Saturday, May 20, 2006

Interesting 20/20 show last night

Last night ABC's 20/20 had a great show about the get rich gurus and putting them to the test to see if they worked for average people.

First up was David Bach of Automatic Millionaire fame. His latest book is about home owning, the two greatest premises was that renters stay poor and homeowners can leverage their equity growth and eventually purchase another property and rent out the original, therefore slowly building their assets. His challenge was to take two ordinary families who were renters and figure out a way to get them into homes and he did it! In the meantime, he discovered ways that one family in CA (who had an income of $45K but lived in Fresno) cut costs by not buying $50 video games and putting their daughter into beauty pageants. Good god, how do people spend so much! But they got a home -- a run down fixer, but a home no less. Home prices in the Bay Area have hit a median of $670,000 and that average morgage is just over $3K per month.

Next was Dr. Thomas Stanley of Millionaire Next Door fame who also wrote The Millionaire Mind (both of which I've read) and the story on him basically outlined his conclusions that real millionaires don't drive fancy import cars or live in huge mansions in exclusive neighborhoods. Millionaires are also willing to take financial risks, something that non-millionaires rarely do. In the segment, they even studied the bran of a successful business woman as she simulated stock trading and noticed a part of her brain was activated whereas a person who did not take such a financial risk did not have that part of the brain stimulated.

The last person on was Robert Kiyosaki, of Rich Dad Poor Dad fame. He's sold 18 books about how rich people thing and go about business, but not one of them tells you exactly how to get there. I read his first book and thought that exact same thing that everyone else does: The book was encouraging and motivating, however if you don't know how to start or what to do, it's useless. The most valuable thing I got from his book was how the rich get their cashflow: They limit their liabilities and buy assets. The assets give them their income and the cycle flows that way. I've listened to his lectures and read a few chapters in more of his books, but didn't pursue further because they all pretty much say the same thing. The rich get financial advice from their attorneys, CPAs, stock brokers and peers. How many average folks even need an attorney or CPA? In the end, this guy is purely a motivational speaker who tells you nothing about the how-tos of becoming financially independent. He's basically a bag of hot air and my opinion of him has been lowered quite alot.

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