Advanced

Guide
to Getting
Out of

Debt

This publication is designed to provide competent and reliable information regarding the subject
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Copyright 2015 by Robert T. Kiyosaki. All rights reserved. Except as permitted under the U.S.
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First Download Edition: July 2015

Introduction
In 2015, the average U.S. household has over $15,000 in credit card
debt. If that isnt enough, many of you have student loans averaging $35,000
and an average mortgage balance of $157,000 to go along with your daily
expenses to support you and your families. When you add it all up, it can be
daunting and seemingly insurmountable. There are steps you can take to get
yourself out of bad debt.
This is the Advanced Guide to Getting Out of Bad Debt. Were not talking
about saving your spare change to put towards your credit card balance.
Were talking about a bold move to increase your assets, to take control of
your bad debt and your life. This is a big step up from our tried-and-true
methods to get out of debt identified in Freedom from Bad Debt (available
for free on RichDad.com).
In Freedom from Bad Debt, we started with the essential steps necessary
to begin chipping away at your bad debt. While the mechanics are solid
and easy to do with some discipline, many of you noticed the part in the
book that says:
Q: Do you have to be debt-free before you invest?
A: No. This is your choice. We had quite a bit of debt when we
started investing.

Introduction: Advanced Guide to Getting out of Bad Debt

Many people contacted us dumbfounded. How could you be investing

while still in so much debt??!
The answer is: The investing helped us get out of debt.
Due to the number of inquiries, I decided to shed some light on this
advanced method. From the outside looking in, it looks like a gamblers
way out of debt. That could not be further from the truth.
The Advanced Guide to Getting Out of Bad Debt can be broken
down into six steps:
1. Stop spendingFind your financial emotional maturity
2. Start savingPay yourself first
3. Look for opportunities
4. Create/build/find your asset
5. Pay down your debt with your cash flow
6. Celebrate. Repeat.

Each of the above steps is very important. Do not take short cuts. Most
people need instant gratification.
Youre not most people.
This process works. It requires discipline and persistence but the rewards
are worth it. If you follow the process, youll have cash-flowing assets paying
down your bad debt.
Lets get into increasing your cash-flowing assets and reducing your
bad debt.

1. Stop Spending
Find Your Emotional Maturity
It is important to point out that financial intelligence is also emotional
intelligence. Warren Buffett, the worlds richest investor, says, If you
cannot control your emotions, you cannot control your money.
The reason many people fail in the process of getting out of bad debt is
they cannot live without instant gratification. Many will sacrifice a richer
tomorrow for a few indulgent purchases today. I did not make much
money in my 20s and 30s, but I make millions today.
The need for instant gratification is so great in todays society. That is why
so many get-out-of-debt educators make you cut up your credit cards. Theyre
addressing the symptom instead of addressing the cause. Why? Because
its easier and its quicker. They take the easy route to helping you with a
symptom instead of addressing the cause.
There are two reasons why I do not tell you to cut up your cards:
1. Its a band-aid for a bigger problem and doesnt solve the problem
2. Your credit cards may be the key to getting you out of bad debt
(Ill explain in Step 4)

Step 1: Advanced Guide to Getting out of Bad Debt

Instead, take steps to improve your emotional maturity and intelligence.

There are many great authors and teachers that will get into the nitty-gritty
details and help you. In the Rich Dad sphere of influence, we have Blair
Singer and his book Little Voice Mastery.
Right now though, take the first step to improve your emotional
maturity and take the instant out of instant gratification.
When youre looking at purchasing something, spending time watching
TV or perusing the Internet, ask yourself, How is this helping me reach
my next goal?
Be honest.
And, dont pat yourself on the back and lie to yourself that you deserve
a reward because you spent 20 minutes researching your business or
investment. Again, be honest. Its great to celebrate all wins and to give yourself
a reward. Just be honest on what a win is and if it truly merits a reward.
Ive been there and lied to myself plenty of times. It wasnt until I started
having the emotional maturity to be honest with myself and making
sure my actions were in line with my goals before I started making actual
progress towards those goals.
I would say that when it comes to money, emotional intelligence is the
most important intelligence of all. It is more important than academic or
professional intelligence. Develop your emotional intelligence so that you
have the fortitude to stop spending money on things that do not help you
get out of bad debt.
If you dont, your tomorrow will be just like your todayor worse.

2. Start Saving
It has probably never happened before, but I am telling you to save money.
Normally I tell you savers are losers. Before I explain why Im suggesting that
you save money, I am going to explain the danger of saving money.

Savers End Up Losing

In the days when the dollar was backed by gold and banks paid a healthy
interest rate and inflation did not really exist, saving money was a solid,
although boring, way to make money.
Those days are over. The U.S. Dollar is no longer backed by gold. This
has created the huge credit explosion we live in today. But with credit, and
no gold backing the dollar, debt has run rampant.
Im not talking about individual debt; Im talking about government
debt. And the governments answer to excessive debt is to print more
money. This allows the government to pay off their debt with cheaper, lessvaluable dollars. When the government prints this moneybasically out
of thin air- then your savings will be worth less and less. This also forces
people to work harder just to keep up with the cost of living.
Think of it as the lessons you learned about supply and demand.
When supply is more than the demand, the value drops. That is what is

Step 2: Advanced Guide to Getting out of Bad Debt

happening. There are more dollars than necessary, so the value of the dollar
drops. This causes prices to rise because your dollar becomes worth less and
less; this is called inflation. When there is inflation, debtors are the winners
and savers are the losers.
In 2008, the U.S. government and Federal Reserve Bank began printing
trillions of dollars, causing millions of savers to be losers via the loss of
purchasing power due to inflation, higher taxes, and low interest rates on
their savings.
The entire modern monetary system is based upon inflation. The banks
and governments want inflation. Why? One reason is so that debtors
can pay back their debt with cheaper dollars. Another reason is because
consumers spend money faster if they expect prices to go higher.
All I am saying is thats what happens when you have an economy that
grows on inflation rather than production. Savers become losers and life
becomes harder because life becomes more expensive. Inflation motivates
many people to become consumers rather than investors. They eat, drink,
and shop, because tomorrow prices may be higher.
All that is why I tell you savers are losersexcept in this one instance:

Pay Yourself First

Start saving your money. Yes. Save your worthless, inflation-bitten
money, but just some of it. Let me explain.
When Kim and I were getting out of debt, we knew we wanted to get
out of debt FAST! We knew how to save our way out of debt, but we
wanted to invest our way out of debt too. This is where the magic is.
When you get your paycheck, do not use all of your money to pay your
bills. Save some of your money. As much as it hurts to say, save some of
your money.

Step 2: Advanced Guide to Getting out of Bad Debt

Kim and I saved thirty percent of our money for our future. This was
not as easy as it sounds. We had to have the emotional maturity to stop
buying things we did not need and eating out less. We also had to have the
maturity to accept that by saving money for our future we did not have
enough to pay our current bills.
It was scary.
Bill collectors called regularly. Bill collectors are not exactly friendly
when you are not paying their bills. Kim and I purposely put ourselves
under constant fire. That is motivation!
What did this motivation do for us? It did two things. First, we became
highly motivated to find extra income and work. Second, we became very
aware of opportunities all around us.
What makes the strategy in this book advanced is the second part of the
motivationopportunity awareness.

3. Look for Opportunities

The sooner you realize that a paycheck is not going to save you from
bad debt the easier your life will be. So what is going to help you? Its really
a quite simple answer, but something that isnt necessarily easy to do. You
have to train yourself to start seeing opportunities.
What does that mean? Once you start using your brain instead of
emotions, your mind will show you ways of making money far beyond
what you could make as an employee. You will see things that other people
never see. Most people never see these opportunities because theyre looking
for money and security. The moment you train your brain to see one
opportunity, youll see them for the rest of your life.
The tricky part is that most opportunities look like risk to the untrained
eye. The problem is that little voice in your head.

How to Find Opportunities

Many people may not be satisfied being told to find opportunities. So
for those who want a to-do list on how to get started, I will share with you
some of the things I do in an abbreviated form:
1. Stop doing what youre doing. In other words, take a break and assess
what is working and what is not working. The definition of insanity

Step 3: Advanced Guide to Getting out of Bad Debt

is doing the same thing over and over and expecting a different result.
Stop doing what is not working and look for something new.
2. Look for new ideas. For new investing ideas, I go to bookstores
and search for books on different and unique subjects. I call them
formulas. I buy how-to books on formulas I know nothing about.
3. Find someone who has done what you want to do. Take them to lunch
and ask them for tips and tricks of the trade.
4. Take classes, read, and attend seminars. I search newspapers and the
Internet for new and interesting classes, many of which are free or
inexpensive. I also attend and pay for seminars on what I want to
learn. I am wealthy and free from needing a job simply because of the
courses I took. I have friends who did not take those classes who told
me I was wasting my money, and yet theyre still at the same job.

The Opportunity That Changed My Life

The opportunity that changed my life was a seminar I attended. I had
bill collectors screaming at me. I was finding odd jobs everywhere to find
extra money to pay my bills and calm the screaming debtors. And I had the
money I was saving. Saving for the opportunity.
My opportunity came in the form of a course teaching real estate
investing. This was my opportunity and it cost $385! (Thats $2,069 in
2015 dollars.)
Notice my opportunity was not a friend telling me about a stock tip. It
wasnt me going out and finding the best real estate deal. No. Even the best
stock tip or the best real estate deal would have failed because the deal can
only be as good as the investor.
I needed to train my mind. I needed education.

Step 3: Advanced Guide to Getting out of Bad Debt

My rich dad was fanatical about exercising your mind, the most
powerful computer in the world. Hed say:
My brain gets stronger every day because I exercise it. The stronger
it gets, the more money I can make. Keep using your brain and
soon your mind will show you ways of making money far beyond
what other people see. You will see things that other people never
see. Most people never see these opportunities because theyre
looking for money and security, so thats all they get. The moment
you see one opportunity, youll see them for the rest of your life.
As I mentioned earlier, the opportunity I found was a real estate seminar.
The seminar really showed me the way to analyze a deal and how to get a
deal done with little to no money down.
If you reread the ways to find opportunities, three of the four strategies
are about getting educated. That is not a coincidence. Again, even the best
stock tip or the best real estate deal will fail if Im not financially educated.
The deal can only be as good as the investor.
So what happened after I took the course? First, before I answer, I
need to highlight that I completed the course. I did all the work required.
I did not just take the course. I fulfilled the course. I accepted the value of
the course and I took this course with the mindset that this course could
change my life.
I spent $385 and that course bought me life. I got out of bad debt at a
rapid pace and now I dont have to work for the rest of my life, because of
that one course. Now, I go to at least two such courses every year.
That course was the opportunity I was looking for. The course taught me
how to buy assets, even in the situation I was in. Future courses have taught
me how to build assets.

10

Step 3: Advanced Guide to Getting out of Bad Debt

Once you learn how to buy assets or build assets and you put what
youve learned into action, you will be free of bad debt. Then you can
follow the formula Kim and I used and shared in Freedom from Bad Debt
with greater speed and efficiency.
The other point that is important is that I spent the money. In order to
get out of bad debt I spent money. That is so counter intuitive. I did not
save. I did not pay my bills. I paid myself first. Then I used the money I
paid myself to pay for the opportunity that changed my life.

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11

4. Create or Buy Assets

In Freedom from Bad Debt, I wrote about picking up extra work to
increase your ability to pay off your bad debt. In this book, youre learning
the advanced way to pay off bad debt. With the advanced method, youre
building your asset column to increase your ability to pay off your bad
debt. You get a two-for-one dealmore assets and less bad debt.
In every book I write, I hammer my readers to stop buying doodads and
liabilities and to start buying assets. Im going to try this again here.
What is an asset or a liability? To put it simply, assets put money in your
pocket and liabilities take money out. Your home doesnt put money in
your pocket, so its a liability. What happens if you rent it out? If the rent
is more than the expenses, then it is an asset. Your car is a liability, even if
its paid off. If you start renting it out or use it for Uber or some other taxi
service, then its making you money and is an asset.
The $385 real-estate seminar took money out of my pocket, but then
when I put what it taught me into action, it put money into my pocket.
Education is an asset, but only if you use the education to make money.
When you use the money from your Pay Yourself First savings, you
need to first buy the education that is going to teach you how to buy
or create an asset. Check your local area or search online for courses on
investments or businesses youre interested in and passionate about. Once
12

Step 4: Advanced Guide to Getting out of Bad Debt

you get some courses and training done, continue to save until your Pay
Yourself First savings can be used to put your education into action.
When I bought my course on real estate, I immediately went out and
found deals. They were not the deals I invest in today, they were very small
and they were what I could handle at the time. My mindset was not large
enough to believe I could invest in huge multi-unit apartments successfully.
I had to start small and learn the lessons from experience, as well as grow
my own confidence.
To drive my point home, let me tell you about Ryan:
Ryan is an employee of mine who decided that he wanted to get out of
debt completely. He began to pay himself first and pretty quickly he built
up a nest egg of over three thousand dollars. So what did Ryan do?
Ryan found an entrepreneur class that taught him how to start his own
online business. He spent his entire Pay Yourself First savings on the
course. When I asked Ryan why he chose this particular course, he gave me
three reasons:
1. The course was laid out well and, if Ryan did his part, hed have an
online business up and running at the end of it.
2. After doing some research, he was able to determine the company
offering the course had a good reputation.
3. It was an area of interest for him and he was passionate about it. Plus,
he already had knowledge all things web and marketing.
Today, with a bit more money from Ryans Pay Yourself First savings,
he has created his business. Ryan has made an asset from little more than a
few thousand dollars, his mind, and determination.
In less than ten months, Ryan has paid off all of his bad debt.

13

Step 4: Advanced Guide to Getting out of Bad Debt

Remember when I blew your mind that credit cards can be the tool to
getting out of bad debt? A credit card can be an efficient debt-destroying
tool through the purchase of educationif you use that newfound
knowledge to acquire assets.
You can also use a credit card to purchase an asset. It sounds ludicrous
and dangerous to most people, but you can. If youre emotionally
intelligent, educated on your investment, have a solid team, and have a plan
in place, you can mitigate a lot of your risk exposure.
Another prime example is another Rich Dad employee, Flo. She has
been working with us for a number of years and has taken various courses.
Well, she put that knowledge to use and purchased multiple assets with her
credit card.
In 2008, she bought her first duplex in Buffalo, New York, on a credit
card. In 2012, she bought another duplex on another credit card. Both
duplexes have positive cash flow.
Is a credit card my preferred method of financing to acquire assets?
No. There are many risks to consider. However, much like hard money,
it is an option and can serve as a bridge-gap until youre able to get more
traditional financing in place.
Is that what Flo did? No, she used her education and her ability to find
opportunities to good use; she bought the duplexes at such great prices that
she didnt need to find traditional financing.
When looking at investments or business, make sure its something
youre truly passionate about. Once you figure out what that is, get
educated, put that knowledge to use, and start acquiring your assets.

14

5. Pay Off Your Bad Debt

Using Your Cash Flow
At this point, youve put in some incredible work. Its not called
Advanced Guide to Getting Out of Bad Debt for nothing. Now, its time to
start reaping the rewards of what you set out to do: Pay off your bad debt.
In Freedom from Bad Debt, we recommended that you ignore interest rates
and attack the smallest balance first. Do that again here. It allows for faster
wins with each bad debt being erased quicker and a greater success rate.
With the Advanced Guide to Getting Out of Bad Debt, youre now
attacking your bad debts with an asset boosting up your monthly payments.
Plus, you now have an asset.

15

6. Celebrate and Repeat

If youve diligently gone through the steps, you will have deserved it.
Youll have accomplished what most of the world only dreams about.
Celebrate!
If youve gotten this far, Id wager I dont need to tell you to do it again.
Success is addicting.
Live your dreams. Youre capable.
I do not take the saying, Pay yourself first, lightly. I wanted to add a
Thank You.
The statement, Pay yourself first, comes from George Classens book,
The Richest Man in Babylon. Millions of copies have been sold. But while
millions of people freely repeat that powerful statement, few follow the
advice. Thank you for your wisdom, George.

16

Its Time to Get Out of the Rat Race!

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