The other day I wrote a not-very-favorable review of the Rich Dad's Education Stock Success Course. I stand by what I said, and I'm still not going to pay for the advanced courses, but I thought I would report on the results I've obtained with what Amy and I learned in the three day course. Per the instruction we received, we're "paper trading" for the first two weeks, which is too bad, because I would love to have actually made these returns.
While I was searching for a stock to "invest" in, my daughter Mara asked me what I was doing, so I started to explain the candlestick chart, the Stochastic chart and the MACD chart to her. We looked through several of the stocks listed on the top and bottom 100 fundamentals in the "Edutrader" software. Nvidia corporation, a manufacturer of video hardware for computers and video games was listed on the top 100 with a fairly strong score, but when we looked at the technical analysis charts, the Stochastic was sending a clear sell signal, and the MACD was sending a soft sell signal. The candlestick indicated that the stock was near resistance levels and likely to fall. So Mara and I decided to "short" sell it.
Our strategy was to sell 1000 shares at $8.50/share. The stock was trading about 8.70 at the time and we thought this would give us a market confirmation that the stock was going down. We set our stop-limit originally at $9.50/share. This limited our losses to $1/share or a maximum of $1000. We later narrowed this to $9/share. We forecast that the stock could go as low as $5.50 per share, which is the prior support level. If it goes that low, our investment will return $3,000. With the narrower stop, this is a risk return ratio of 1:6.
We enetered the position last Thursday. Today NVDA closed at $7.51, or $0.99/share down from where we entered. If we were to buy the stock today, we'd have a $990 profit, but the signals don't indicate that the trend will change any time soon, so we're hanging out in this position for a while longer. If we'd put actual money into this trade, we'd have paid for the three day stock course almost twice over with these returns. So, the three day course was worth the $499 we paid for it.
Friday, December 26, 2008
Good Grades not predictor of Economic Success
This week I'm reading The Millionaire Mind by Dr. Thomas Stanley, Ph.D. Stanley surveyed 733 "millionaires" (what he calls "Balance Sheet Affluent" or people with a net worth of > $1,000,000). I'm only a couple of chapters in so far, but a lot of what he reports was rather eye-opening. One of his key findings is that most millionaires, other than those that made their money as attorneys or physicians, weren't particularly stellar in school (either college or in high school.) According to Stanley, most millionaire don't attribute their success to having high IQ, being near the top of their classes, or to having attended a prestigous university. Although some of the linkages seem somewhat anecdotal, Stanley seems to be saying that academic success, as measured by grades and achievement tests is not a significant predictor of economic success.
Instead, the attribute their success to: choosing the right vocation or niche, integrity (hmmm), tenacity and leadership ability.
As I've read through this material, I've pondered some of the things I've read in Kiyosaki's books, especially Rich Kid, Smart Kid, as well as Oliver van de Mille's A Thomas Jefferson Education and Gatto's Dumbing us Down. All four of these authors reach the conclusion that our public and post-secondary education system is geared to produce factory workers or self-employed specialists, but that the system does not produce leaders or provide a solid education in financial literacy.
As an education reform activist, I'm beginning to wonder if the attempts to reform the system are falling victim to the same myths that brought the system to its current pass. It appears that analytical intelligence just isn't what its cracked up to be.
Kinda makes me feel like I got cheated...
Instead, the attribute their success to: choosing the right vocation or niche, integrity (hmmm), tenacity and leadership ability.
As I've read through this material, I've pondered some of the things I've read in Kiyosaki's books, especially Rich Kid, Smart Kid, as well as Oliver van de Mille's A Thomas Jefferson Education and Gatto's Dumbing us Down. All four of these authors reach the conclusion that our public and post-secondary education system is geared to produce factory workers or self-employed specialists, but that the system does not produce leaders or provide a solid education in financial literacy.
As an education reform activist, I'm beginning to wonder if the attempts to reform the system are falling victim to the same myths that brought the system to its current pass. It appears that analytical intelligence just isn't what its cracked up to be.
Kinda makes me feel like I got cheated...
Monday, December 22, 2008
Stock Success Course
Monday, Tuesday and Wednesday of this last week, Amy and I attended a three day "Stock Success System" training seminar put on by Rich Dad Education. The seminar cost us about $500, and came with "Edutrader" software. On a scale of one to ten, I'd give this course about a 4.
Here's the run down on the course: First we received an invitation to attend a "free" one evening seminar at the South Town Expo Center. Included as a promotional give away was a flash drive with valuable information already installed. The valuable information was a video presentation by Robert Kiyosaki. In the one evening free course, we were introduced to the concept of the MACD chart and shown how an astute trader could have made about 15% over the course of a year trading a fairly stable stock. We were also shown one options trading strategy called a "covered call" that promised great results without much risk.
But of course, we were not given enough information to actually go out and make any of the trades they showed us that night, because that was the bait to get us to sign up for the three day course and pay our $500. Amy and I both felt that the three day course would be a great educational investment and signed up. We were given this really nice yellow bag with the Rich Dad's Education logo screened onto the side, with the software and a very thin booklet inside, as well as the contract and other paperwork.
The first sign of trouble came when I installed the software. We had signed up for the course in my name; my name was on the "buyer" line of the contract, and my signature was on the bottom. My name was encoded into the user name for the software. And so on. But we used Amy's credit card to pay for the software. When I logged on to the website to takecare of license agreements, and so forth, there were four different sets of agreements I was supposed to read and agree to. Since this involved significant financial transactions, I read through all of them. One of the agreements required me to certify that I was a non-professional and that I would use the software for my personal investing and not to advise others. Not a problem for me, so I checked the non-professional status boxes and continued through the agreements.
When I got all the way to the bottom and the digital signature, it was Amy's name instead of mine. But Amy is a registered Securities Representative with a Series 7 and Series 66 licensure with FINRA. She could not accept the license agreement as a non-professional. When I called support, they told me I'd have to have Amy execute a "transfer of ownership" to move the software into my name. They'd email the form right over. Well, the form they emailed required both Amy and I to sign before a notary, have the document notarized and then send it back. (It was also partially greeked in transit when they tried to convert a RTF document to HTML in email, but that was only a minor annoyance.) Over the run up to the beginning of the course, I talked with two people in support one supervisor, and emailed another. By the time the course started, we still didn't have the software installed and operational. Major loss of Customer Service points on this.
The "success coaches" that were staffing the three day course took immediate care of the problem and had everything fixed by lunch on the first day (except it still came up with Amy's name that night when we finally installed the software...) The course got off to a great start. The instructor, Scott Stewart, did an excellent job of showing us how to examine the fundamentals of a stock and to predict a stock's movement using the MACD-Histogram, the Stochastic plot, and a Candlestick chart. He also showed us how to indentify trending by using the 15, 50 and 200 day moving averages for the stock, went into a great deal of detail on how to identify support and resisitance for a given stock. He also covered short selling, Stop-Loss orders, and margin accounts I felt very comfortable trading stocks. Then he introduced us to options. he showed us a few simple strategies, and demonstrated how they could make money. Since I expected more detail in the remaining two days of the course, I again felt comfortable.
I didn't have any problem with him mentioning the advanced courses offered by Rich Dad Education, and in fact, Amy and I were planning to take the first course by the time the day was over. All in all, Day 1 was a good presentation and very informative.
Day 2 started out strong, with demonstrations of more options strategies, and how to determine win/loss ratios and Risk/Reward percentages in straight trades and option trades.
The first red flag went up during a break. I asked Scott what the win/loss percentage was on a particular strategy, and his answer was, "It depends on what standard deviation you use." That answer didn't make any sense mathematically, since the standard deviation would describe how closely results would cluster around the mean, but would not describe the mean, which would have been the answer to my question. I let that slide by... He's an options trader, not a mathematician.
The second, and most damaging red flag went up right after lunch when the entire class was playing Cash Flow 101. I will detail this board game in more detail in a later post, but it is an investing game designed teach investing and financial intelligence. One of the players at our table drew a card that allowed him to get into an investment that was beyond his means that provided negative cash flow, but promised high returns on equity. One of the "Success Coaches" coached him to use leverage to get into the investment. The leverage he needed was enough to bankrupt him if he couldn't get back out quickly. At first I thought the coach was using this as an object lesson in proper use of leverage, and was left scratching my head when he allowed, even encouraged the player to make this risky move. Kiyosaki would have characterized the "investment" and purchasing a liability and thinking it was an asset.
A few minutes later, this same coach convinced another player at our table to "over borrow" to purchase a stock that would put him at a negative overall cash flow (it would have taken all of his other cash flow and then some to make the loan payments on the position he took). The "strategy" was to make the loan payments from the extra cash borrowed in the transaction (a loan at 10% interest). In order for him to get out of the position, it would have been necessary for his stock to triple in value within five payment cycles. If he had to make a sixth loan payment, he would be bankrupt and out of the game. Although it wasn't impossible for him to survive, it was highly improbable. When the player did, in fact, run out of cash, the coach told him to borrow still more money to stay in the game.
Needless to say, I started asking myself if I really wanted to have these folks as investment advisors.
As the rest of Day 2 wore on, I began to notice that we were being shown a lot of strategies, with promises of high returns, but we weren't being given enough information to actually make the trades. Instead we were being subjected to a lot of "encouragement" to take the advanced courses (six of them at $5,000 a pop). We were also not being shown the Win/Loss percentages on these trades. (Say that a trade is capable of making a 20% return in one months, but only one out of 4 trades is successful. My actual rate of return on all of my capital is only 5%/month. Not shabby, but not the kinds of numbers Scott was showing us.) By the end of Day 2, I felt like I was in a very long infomercial that I'd paid $500 to watch.
Amy and I did some talking and figuring on the way home that night and decided not to take the advanced courses right away, and we were wondering if perhaps it would be better to get our financial education from another source. Especially since they were suggesting that we finance the courses/packages. (Leveraging an investment in our education, encouraged by the same folks I'd just seen coach two Cash Flow 101 players in to bankruptcy.... hmmm)
Amy stayed home from Day 3, but I wanted to get more information on picking a brokerage. I was a little disappointed there, but still got some good information. During Day 3, they introduced the package deal for the advanced courses, and offered a discount to anyone signing up that day.
Artificial urgency! Anytime someone tries to sell me a large ticket item using this tactic, my first question is why? If this is such a great deal, why can't I sleep on it for a couple of days? Or are you afraid that if you let me think it over and run the numbers, I'll realize that it isn't a good deal after all. Since Amy and I had already made our decision, I took advantage of the time to run some income statement comparisons.
Amy and I have about $8,000 we can invest, with another $5-6,000 coming about February. My earlier projections indicated that we could expect to make about 35%/year swing trading. Scott's presentation said we should be able to make about 5%/month, or about 60%/year (yes, I know that it works out to 79%, but Scott just multiplied, so I'll do the same).
Not taking the course:
Invest $8,000 with a 35% annual return, returns $2,800, for a total capital at the end of the year of $10,800.
Taking one advanced course and paying cash for it:
Pay $5,000 for course, leaves $3,000 to invest
Invest $3,000 with a potential of 60%, returns $1,800 for a total capital at end of year of $4,800.
Obviously compounding the 60% return over a longer period would eventually overtake the 35%, but the real question is whether or not I can acquire the financial education necessary to obtain the 60% results for a smaller investment than the $5,000 within the space of one year. I think I can. And the 60% result is actually based on taking 10 courses, not just one. Financing the courses makes about as much sense as the advice the coach gave to "over borrow" in the cash flow game.
(For anyone interested, for any initial capital greater than $32,000, then the education investment makes sense if the objective is to recover the original investment capital within one year. To calculate the amount of initial capital necessary to make the deal work for other "tuition" amounts, multiple the higher rate of return -- in this case 1.60 -- by the tuition cost -- $5,000 in this case -- and divide by the difference between the rates of return -- 1.60 - 1.35. So, using the package deals they offered at the seminar, the discounted price for all of the advanced classes was $41,485. This would be a good deal for someone looking to invest $265,504 and recover initial capital within one year.)
This three day course was not consistent with the philosophy Robert Kiyosaki develops in his books. I hope that the books represent the real attitude he has toward financial education, and that this experience was merely a fluke.
Here's the run down on the course: First we received an invitation to attend a "free" one evening seminar at the South Town Expo Center. Included as a promotional give away was a flash drive with valuable information already installed. The valuable information was a video presentation by Robert Kiyosaki. In the one evening free course, we were introduced to the concept of the MACD chart and shown how an astute trader could have made about 15% over the course of a year trading a fairly stable stock. We were also shown one options trading strategy called a "covered call" that promised great results without much risk.
But of course, we were not given enough information to actually go out and make any of the trades they showed us that night, because that was the bait to get us to sign up for the three day course and pay our $500. Amy and I both felt that the three day course would be a great educational investment and signed up. We were given this really nice yellow bag with the Rich Dad's Education logo screened onto the side, with the software and a very thin booklet inside, as well as the contract and other paperwork.
The first sign of trouble came when I installed the software. We had signed up for the course in my name; my name was on the "buyer" line of the contract, and my signature was on the bottom. My name was encoded into the user name for the software. And so on. But we used Amy's credit card to pay for the software. When I logged on to the website to takecare of license agreements, and so forth, there were four different sets of agreements I was supposed to read and agree to. Since this involved significant financial transactions, I read through all of them. One of the agreements required me to certify that I was a non-professional and that I would use the software for my personal investing and not to advise others. Not a problem for me, so I checked the non-professional status boxes and continued through the agreements.
When I got all the way to the bottom and the digital signature, it was Amy's name instead of mine. But Amy is a registered Securities Representative with a Series 7 and Series 66 licensure with FINRA. She could not accept the license agreement as a non-professional. When I called support, they told me I'd have to have Amy execute a "transfer of ownership" to move the software into my name. They'd email the form right over. Well, the form they emailed required both Amy and I to sign before a notary, have the document notarized and then send it back. (It was also partially greeked in transit when they tried to convert a RTF document to HTML in email, but that was only a minor annoyance.) Over the run up to the beginning of the course, I talked with two people in support one supervisor, and emailed another. By the time the course started, we still didn't have the software installed and operational. Major loss of Customer Service points on this.
The "success coaches" that were staffing the three day course took immediate care of the problem and had everything fixed by lunch on the first day (except it still came up with Amy's name that night when we finally installed the software...) The course got off to a great start. The instructor, Scott Stewart, did an excellent job of showing us how to examine the fundamentals of a stock and to predict a stock's movement using the MACD-Histogram, the Stochastic plot, and a Candlestick chart. He also showed us how to indentify trending by using the 15, 50 and 200 day moving averages for the stock, went into a great deal of detail on how to identify support and resisitance for a given stock. He also covered short selling, Stop-Loss orders, and margin accounts I felt very comfortable trading stocks. Then he introduced us to options. he showed us a few simple strategies, and demonstrated how they could make money. Since I expected more detail in the remaining two days of the course, I again felt comfortable.
I didn't have any problem with him mentioning the advanced courses offered by Rich Dad Education, and in fact, Amy and I were planning to take the first course by the time the day was over. All in all, Day 1 was a good presentation and very informative.
Day 2 started out strong, with demonstrations of more options strategies, and how to determine win/loss ratios and Risk/Reward percentages in straight trades and option trades.
The first red flag went up during a break. I asked Scott what the win/loss percentage was on a particular strategy, and his answer was, "It depends on what standard deviation you use." That answer didn't make any sense mathematically, since the standard deviation would describe how closely results would cluster around the mean, but would not describe the mean, which would have been the answer to my question. I let that slide by... He's an options trader, not a mathematician.
The second, and most damaging red flag went up right after lunch when the entire class was playing Cash Flow 101. I will detail this board game in more detail in a later post, but it is an investing game designed teach investing and financial intelligence. One of the players at our table drew a card that allowed him to get into an investment that was beyond his means that provided negative cash flow, but promised high returns on equity. One of the "Success Coaches" coached him to use leverage to get into the investment. The leverage he needed was enough to bankrupt him if he couldn't get back out quickly. At first I thought the coach was using this as an object lesson in proper use of leverage, and was left scratching my head when he allowed, even encouraged the player to make this risky move. Kiyosaki would have characterized the "investment" and purchasing a liability and thinking it was an asset.
A few minutes later, this same coach convinced another player at our table to "over borrow" to purchase a stock that would put him at a negative overall cash flow (it would have taken all of his other cash flow and then some to make the loan payments on the position he took). The "strategy" was to make the loan payments from the extra cash borrowed in the transaction (a loan at 10% interest). In order for him to get out of the position, it would have been necessary for his stock to triple in value within five payment cycles. If he had to make a sixth loan payment, he would be bankrupt and out of the game. Although it wasn't impossible for him to survive, it was highly improbable. When the player did, in fact, run out of cash, the coach told him to borrow still more money to stay in the game.
Needless to say, I started asking myself if I really wanted to have these folks as investment advisors.
As the rest of Day 2 wore on, I began to notice that we were being shown a lot of strategies, with promises of high returns, but we weren't being given enough information to actually make the trades. Instead we were being subjected to a lot of "encouragement" to take the advanced courses (six of them at $5,000 a pop). We were also not being shown the Win/Loss percentages on these trades. (Say that a trade is capable of making a 20% return in one months, but only one out of 4 trades is successful. My actual rate of return on all of my capital is only 5%/month. Not shabby, but not the kinds of numbers Scott was showing us.) By the end of Day 2, I felt like I was in a very long infomercial that I'd paid $500 to watch.
Amy and I did some talking and figuring on the way home that night and decided not to take the advanced courses right away, and we were wondering if perhaps it would be better to get our financial education from another source. Especially since they were suggesting that we finance the courses/packages. (Leveraging an investment in our education, encouraged by the same folks I'd just seen coach two Cash Flow 101 players in to bankruptcy.... hmmm)
Amy stayed home from Day 3, but I wanted to get more information on picking a brokerage. I was a little disappointed there, but still got some good information. During Day 3, they introduced the package deal for the advanced courses, and offered a discount to anyone signing up that day.
Artificial urgency! Anytime someone tries to sell me a large ticket item using this tactic, my first question is why? If this is such a great deal, why can't I sleep on it for a couple of days? Or are you afraid that if you let me think it over and run the numbers, I'll realize that it isn't a good deal after all. Since Amy and I had already made our decision, I took advantage of the time to run some income statement comparisons.
Amy and I have about $8,000 we can invest, with another $5-6,000 coming about February. My earlier projections indicated that we could expect to make about 35%/year swing trading. Scott's presentation said we should be able to make about 5%/month, or about 60%/year (yes, I know that it works out to 79%, but Scott just multiplied, so I'll do the same).
Not taking the course:
Invest $8,000 with a 35% annual return, returns $2,800, for a total capital at the end of the year of $10,800.
Taking one advanced course and paying cash for it:
Pay $5,000 for course, leaves $3,000 to invest
Invest $3,000 with a potential of 60%, returns $1,800 for a total capital at end of year of $4,800.
Obviously compounding the 60% return over a longer period would eventually overtake the 35%, but the real question is whether or not I can acquire the financial education necessary to obtain the 60% results for a smaller investment than the $5,000 within the space of one year. I think I can. And the 60% result is actually based on taking 10 courses, not just one. Financing the courses makes about as much sense as the advice the coach gave to "over borrow" in the cash flow game.
(For anyone interested, for any initial capital greater than $32,000, then the education investment makes sense if the objective is to recover the original investment capital within one year. To calculate the amount of initial capital necessary to make the deal work for other "tuition" amounts, multiple the higher rate of return -- in this case 1.60 -- by the tuition cost -- $5,000 in this case -- and divide by the difference between the rates of return -- 1.60 - 1.35. So, using the package deals they offered at the seminar, the discounted price for all of the advanced classes was $41,485. This would be a good deal for someone looking to invest $265,504 and recover initial capital within one year.)
This three day course was not consistent with the philosophy Robert Kiyosaki develops in his books. I hope that the books represent the real attitude he has toward financial education, and that this experience was merely a fluke.
Sunday, December 14, 2008
Industrial Age Education in the Information Age
Kiyosaki's Cash Flow Quadrant concludes with "Seven Steps to Finding Your Financial Fast Track." The first step he recommends is to "mind your own business." Kiyosaki's point is that most of us are minding everyone's business but our own. He points out that the typical "Employee" or "Self Employed" (Kiyosaki's "E" and "S" quadrants) who follows the conventional wisdowm of, "Go to school and get good grades, so you can find a safe, secure job with good pay and excellent benefits," ends up becoming:
- Employees, making their bosses and owners rich.
- Debtors, making the banks and money lenders rich.
- Taxpayers, making the government rich.
- Consumers, making other businesses rich.
This is actually very consistent with writings by John Taylor Gatto (Dumbing Us Down, The Undergorund History of American Education), who traces the rise of socialized education to the beginning of the Industrial Age, and the need to create a cadre of docile workers educated sufficiently to work in the factories, but not sufficently well educated to move beyond.
Kiyosaki is quick to point out that the models of the Industrial Age are not appropriate to the "Information Age." Those of us that continue to follow the advice and patterns of the Industrial Age will be left behind; those of us that are able to educate ourselves will prosper.
Kiyosaki recommends several action items to complete the first step of "minding your own business" The first is to complete a set of personal financial statements. I won't publish Amy's and mine here, but I will say they aren't pretty.
The second action item is to set financial goals for 5 years out, with milestones at twelve months.
Our twelve month goals:
- To eliminate half of consumer debt, excluding our mortgage (liabilities) from our financial statement.
- To generate $2,000 per month in passive income from our assets.
Our five year goals:
- Generate $5,000/ month positive cash flow from assets (passive income)
- To have online/brick-and-mortar businesses generating income from affilliate marketing and passive sales, 5 - 7 rental properties either occupied as rentals of under lease-option.
Stay tuned and see how it comes out.
Saturday, December 13, 2008
Changes in Throught Processes
The first time I heard a radio commercial for John Cumuta's "Transforming Debt into Wealth" ( TDIW) system, I was a bit skeptical. Especially when I heard the customer testimonial claiming to have completely paid off an enormous amount of consumer debt and a mortgage in something like 5 years. But when Amy called, the company was willing to give us trial of the system, and even included the additional materials for "Wealth Masters" and "Seven Steps to a 720 Credit Score," so we said, "What the heck, lets try it."
Cumuta's "system" is really rather simple, and yes folks, it can work. The math is rather straight forward, and the sytem comes complete with computer software that you enter your debt information into and, yes indeed, it will tell you the exact day your bills should be paid off.
"But what," I asked, "is the purpose of all of these audio CD's?"
Last night as I was doing my evening reading (in Kiyosaki's Cash Flow Quadrant) it occured to me why John Cumuta's "Transforming Debt into Wealth" series came with a total of six CD's rather than just providing a roadmap to focused debt reduction. And it is a key piece of the puzzle that explains why the rich get richer and the poor get poorer. The audio CD's are more important than the software or even the debt elimination system itself.
The key to Cumuta's "system" (and in fact, the key to becoming wealthy) is not in the "doing" but rather in the "thinking" or "being." Unless we changes our thinking about debt and about money, we will still be susceptible to the advertising and mythology about money that got us into debt in the first place.
The TDIW system is designed for people in the middle class that have acquired large loads of "consumer" debt. Consumer debt is debt that you acquire without acquiring assets that generate cash flow to make the payments with. As such, Cumuta's program is designed to help folks who are employees of someone else's company or that are "self employed." It first aims to eliminate all debt, then it trains the listener in some basic strategies for increasing income. Our half.com store and the affliliate marketing we do on this blog were ideas that started from Cumuta's program.
Consumer debpt is significantly different from "leverage" or debt incurred to acquire assets that will increase your wealth and that have a positive cash flow. There are differences of opinion between the different authors and experts I will be discussing on how and when to use leverage, and I'll cover those subjects in more detail in future posts.
For now, if you are swimming in consumer debt and can't find a way out, then I highly recommend John Cumuta's Transforming Debt into Wealth system. Get it, listen to a CD every night, and follow the plan!
Cumuta's "system" is really rather simple, and yes folks, it can work. The math is rather straight forward, and the sytem comes complete with computer software that you enter your debt information into and, yes indeed, it will tell you the exact day your bills should be paid off.
"But what," I asked, "is the purpose of all of these audio CD's?"
Last night as I was doing my evening reading (in Kiyosaki's Cash Flow Quadrant) it occured to me why John Cumuta's "Transforming Debt into Wealth" series came with a total of six CD's rather than just providing a roadmap to focused debt reduction. And it is a key piece of the puzzle that explains why the rich get richer and the poor get poorer. The audio CD's are more important than the software or even the debt elimination system itself.
The key to Cumuta's "system" (and in fact, the key to becoming wealthy) is not in the "doing" but rather in the "thinking" or "being." Unless we changes our thinking about debt and about money, we will still be susceptible to the advertising and mythology about money that got us into debt in the first place.
The TDIW system is designed for people in the middle class that have acquired large loads of "consumer" debt. Consumer debt is debt that you acquire without acquiring assets that generate cash flow to make the payments with. As such, Cumuta's program is designed to help folks who are employees of someone else's company or that are "self employed." It first aims to eliminate all debt, then it trains the listener in some basic strategies for increasing income. Our half.com store and the affliliate marketing we do on this blog were ideas that started from Cumuta's program.
Consumer debpt is significantly different from "leverage" or debt incurred to acquire assets that will increase your wealth and that have a positive cash flow. There are differences of opinion between the different authors and experts I will be discussing on how and when to use leverage, and I'll cover those subjects in more detail in future posts.
For now, if you are swimming in consumer debt and can't find a way out, then I highly recommend John Cumuta's Transforming Debt into Wealth system. Get it, listen to a CD every night, and follow the plan!
Monday, December 8, 2008
First Sale
Building on the information we've learned from Kiyosaki, Cumuta and Gunderson, Amy and I have opened an online book store through half.com. We're also working on building a product line for another online store and building an affiliate marketing network.
We made our first sale today, at a rather handsome profit. Now all we need to do is make about 1,000 or so more just like it and we'll have plenty of income to work with.
We made our first sale today, at a rather handsome profit. Now all we need to do is make about 1,000 or so more just like it and we'll have plenty of income to work with.
Sunday, December 7, 2008
Bringing the story up to date & setting the stage
Amy and I don't remember what the conversation was about. She was reading a book, I think it was Napoleon Hill's Success Through a Positive Mental Attitude, but neither of us is certain. In any event, we began discussing the house we live in.
We are in a very unusual situation. We rent the home we live in with an option to purchase it. At the same time, we own a house about 7 miles away that we have lease optioned to the same folks we're leasing from. They've invested between $10-15,000 in fixing it up and they are trying to find a lease-option tennant to buy it. Some time in the future I will go into more detail on this arrangement, but you need to understand that we were talking about whether or not we should exercize our option to purchase the house we live in.
Somehow the discussion came around to the book Rich Dad, Poor Dad, by Robert Kiyosaki. I had started reading a borrowed copy of the book several years earlier, but hadn't finished it. One of the things I remembered about it was Kiyosaki's assertion that a person's residence wasn't an assett, but was a liability. I couldn't remember the details of his argument, so we decided to get a copy of the book. If there is a turning point that marks the beginning of our story, it will undoubtedly prove to be the purchase of this book.
Beyond purchasing Rich Dad, Poor Dad, Amy and I have purchased "Cashflow 101," a board game designed to teach financial literacy, and we've enrolled in a course on stock market investing offered by Rich Dad Education. We've also ordered other books, Cashflow Quadrant and Rich Kid, Smart Kid from the Rich Dad series.
Amy and I are avid theater geeks. When we're not working on a show for our favorite community theatre (The Empress Theatre in Magna, Utah) on a Saturday night, you'll find us listening to Laura Bedore's "Showtunes Saturday Night" on a local radio station. One of Laura's sponsors is John Cumuta's "Turning Debt into Wealth" program. One evening around the same time we started reading Rich Dad, Poor Dad, Amy felt inspired to call the toll free number and find out what the program is all about. That call hooked us up with a 30 day trial of the "Turning Debt into Wealth" program, and other programs offered by Nightingale-Conant, including Cumuta's "Wealth Masters" series, and Phillip X. Tirone's "Seven steps to a 720 Credit Score." Through these programs we've also been introduced to several personal coaching programs, and a company called "Prosper Learning," which is located right here in Utah. (Their Orem, Utah office aparently does coaching for Kiyosaki's Real Estate Investing programs, and their Draper, Utah office works with Cumuta's programs.)
Finally, I am the secretary for the Oquirrh Hills Performing Arts Alliance Board of Trustees. Our chairman, Rodney Walgamott, is a real estate agent and investor, and through him we've been introduced to Kris Krohn, a multi-millionaire real estate investor and the founder of "The Real Estate Investment Club. (REIC)" We will be joining REIC and participating in REIC's real estate investment training. In an interesting twist of irony, it turns out the Kris Krohn worked at Prosper Learning while he was in college. (A fact we learned about when Amy interviewed for a job at the company...She didn't get it.)
Through REIC and a bit of serendipity, Amy and I met Greg Blackbourns, the CEO of "The Accredited Network," another coaching organization. Mr. Blackbourns gave us a copy of Killing Sacred Cows by Garret Gunderson, another multimillionaire business owner who also does success coaching and is a principal in "Freedom Fastrack." (Mr. Gunderson himself was there that evening, but we weren't able to actually meet him.)
In the course of all of this, Amy realized that her work as a financial advisor was not consistent with her values and has resigned from the brokerage house she worked for (Hence the application at Prosper Learning). Meanwhile, I have made myself available for short term contract work as a software developer while we work on creating a couple of businesses. (This blog is part of that process.)
So, to sum it all up: I am an unemployed software developer, and Amy is an unemployed financial advisor. We have embarked on a plan to create prosperity for ourselves and our family, and have decided to increase our financial intelligence in many areas. We are actively seeking knowledge about value, businesses, debt, credit, insurance, real-estate investing, stock market investing (including options trading), retirement planning (you know, IRA's and 401(k)'s and the like) and other investment opportunities while we work to build our own businesses and educate the seven children living in our our home.
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