Page 109 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

Again, the definition of a budget is: a plan for the coordination of resources
and expenditures. You may notice this does not say a plan for the

coordination of money. It’s about the coordination of resources. A very
important lesson from rich dad was that a financial problem is a resource—
if you solve the problem. If you learn to take financial problems such as not
enough money, a bad boss, or a mountain of debt, and use them as resources

and opportunities to learn, you will slowly but surely create a budget
surplus.
The lesson my rich dad taught me about financial intelligence is really
about being resourceful. He taught his son and me to be resourceful and

turn problems into opportunities. He said, “When I was a kid, I was poor. I
am rich today because I saw being poor as an opportunity, a very important
resource God gave me to use to become rich.”

Good Debt and Bad Debt

There are two types of debt: good debt and bad debt. Simply said, good
debt is debt that makes you richer and someone else amortizes (pays off) for
you. Bad debt is debt that makes you poor, and that you have to amortize
yourself.

Money causes some people to do goofy things. For example, many
people do something financially insane, like buy a big house, put in a
swimming pool, use credit cards to pay the bills, and then use the equity on
their home to pay the credit card bills. This is an example of taking a bad

situation and making things worse—creating a budget deficit.
Our government does the same thing. Many people in government think
it takes money to solve problems, so the problems get bigger, requiring
more money, which leads to a budget deficit.

A very serious problem in the world today is excessive bad debt. Bad
debt is debt from a liability. Bad debt is a drag on countries, businesses, and
individuals. One way to become rich is to see bad debt as an opportunity, a
resource to make you richer, not poorer.

If bad debt is holding you back, then you may be your own worst enemy.
When people borrow bad debt to solve problems, the problems definitely