The real treasure I got was when I had an opportunity to buy a great property and sold it for a few thousand. I already accumulated money from trading but is not yet enough for the downpayment of the property. So I loaned 3000 from the bank that i added up on my 2000. I paid the 5000usd downpayment and had a total mortgage of 35000usd. My mortgage payment ammounted to 300usd which was below my monthly income (880). As a secretary I had very little monthly expense so i was able to accumulate more money eventhough my salary was way below the other players. Then suddenly someone wanted to buy my property for a stagering 60000usd. And after the deductions I was 17500usd richer.

After the alloted time, I was still inside the rat race. But knowing that i perform better than the other players gave me some conclusions.

1. It's not the amount of money that comes in but the amount of money that stays and is used for investments.

2. The profession does not equate to wealth.

3. The person tends to ignore the opportunities if he doesn't know anything about it.

4. Too much debt can drown you (alive).

5. Lessen thenliabilities. Pay debts as early as possible.

6. Know what is an asset and a liability.

7. Grab opportunities as long as you are comfortable in it.

8. Know thy opportunities. Invest in education not in doodads.

9. Increase sources of passive income.

10. Know the difference of good debt vs bad debt.

2012 Goals

I think we all knew about resolutions because we all formulate our resolutions every year. I ditch the idea of resolutions and replaced it with goals since I want to focus on achieving things and not just improving myself in some aspects of my life.

I want to share to you my goals and i hope this will inspire you to make your list also.

1. Open a dollar account. [Not feasible since dollar is declining]

2. Learn how to drive smoothly.

3. Get a passport.

4. Get a dental check up every 6 months.

5. Picnic date with Paul

6. Get a body scrub. (in a spa)

7. Ride a horse.

8. Buy paul a gift.

9. Travel to three (3) places.

10. Run a half marathon.

11. Publish 100 blogs

12. Update my wardrobe.

13. Donate blood.

14. Spend one Saturday in the office.

15. Sell my blackberry.

16. Surf in La Union/Baler.

17. Read a book every month.

18. Get a facial regularly.

19. Weigh 114lbs by December 2012. [Ha ha ha!]

20. Get a student license in April.

What to do with finances this year?

I've not been writing lately because I want to reflect more on what I should do this year with my finances. It's not that I have a lot of it but I want to make sure that my finances are in tact and are geared towards the goals I have set few years back.

What struck me was the realization that basics are still the best guides in handling everything especially money matters. They have not failed me yet.

Here's what im going to do this year in order to achieve my financial goal this year.

1. Save first before spending.

2. Increase tithes.

3. Invest more money.

4. Lessen expenses.

5. Prepare for emergency.

6. Give away what i find unnecessary to me.

7. Live a simple life.

These seven simple things never failed me yet. I hope readers can also find their seven simple steps this year.

Till then.

Lessons of Debt

It is a very common practice for Filipinos to loan money to buy things especially big purchases like a house and lot or a car maybe.

As for incurring debt, three lesons have been shared.

1. It always depends on the purpose. If the purpose is wrong, debt is bad.

I remember a qoute told by David Ramsey thatngoes this way, "We buy things that we don't need with money we don't have to impress people we don't like." If you think you fit this qoute then i think you have a problem.

It is not bad to be ahead of everyone. It is not bad to have things. But if you accumulate things the wrong way, i am 100 percent sure that you are going to dig yourself deeper and deeper until there is no more space for younto breath.

Lesson: "Do not keep up with the Joneses. Who are they anyway?"

2. Size of debt versus income matters.

Think of it this way. You are applying for a loan and your records show that you are paying your bills on time with instances of paying more what is required in your credit card. What is the probability that the bank will lend you money? Actually it is high.

On the other hand, if you are so indebted and your debt is close to your monthly salary then the probability is very small. The bank analyzes cashflow. The mere fact that your debt to income ratio is closer to 1 signals a red light.

3. Debt Management Approach

Paying debt requires financial management. It requires discipline. You cannot depend on other people. It is you who is responsible. Start managing your debt or your debt will begin to manage you. The smaller your debt the more cash will be put to your bucket and the faster younwill achieve financial independence.

Dream On

When I started attending a series of financial literacy seminars first thing that struck me was their tagline, "Financial independence is not a dream, it's a reality!"

All my life, no one told to me about financial independence and its importance to my life. So naturally I was taken aback when I first heard it.

First let us define financial independence. According to wikipedia, it is the state of having sufficient personal wealth to live independentlynwithout having to work activelyfor basic necessities. His only means that the tag line suggests that a person can accumulate wealth to sustain his needs. Only if he makes it a priority.

From that day on, I committed on making my dream a reality. The journey is not a joyride. Actually it is difficult. I have to learn how to restrain myself from buying and accumulating things. I have to immerse myself with books on personal finance. I have to take advices from different people, media, internet and bloggers. I need a total overhaul.

To this day i continue the discipline in handling my finances. I am more confident to talk about money now. I am more informed than before. I am able to foresee my future and can lay down financial plans easily. The seminars and the discipline are now bearing fruits. Everything is part of my system now.

I am confident that I can reach my target this year. And I am confident that I can exceed what is expected. Thanks to the community, now i can start "Dreaming on!"