Cashflow 101 on 3rd December 2010

Me and my partner organized a cashflow 101 game at livewire again. This time we pledge to give a book prize for the winner.

Either I was good in explaining the game, or they were fast learners. well 2 out of 4 anyway, the last 2 caught up later in the game. But in the end my partner won the game. The book prize was Kiyosaki‘s latest book – Conspiracy of the Rich.

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At the beginning, I shared the basic of the game, such as:

  • The basics of Financial Statement using a Job Card in the game.
  • The Objective of the game – to increase your passive income to be greater or equal to their expenses in the rat race, and to rich your dream or a higher cashflow in the fast track.
  • What the spaces on the board meant, such as paycheck, opportunities, doodads, Charity, Baby and Downsized meant.
  • During gameplay when the player gets card with a new twist, I explained the meaning of the card and how it would be used as well how it effected their financial statement.
  • Basic Strategy of the game such as buying assets, paying liabilities and using loans.

I skipped on the rules of bankruptcy and only resorted to that if only it happens. even then I would have to refer to the rule book as it really rarely happens. although it happened to me twice a long time ago. :p

The explanation was admittedly slow and long, but I believed with enough knowledge at the beginning, the players will not complain much or give excuses about not knowing about the rules that caused them to “lose”. Some players as usual used the strategy of paying of their liabilities, which I believe slowed them from progressing. Another factor was they had good opportunities (such as $1 or $5 stocks) but did not buy a lot of them. Some players were aware when they had a good deal (a rental property) when the experience players were fighting off to buy it from them, and eventually declined to sell and bought it for themselves instead.

The winner of the game received Kiyosaki’s Latest Book – Conspiracy of the Rich.

Rut to Riches – part 2

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Played rut to riches again. This time I didn’t “retire” in the game, but I still got a positive net worth. I still maintain that I don’t need to pay off the liabilities other than the high interest one’s like overdraft. But even to a self proclaimed experienced player (of cashflow 101 anyway), I saw some interesting strategies that was used by some beginner players. I saw that they were putting their cash in hand into their savings. At first glance, I was remembering how Kiyosaki‘s statement of how “savers are losers”, as that money could be more value in buying assets rather than just being stagnant in a bank. But then I saw it, in the rut to riches games, if you’re not retired and you are in the inner/mentor circle, you have a risk of being kicked out of it and losing half of your cash in hand. So if you were in that position, that would be an acceptable strategy.

I noticed I was upset in the beginning of the game, as an opportunity was blocked by another player, what made it worse was they actually used overdraft to get the deal, that would actually be my strategy if I didn’t have money, but what was bad was they didn’t took advantage of the opportunity to sell it when they could, and instead was left with the overdraft. I didn’t really tell them what to do, I told them their option, pros and cons, but they still chose to keep the property and the liability and the expenses that came with it. I was upset because the opportunity was taken from me, and even upset that the person didn’t make full use of the subsequent opportunities. At almost the end of the game I realized my frustration distracted me from focusing on winning the game.

Almost at the end of the game, one of the instructors/experts told 2 players at my table that the 4 unit commercial deal could be shared to be come 2 X2 units each,  that was new to me. I assumed it was an advanced (made up) rule but I let it go. In real life there are cases where a single deal can be shared by 2 players, simplest partnership are spouses. I planned to ask more about that after the game, but I forgot. So that night I opened up the pdf rule book I found online at http://www.rut2riches.com and found the rule to exist under the term syndication. So it was possible to use syndication, and according to the rule book it can be applied to almost any deal applicable to one player, including the $1 stock, Royalites, business partnerships and Real Estates. The only thing it did apply was the directway cards. In the game and in real life, the strategy applies to more than 2 players, the only problem is to get the person who got the deal in the first place to agree on the terms and conditions. And finally the deal can be sold off only with the agreement of all the players who syndicated the deal. I wonder if my wife would be open to syndication, we would be almost unstoppable!

So in summary, my lessons in this session was

  1. Savers are not necessary losers, It is a good idea to have some amount in the bank for safekeeping. Quoting from several books and workshops, you should have at least 3 t0 6 months of expenses in savings just in case something does go wrong. Good to save, but only to an amount, and then the rest can be used for investments.
  2. Focus on your goals, do not worry or be frustrated on what has passed and nothing can be done any longer
  3. Deals can be syndicated or shared, but the profits and risk must be shared as well.

Playing Rut to Riches Board Game

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Recently I was invited to play a Board Game that would teach Financial Intelligence. I have had played Cashflow 101 before and blogged about it, so I was interested to see what else was out there.

I remembered playing the game before, but it was then called SmartMoney, But now it is called Rut to Riches. After the game, I searched for it on the internet, and found www.rut2riches.com. Here is my comparison for this game to Cashflow 101.

  • Cashflow 101 is simpler. I put the complexity of SmartMoney to be between Cashflow 101 and 202.
  • Rut to Riches uses Cashbook accounting, rather then using those play money. Bear in mind some people may actually enjoy holding fake money in hand, but this is just more neat.
  • Rut to Riches takes into account network marketing. I found it strange that Kiyosaki mentioned Network Marketing/MLM/Direct Selling in his books and yet did not include them in his games.
  • Rut to Riches takes into account Royalty in terms of Books and Movies.
  • Rut to Riches uses the Inner Circle as a Fast Track with the use of a Mentor. Cashflow uses The outside lane as the fast track, but the player is no longer affected by good and bad cards, while in the rut to riches, the “retired” player may still be affected.
  • Rut to Riches gameplay is quicker with the fact that “plot twist” cards are taken in bundles. e.g. Share market cards are taken in two’s, and any deal cards is followed by the market forces card.

Overall, I think Rut to Riches is an improvement (albeit probably a copy cat) of Kiyosaki’s Cashflow 101/202. But due to the complexity, I’d recommend Cashflow for beginners. Which probably explains my frustrations with misconceptions that some the “experts” who was supposed to be teaching us had. I was a bit confused by some explanations, but not because I didn’t understand, but it just didn’t made sense, Which I read the rule book available online to be sure, I’ve highlighted the rule or issue, followed by the misconception, followed by my opinion and understanding is the correction:

  • Issue of Savings. Savings was “taken out” our hands to make our cashflow balance zero. When it made more sense that it was taken “In” to our hands as money to be played. This of course what I understood from playing Cashflow.
  • Overdrafts were limited to (current cashflow + potential income) x 8. The “expert” players added a rule about “minus the amount you already borrowed”, when that has been clearly dealt with in putting 10% in the expenses for the amount borrowed.
  • Players may play pay of their liabilities (This one’s annoying). The “expert” players kept on pressing on paying of liabilities, and after at the end explaining about Net Worth = Assets + (cash balance) – Liabilites, and affirming everyone had very small or negative net worth, they stated it was because they didn’t pay off their liabilities. I had a huge net worth, but I didn’t pay those liabilities. Real example is Donald Trump has billions in debt, but billions in net worth. The key is to gain cash producing assets.
  • Directway (in relation to most MLM’s being somethingWay) are mostly not affected by market forces. Ok this maybe more of strategy then just a rule. I noticed the “expert” player was mostly targeting to get the DirectWay Cards. These guys didn’t even get out of the Rut! I’m thinking because these “experts” are mostly into Network Marketing that they played into their beliefs. But if they read Kiyosaki’s Books carefully, he basically states that the key to riches is multiple streams of income. A balance of Stocks, Real Estate and Business, not just Network Marketing. But Network marketing is probably the best for hard workers, socialites and risk averse individuals.

Overall, it was a fun game (considering I was the only one in my table that got out of the rut), and when I get the chance I would like to have a discussion with the “expert” players on my findings from reading the rule book. Last time I had to hurry to get to another function that day. Oh for more information on the playing board game, contact the people from www.yesinvMS.com