In a $1.2B dollar debt, How do you still smile and even sleep at night?

[Fivestar4everMVP]

This is the question that ran through my mind and may run through your mind too if you listen to the podcast where it was revealed or Robert Kayosaki (the renowned author of "Rich dad, Poor dad") revealed that he is in a $1.2 billion dollar debt.

First, it seemed really unpleasant to learn that a prominent figure considered by many to be one of the best financial advisors would get into such debt.
Secondly, I was curious to find out what could have lead him into such debt, and in my research, I learnt something which I thought to share with us.

I learnt that there are two types of debts..

• Good Debt
• Bad Debt

And the $1.2B dollar Robert Kayosaki is said to owe is actually a good debt if we know the difference between a good debt and a bad debt.

THE DIFFERENCE
To understand the difference between the two types of debt, one will have to first understand the difference between..
. AN ASSET - (Something that puts money in your pocket) and
. LIABILITY - (Something that takes money out of your pocket)
A Good debt is when you borrow money to buy/invest in things/assets that produces/generates income, where it is expected that part of the income produced/generated by the asset will be used to service/pay-off the Debt, example - borrowing to invest in real estate.
While a Bad debt is when you borrow money to buy things/liabilities that do not produce/generate income, where it is expected that you are going to service/pay-off the debt/borrowed money out of your own pocket, example - a car loan (private car) etc.

Now, why is Robert kayosaki's $1.2B dollar debt a Good Debt?
Robert and his partners(business associates) took the loan of $1.2B to finance a real estate purchase of 1,500 units of houses, in the future, part of the income generated from each of this buildings can peharps, be used to service/payoff this debt.

Why did i decide to create this post?
The reason is simple, I went through comments on this subject on social media and I realized how ignorant most people are on the issue of debt, many people think all debts are bad, which is wrong.





And important to Note
As bad as a "Bad debt" can be or how risky it can get, A "good debt" can come with some level of risks too, it is possible for a "good debt" to turn into a "bad debt" under some unforeseen/unplanned circumstances.
So it is very important to analyse, calculate the risks and plan very well before deciding to go into a "good debt" to ensure the lowest chances of anything going wrong..

Your thoughts, arguments and contributions are welcome and thanks for reading.

[Don Pedro Dinero]

Why did i decide to create this post?
The reason is simple, I went through comments on this subject on social media and I realized how ignorant most people are on the issue of debt, many people think all debts are bad, which is wrong.

They are not so ignorant, if you notice the first comment, 'Rich Dad, Broke Dad'. Kiyosaki has gone bankrupt several times; the most high-profile and recent instance was the bankruptcy of his company, Rich Global LLC—which, given that name, is pretty bold. The system he uses makes sense; it has allowed him to become very wealthy, but it isn't suitable for the average person.

And as for the question of the title he sleeps well at night because his net worth is greater than that debt, he has cash reserves and uses the cash flow from that real estate to pay off the debt and get richer.

[Kelward]

I was partially in the class of these ignorant guys that were thinking that the author of "Rich dad, poor dad" actually went broke because it was heartbreaking that somebody who teaches many strategies on how to become rich and financially independent could be deep in dept. It was hard to believe but I didn't pass any judgements on him because I hadn't read the complete story of how he came to be in such a huge dept after everything he knows about how money can work for us.

I'm quite relieved to know that he is in dept because he borrowed money to fund a project that has the potentials to repay the loan and make him richer, that is the rich dad mentality in action. If the real estate purchase works out as he planned which I believe that he had carefully weighed the options of it succeeding I'm sure that everybody that is laughing at him ignorantly now will turnaround to celebrate him again. Success is everybody's friend but failure is a bastard, if you succeed the people that mocked you in your planing stage will be the first ones to sing your praise.

[Ojima-ojo]

$1.2B debt is leverage on a 1,500 units Real estate investment, so the real thing is that the debt is not tied to his personality but an investment that it turn over in years can amount to 10 of that amount in debt for his company and partners involved in the deal, rich people know how to make money work for them, and understand what project debt financing is and use debt wisely to become richer in the future.



Kiyosaki has always said that he uses debt to get rich while most people use debt to get poor; this outlines his understanding and approach to debt to finance income-generating assets like real estate, which is capable of servicing the debt and making a good profit in the long term.

[aoluain]

The global financial system - particularly in the west ^{ie. Europe and North America} is built on debt,
its the main thing the Banks can make massive profits on.

Look at the super wealthy, they use Debt as a tool to enriching their personal wealth - good debt

Then you have the average Joe and Jane who use debt to buy nice things they cannot afford - arguably bad debt

[davis196]

Random losers on social media making fun of someone, who is way more financially successful than they ever will be.
Twitter/X is full of leftist liberals(despite the fact that Twitter/X is being owned by Elon Musk). Leftists love to criticize and throw insults at anyone, who is wealthy and successful. I'm definitely not a Robert Kiyosaki fan, but the guy really knows a thing or two about personal finance.
The people should listen to his advice, instead of drowning in credit card debt and buying a crazy expensive house with mortgage.

[Hewlet]

This is the question that ran through my mind and may run through your mind too if you listen to the podcast where it was revealed or Robert Kayosaki (the renowned author of "Rich dad, Poor dad") revealed that he is in a $1.2 billion dollar debt.

Debt in itself is not a bad thing except you are using it for the wrong reason like using it for personal consumption or for a cause that is not yielding you more returns in the future. most nations are in more debt and still run her national economy as though they are not in that level of debt. the reason for that is that they through the debt have built a system that is capable of taking them out of that indebtedness. it is more about understanding the principle of wealth creation even while you are still indebted and increasing your finance through it.

I am not a fan of debt probably because i don't have the right system at the moment that can cover up for it but if there is a system on ground, it is not a big issue taking up a loan and putting it into something that is capable of yielding returns that can sort out the interest in the loan and still add more revenue to you.

[Accardo]

I think he's working on a new book and wants to add this story of how he came out of this current debt to some chapter of his work. Before he chose to make this public, his plans would be to make more money out of the debt trend. It's normal to be indebted as a business person, but the rich dad poor dad guy, no, people will surely react to the news.

[_act_]

The reason is simple, I went through comments on this subject on social media and I realized how ignorant most people are on the issue of debt, many people think all debts are bad, which is wrong.

Why did you post that they are ignorant? You also posted this:

A "good debt" can come with some level of risks too, it is possible for a "good debt" to turn into a "bad debt" under some unforeseen/unplanned circumstances.

So if they think debt is not good, you can not say they are ignorant.

I know some rich men are borrowing money, but they are very smart and some use dept to try to avoid paying higher taxes, but for most average people, I do not think dept is good, although if they have means to pay back the debt, they can go for it for business reasons.

[bakasabo]

I think whenever someone has such a huge debt, then this person starts not to care about it at all. When a person has debt that can be repaid by selling everything he has and by working for many years, then that person has a headache. But if a person has a debt that he will never repay or it is impossible to repay (who would be able to repay $1.2B?), then this person stop to pay attention to it. He can not repay it and who gave him the money can do nothing about it. Due that person with huge debt sleeps normally at night. Everyone one of us are debtors also. We all have huge national debts to pay, however no one really cares about it and sleep normally at night.

[Porfirii]

-snip-
Robert and his partners(business associates) took the loan of $1.2B to finance a real estate purchase of 1,500 units of houses, in the future, part of the income generated from each of this buildings can peharps, be used to service/payoff this debt.
-snip-

I do not know how they get income from that investment, I imagine charging rents or reselling the houses at higher prices. I think it is very good that people do business and in that way the economy moves, but at these levels the impact on the market can be brutal. I hope I'm wrong, but if Kiyosaki's way to become a billionaire has been to go into debt to own some kind of vulture fund, I would find it disappointing.

[maydna]

I know debt considering to be a good debt and a bad debt. But I take the point that if you know what you will do with the debt and you have plans to do and can manages well, you can take a debt. That helps you to achieves your goals and pay the debt.

But mostly people are stuck with their debt and makes them difficult, all things runs out of their plan and makes them can't pay the debt. If they have another plan as a back up plan, they will not stop think and consider to keep running to pay the debt.

Rich people might have a big debt but they can smile and sleep at night. They have plans and know how to runs it so they can pays the debt without a problem.

[letteredhub]

Just like every country is in debt regardless of the resources they may have that's same way the millionaires and billionaires we know of are in one way in debt for majorly investment reasons and purposes. That's the philosophy of wealth that most poor people are either not aware of or scared of when the word debt is mentioned.

A Good debt is when you borrow money to buy/invest in things/assets that produces/generates income, where it is expected that part of the income produced/generated by the asset will be used to service/pay-off the Debt, example - borrowing to invest in real estate.

A good as you know can also become a bad debt in the process with time if it wasn't well calculated and articulated into the right asset. Time changes many things and that's why what seems to be a good taken decision today could go south tomorrow and leave a person in bad debt. Take bitcoin as an instance, due to its volatility a lot of people who took loan to invest in it at some point came out with losses because of time-pressure in paying back the loan didn't aligned with what bitcoin price was doing at the time the loan payments duration elapsed.

[Nothingtodo]

Rich Dad Poor Dad famous author and businessman Robert Kiyosaki will sleep peacefully. This means that he has enough assets to pay off the amount of debt that he and his company are in. That is why he can sleep peacefully and keep a smile on his face.
But in the case of those who cannot afford to pay off the debt, that is, to pay off the debt, they may not have a smile on their face, but in the case of those who can afford it, they can laugh peacefully, eat, travel, shop.

[Livingleged]

A good as you know can also become a bad debt in the process with time if it wasn't well calculated and articulated into the right asset. Time changes many things and that's why what seems to be a good taken decision today could go south tomorrow and leave a person in bad debt. Take bitcoin as an instance, due to its volatility a lot of people who took loan to invest in it at some point came out with losses because of time-pressure in paying back the loan didn't aligned with what bitcoin price was doing at the time the loan payments duration elapsed.

Who even takes loan to invest in a volatile asset like bitcoin? the only time someone can consider taking a loan to invest in bitcoin is only when you already made an arrangement on how to pay back the loan from the profit  made from the investment you’ve made with the money, but rather from a different source. Ideally taking loan for investment isn’t a bad loan, but could actually  result to a bad loan if the repayment plan is not properly structured. Also the kind of investment can actually make the loan a bad one just like you have stated just like the case of investing in bitcoin that is volatile with a debt that is a risky one and not advisable.

[Satofan44]

This is the question that ran through my mind and may run through your mind too if you listen to the podcast where it was revealed or Robert Kayosaki (the renowned author of "Rich dad, Poor dad") revealed that he is in a $1.2 billion dollar debt.

This number on its own is completely meaningless. Someone could have a $5000 debt and be in a worse position than someone with $1.2 billion in debt. Without the complete picture, you can't make a judgement about the specific case. Anyhow, is there any proof for this claim of having a $1.2 billion debt? Anyone can claim anything, but it seems you have not learned the lesson of believing someone just because they are famous.

First, it seemed really unpleasant to learn that a prominent figure considered by many to be one of the best financial advisors would get into such debt.

Not really, rich people leverage debt all the time for all kinds of things. It is usually people who are not financially literate or otherwise educated that are being surprised by the most basic and normal things. You should never respond to the general opinion of the masses, it is almost always wrong and should be ignored.

A Good debt is when you borrow money to buy/invest in things/assets that produces/generates income, where it is expected that part of the income produced/generated by the asset will be used to service/pay-off the Debt, example - borrowing to invest in real estate.
While a Bad debt is when you borrow money to buy things/liabilities that do not produce/generate income, where it is expected that you are going to service/pay-off the debt/borrowed money out of your own pocket, example - a car loan (private car) etc.

Which is a completely nonsensical distinction, and most people that have gone bankrupt have gone bankrupt not because of "bad debt" but because of this so called "good debt". A few project management failures, a change in the global or national economy and your "good debt" becomes your bankruptcy.

Now, why is Robert kayosaki's $1.2B dollar debt a Good Debt?
Robert and his partners(business associates) took the loan of $1.2B to finance a real estate purchase of 1,500 units of houses, in the future, part of the income generated from each of this buildings can peharps, be used to service/payoff this debt.

Big claims, no proof.

Why did i decide to create this post?
The reason is simple, I went through comments on this subject on social media and I realized how ignorant most people are on the issue of debt, many people think all debts are bad, which is wrong.

You got it wrong too, just in a different way.

[pooya87]

There is no such thing as good debt and bad debt. There is only one thing that that is debt which is bad by nature. Of course it is understandable why this person is saying this. He is an American who has grown up inside a corrupt debt-based economic system that can only exist if people borrow more money and get buried deeper under their debts!

What justifiers of the terrible debt-based economy don't tell you is that the other word for such a system is a Ponzi scheme.

[abhiseshakana]

There is no such thing as good debt and bad debt. There is only one thing that that is debt which is bad by nature. Of course it is understandable why this person is saying this. He is an American who has grown up inside a corrupt debt-based economic system that can only exist if people borrow more money and get buried deeper under their debts!

What justifiers of the terrible debt-based economy don't tell you is that the other word for such a system is a Ponzi scheme.

Agree, what i think funny nowdays, debt no longer a sign of weakness but more of a sign of credibility, at infividual level, the amount of debt provided by the bank, demonstrates the extent of a person's credibility, even though collateral is required in my country but many have obtained a debt limit in excess of the value of the collateral provided. On state level, an increasing amount of government bonds is being absorbed by the market, demonstrating how high, level of confidence to the future of that country. Significant debt shifting is taking place, from just personal debt become global commodity that packaged, broken down, and traded among banks and now it has become foundation of global financial system.

Debt are Bank's main asset, on their balance sheet, our saving money are Bank's liabilities to us on the other hand, debt  which given by bank to borrowers classified as bank's core asset because it is produce interest and income for bank, the greater the debt they create, they are getting richer.

[Stepstowealth]

First, it seemed really unpleasant to learn that a prominent figure considered by many to be one of the best financial advisors would get into such debt.

People who are financially uneducated will be quick to criticize him for being in debt but he forgets that rich people actually know how to use debt properly to benefit from it unlike poor people who get into debt at a disadvantaged position. The criticism would be that how can a financial adviser get into debt but those criticism comes from a place of lack of knowledge.

Secondly, I was curious to find out what could have lead him into such debt, and in my research, I learnt something which I thought to share with us.

It requires a level of confidence to get into some sort of debt and sometimes when you get into some kind of debt intentionally it means that you are very confident in yourself that you'll be able to pay off the money and still benefit from it especially when it is good debt. Kiyosaki is confident he can pay, it is people who see that amount as very big and a debt they cannot pay that will criticize the most.

[letteredhub]

A good as you know can also become a bad debt in the process with time if it wasn't well calculated and articulated into the right asset. Time changes many things and that's why what seems to be a good taken decision today could go south tomorrow and leave a person in bad debt. Take bitcoin as an instance, due to its volatility a lot of people who took loan to invest in it at some point came out with losses because of time-pressure in paying back the loan didn't aligned with what bitcoin price was doing at the time the loan payments duration elapsed.

Who even takes loan to invest in a volatile asset like bitcoin? the only time someone can consider taking a loan to invest in bitcoin is only when you already made an arrangement on how to pay back the loan from the profit  made from the investment you’ve made with the money, but rather from a different source. Ideally taking loan for investment isn’t a bad loan, but could actually  result to a bad loan if the repayment plan is not properly structured. Also the kind of investment can actually make the loan a bad one just like you have stated just like the case of investing in bitcoin that is volatile with a debt that is a risky one and not advisable.

There are people that still do fall for it because they don't know better, so out of ignorance they just assumed base on some random speculation from some prominent personality or influencer who may have given his speculation about bitcoin price going up in amount double the current price, going by that speculation they FOMO in to buying, using borrowed funds even when they don't have available funds at hand.

Taken for investment isn't a bad idea until unexpected and unprecedented circumstances happens that affects the outcome of things with the investment crashing, then that's when it eventually exposes the danger of going on with borrowed money for investment.