Savers Are Losers and Cash Is Trash: Why You Need to Change Your Mindset About Money

One of the most outdated ideas is to go to school, get a job, work hard, save money, get out of debt and invest for the long-term in the stock market. Why would you save money when they are printing trillions of dollars? The gap between the 1% and 99% is huge. It is not just about money; you have to look at the bigger picture.

What can you do? We all have a poor person, a middle-class person and a rich person inside us. However, this is not taught. We are taught to go to school, get a job and get a paycheck. We are not taught how to get rich. In Rich Dad Poor Dad, I wrote that my rich dad refused to pay me. He said that the paycheck was one of the most harmful things you can accept in your life. He said that once you accept a paycheck, you become an employee and that is your mindset.

My rich dad never paid me. This made my poor dad, who was a government employee, very angry. He said: “You have to pay people; you have to pay people.” My rich dad was not saying that the paycheck was bad; he was saying that he did not want to be a slave to money. As an entrepreneur, if my rich dad’s business failed, I would just start another one. I do not need a paycheck; I do not need anyone to take care of me. If my government does not like me, I can move to another country because they need entrepreneurs there. Being an entrepreneur is not so much about the business; it is more about the mindset and the skill sets and the different rules. You see, I do not operate by the same rules as small businesses do; big businesses have different rules. Being an entrepreneur requires a different mindset, a different skill set and different rules. Depending on whether you are an employee or a small business owner, the rules are different, the mindsets are different, the skill sets are different.

If you could say one thing to somebody whose never been an entrepreneur and they're thinking about making the leap of faith into becoming an entrepreneur,what could you tell them?

I would tell them the same thing that happened to me. I still remember my last paycheck clearly; it was one of the worst and the best days of my life. I was in Puerto Rico, working for Xerox, and my boss gave me my last bonus check. I think it was about 30,000 dollars, but it was taxable. That was the problem. I was excited but also disturbed. Then another guy came up to me; his name was John. He said to me: “You will be back.” I asked him: “Why?” He said: “Because you will fail.” I looked at him and said: “You left Xerox, failed and came back, but I will fail and never come back.” That was my attitude.

If you say: “If I fail, I will go back to mommy and daddy”, then that is what you will do. When I failed, that is when I became an entrepreneur because I had no money. I had no money for years. Yes, I did not have a paycheck. But that is what my rich dad encouraged me to do. He said: “When you do not have a paycheck, you get hungrier, smarter and it is a test of your character. Will you become a crook? Will you become dishonest? Will you cheat and steal? Or will you become a better human being?” That is the benefit of becoming an entrepreneur; you really find out who you are when you have nothing. So you always have to look at the big picture. Too many people look at: “what will happen to me?” When you look at the big picture, you also know that when something bad happens, something good will happen too. But you have to prepare for whatever is coming. If you think the next 20 years will be like the last 20 years, you will get crushed."

When we go to the supermarket and buy a carton of milk, we always check for the expiration date. But most people do not check for the expiration date on their brains. Instead of getting out of debt, I get into debt. I just refinanced 300 million dollars in debt. I went from 5% to 2.5% interest. I made a fortune. Every month, more money comes in because my cost of money has decreased. So while some financial experts are saying: “get out of debt”, I am saying: “learn how to use debt”. When I came back from serving in Vietnam in January of 1973, the first thing my rich dad said to me was: “Go to school to learn how to invest in real estate.” It was not about real estate; it was about how to use debt and taxes. Debt and taxes make the rich richer; debt and taxes make the poor and middle class poorer. So all the rich guys who are doctors and lawyers or other professionals are getting crushed - and they do not know why.

Doctors are getting crushed?

Yes, they are making more money but their take-home is less. My doctor just told me that he was happy because he finally made a million dollars. This was just three weeks ago. I said: “That’s great, but how much did you pay in tax?” He said: “$750,000 in taxes.” So his net was about $400,000. That is not bad but when I make a million dollars, I keep a million dollars. The reason is that I do not make it by working for money. If you work for money, you are taxed. That is why lesson number one in Rich Dad Poor Dad is: the rich do not work for money. What we do instead is we create businesses as entrepreneurs and we acquire real estate. I do not invest in the stock market because as an entrepreneur and an investor in real estate, I have more control over my income, how much I make and how much I pay in taxes. And because of that, I pay zero tax."

Every time I make a million dollars as an entrepreneur, I invest it in real estate immediately and I have a 4 to 1 leverage. I put a million dollars in real estate and I get four million from the bank. That is why I love banks. But the banks are exploiting everyone else; that is terrible but it is good for me.

That is why you say when they print money, it is good for you but when you print money, it is bad for people who work for money.

Because when they print money, savers and workers lose value. When they print money, debtors get rich. You see, debt and taxes make the rich richer and debt and taxes make the poor and middle class poorer. When we have obsolete ideas, we get obsolete results. So what is happening for most people is that the idea of going to school, getting a job, working hard, saving money, getting out of debt, buying your house because it is an asset and investing for the long term is obsolete. The world has changed; the world changed in 1971 when President Nixon took us off the gold standard and money became debt.

What if we get rid of school then? What would happen?

Would it be better if we had no educational system at all?

No, I am saying education was more important before; it is just obsolete now. There is Moore’s law that states information doubles every 18 months. In other words, everything becomes obsolete in 18 months. So when you come out of school, you are already obsolete. And that is why I am the old guy; I meet my friends who say: “I went to Harvard.” I say: “That was how long ago? 50 years ago?” Today the banks are charging you interest to save money. In other words, the banks do not want your money because they have printed too much of it. And that is why there are bubbles in stocks and real estate and so on. People are getting rid of cash.

As I said in this book: “Savers are losers and cash is trash.” And yet people still want a high-paying job. That is an obsolete idea. Get out of debt; that is an obsolete idea too. You should learn how to get into debt and use it to get rich. And they will never teach you about taxes. The reason the 1% are way up here and the 99% are going down is because when they print money, two things happen: inflation and taxes. They are crushing them. And any entrepreneur who thinks: “I am just going to make money and start a business and make a lot of money” because that is what we talk about they really have to wake up. That is not what the real entrepreneurs are doing. Most entrepreneurs, there are 28 million small business owners in America, 24 million are one-person entrepreneurs. They are called non-employee entrepreneurs. That is because they do not really understand what an entrepreneur does. Most people are self-employed, but they are not really entrepreneurs. The self-employed pay the highest taxes of all and nobody tells them that.

Yes, it is also called the entrepreneurial spirit but what we are actually talking about is that there is no such thing as a bad economy.

We all have an external economy, but we also have an internal economy and the will power is to change our internal economy. So for me, I can see the good, I can see the bad I do not really care. Because I am going to be rich anyway. But a poor person with a poor personal economy they only see a bad economy. Because they do not know how to make money in any economy. And a middle-class person, they have a middle-class economy; they want a nice house, a steady paycheck, a job and a car. And so when you take their job away, to them that is disaster. But since an entrepreneur does not have a job anyway, it is no big deal.

So all I am saying to people is what Bucky Fuller taught me. There are always two sides; at least two. So if you think the economy is bad, it is because your economy is bad. If you think that steady employment is important, then you will see an economy without jobs.” Your economy versus the external economy. Where you control versus where you cannot control. I can control; yes, it is called having an internal focus versus an external focus. So the real entrepreneur has an internal focus and if they fall down they say: “This is good because I am going to go up higher.” The average person will fall down and say: “I am going to take some Prozac.” Or they will say: “Mistakes do not matter.” Well, mistakes matter; it means you did not know something. But a real entrepreneur, whether they fall down or they succeed, they always go up. They can stand back up and go higher. No matter what happens to them, they get stronger and better and smarter and happier. But a person with a weak internal mindset is so afraid of what happens and it generally happens. For example, people who are afraid of losing their jobs they usually lose their jobs. Do you know what I mean? Yes, no doubt; so everything comes through you. Yes, so the entrepreneur’s first job is to control inside here not outside there. The moment you take that paycheck you are an employee. You have to be stronger than that. It is about internal control.