I often talk about the lack of financial education in our government run 
schools. This article is an excellent example of why solving this 
problem would help so many Americans.


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http://finance.yahoo.com/expert/article/richricher/153515

Robert Kiyosaki Why the Rich Get Richer

Why the Cheap Will Never Get Rich
by Robert Kiyosaki

Posted on Tuesday, April 7, 2009, 12:00AM
The other day a friend of mine approached me excitedly, saying, "I found 
the house of my dreams. It's in foreclosure and the bank will sell it to 
me for a great price."

"How good is the price?" I asked.  

"Just before the real estate market crashed, the seller was asking 
$780,000 for the property. Today, I can buy it from the bank for 
$215,000. What do you think?" she asked.

"How would I know?" I replied. "All you've given me is the
price."

"Yes!" she squealed. "Now my husband and I can afford it."

"Only cheap people buy on price," I replied. "Just because
something is 
cheap doesn't mean it's worth the cost."

I then explained to her one of my most basic money principles: I buy 
value. I will pay more for value. If I don't like the price, I simply 
pass. If the seller wants to sell, he will come back with a better 
price. I let him tell me what he will accept. I know some people love to 
haggle; personally, I don't. If a person wants to sell, they will sell. 
If I feel what I am buying is of value, I'll pay the price. Value rather 
than price has made me rich. 

Against my advice, my friend sought financing for her "dream" home.

Fortunately, the bank turned her down. The house was on a busy street in 
a deteriorating neighborhood. The high school four blocks away was one 
of the most dangerous schools in the city. Her son and daughter would 
either have to go to private school or take karate lessons. She is now 
looking for a cheaper house to buy and has asked her father, who is 
retired, for help with the down payment. If her past is a crystal ball 
to her future, she will likely always be cheap and poor, even though she 
is a good, kind, educated, hard-working person.

My Point of View

What follows are some thoughts on why my friend will probably never get 
ahead financially -- especially in this market.

1. She and her husband have college degrees but zero financial 
education. Even worse, neither plans to attend any investment classes. 
Choosing to remain financially uneducated has caused them to miss out on 
the greatest bull and bear markets in history. As my rich dad often 
said, "What you don't know keeps you poor."

2. She is too emotional. In the world of money and investing, you must 
learn to control your emotions. When you think about it, three of our 
biggest financial decisions in life are made at times of peak emotional 
excitement: deciding to get married, buying a home, and having kids. 

My dad often said, "High emotions, low intelligence." To be rich, you 
need to see the good and the bad, the short- and long-term consequences 
of your decisions. Obviously, this is easier said than done, but it's 
key to building wealth.

3. She doesn't know the difference between advice from rich people and 
advice from sales people. Most people get their financial advice from 
the latter -- people who profit even if you lose. One reason why 
financial education is so important is because it helps you know the 
difference between good and bad advice. 

As the current crisis demonstrates, our schools teach very little about 
money management. Millions of people are living in fear because they 
followed conventional wisdom: Go to school, get a job, work hard, save 
money, buy a house, get out of debt, and invest for the long term in a 
well-diversified portfolio of mutual funds. Many people who followed 
this financial prescription are not sleeping at night. They need a new 
plan. Had they sought out a little financial education, they might not 
be entangled in this mess.

A Thank You to Jon Stewart

Speaking of finance experts, I personally want to thank Jon Stewart of 
'The Daily Show' for taking on Jim Cramer and CNBC. Jon Stewart did an 
incredible job of representing the millions of people all over the world 
who have lost their savings in the market. He was right in saying he 
thought it "disingenuous" to advise people to invest for the long term 
through their retirement plans while knowing full well that traders 
could steal Americans' retirement money by trading in and out of the 
market. Most traders like Cramer realize that investing in mutual funds 
for the long term is financial suicide. Cramer should have spoken up, 
but we all know why CNBC won't let him tell the truth. If he did, the 
station's advertisers would leave.

While I applaud Cramer for going on 'The Daily Show' and facing the 
music, I'm afraid he was marginalized by Stewart -- certainly outgunned -
- and he has lost his credibility. He may pay an even bigger price if 
the SEC decides to dig deeper.

Jim Cramer is a very smart man. I watch his show. I just do not follow 
his advice. 

In closing, I will say what I have said for years: We need financial 
education in our schools. Without it, we cannot tell the good advice 
from the bad.

CMPQwk 1.42-21 9999 
Democrats --  The party of trickle-up poverty ....

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