Rich Dad Poor Dad – Day Four

Chapter Three

Lesson 3: Mind Your Own Business

Chapter Three is a relatively short chapter where Kiyosaki kicks it off by stating, similarly to how I sent out yesterday’s post, Rich Dad Poor Dad – Day Three – Fired to FIRE (, “The rich focus on their asset columns while everyone else focuses on their income statements.”

He talks of the distinction between your profession and your business. If you ask a lot of people, “What’s your business?” Many of them will have responses like accountant, mechanic, lawyer, etc. This response is confusing one’s profession with one’s business. He uses this example to compare to McDonalds’ Ray Kroc’s statement, as he was addressing some students in the University of Texas – Austin MBA program, “Ladies and Gentlemen, I’m not in the hamburger business. My business is real estate.”

Today McDonalds is the single largest owner of real estate in the world. One’s business revolves around their asset column, not their income column. So the takeaway is that people should be less concerned with their income statement and more concerned with their balance sheet.

One thing that made me feel uneasy was when I read his assessment of when people mention their net worth. I think it made me feel uneasy because deep down I think it’s true and I’ve felt a bit of guilt before, like I was lying to myself. What he said is that once you start selling some of your assets you’ll get taxed on the gains, and therefore your net worth is probably overstated. While there are some passages around paying tax in real estate that I know, like the 1031 exchange, there may be a time where I’d actually have to liquidate entirely, under a severe stress scenario. Furthermore right now I couldn’t even get access to my retirement accounts without paying tax plus a 10% penalty!

Some of those thoughts I’ve had before which is why I started looking into ways to get access to my retirement money before I hit 59.5 years old. The backdoor Roth conversion could provide that, where I could slowly pay taxes and have access to some principal five years from now. That being said I may want to start taking haircuts off of some of my assets to account for having to pay these various taxes. A sad thing to do but sometimes the truth hurts…

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