Rich Dad Poor Dad is a starting point for anyone looking to gain control of their financial future

$40,000 is created in the 
asset column. Money is 
invented without being 
taxed. At 10 percent 
interest, $4,000
a year in cash flow is 
added to income.
Assets
BALANCE SHEET
Liabilities
Income
Expenses
Taxes
Mortgage Payment
$40,000
Note
$20,000 
Mortgage
INCOME STATEMENT

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Rich Dad Poor Dad
101
During this depressed market, Kim and I were able to do six of these 
simple transactions in our spare time. While the bulk of our money was 
in larger properties and the stock market, we were able to create more 
than $190,000 in assets (notes at 10 percent interest) in those six “buy, 
create, and sell” transactions. That comes to approximately $19,000 
a year income, much of it sheltered through our private corporation. 
Much of that $19,000 a year goes to pay for our company cars, gas, 
trips, insurance, dinners with clients, and other things. By the time the 
government gets a chance to tax that income, it’s been spent on legally 
allowed pre-tax expenses.
BALANCE SHEET
INCOME STATEMENT
Job
Assets
Income
Expenses
Liabilities
Salary
Taxes
Savings
How much income 
would you have to
earn if the government
takes 50 percent
in taxes?
 
How long would it take 
you to save $40,000? 

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Chapter Five: Lesson 5
102
This was a simple example of how money is invented, created, and 
protected using financial intelligence.
Ask yourself: How long would it take to save $190,000? Would the 
bank pay you 10 percent interest on your money? And the promissory 
note is good for 30 years. I hope they never pay me the $190,000. I have 
to pay a tax if they pay me the principal, and besides, $19,000 paid over 
30 years is a little over $500,000 in income.
I have people ask what happens if the person doesn’t pay. That does 
happen, and it’s good news. That $60,000 home could be taken back and 
re-sold for $70,000, and another $2,500 collected as a loan-processing 
fee. It would still be a zero-down transaction in the mind of the new 
buyer. And the process would go on.
The first time I sold the house, I paid back the $2,000, so technically, 
I have no money in the transaction. My return on investment (ROI) is 
infinity. It’s an example of no money making a lot of money.
In the second transaction, when re-sold, I would have put $2,000 in 
my pocket and re-extended the loan to 30 years. What would my ROI
be if I got paid money to make money? I do not know, but it sure beats 
saving $100 a month, which actually starts out as $150 because it’s after-
tax income for 40 years earning low interest. And again, you’re taxed on 
the interest. That is not too intelligent. It may be safe, but it’s not smart.
A few years later, as the Phoenix real estate market strengthened, 
those houses we sold for $60,000 became worth $110,000. Foreclosure 
opportunities were still available, but became rare. It cost a valuable 
asset, my time, to go out looking for them. Thousands of buyers were 
looking for the few available deals. The market had changed. It was time 
to move on and look for other opportunities to put in the asset column.
“You can’t do that here.” “That is against the law.” “You’re lying.”
I hear those comments much more often than “Can you show me how 
to do that?” The math is simple. You do not need algebra or calculus. 
And the escrow company handles the legal transaction and the servicing 
of the payments. I have no roofs to fix or toilets to unplug because the 
owners do that. It’s their house. Occasionally someone does not pay. 
And that is wonderful because there are late fees, or they move out and 
the property is sold again. The court system handles that.

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Rich Dad Poor Dad
103
And it may not work in your area. The market conditions may be 
different. But the example illustrates how a simple financial process can 
create hundreds of thousands of dollars, with little money and low risk. 
It is an example of money being only an agreement. Anyone with a 
high school education can do it. 
Yet most people won’t. Most people listen to the standard advice of 
“Work hard and save money.”
For about 30 hours of work, approximately $190,000 was created 
in the asset column, and no taxes were paid.