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Robert Kiyosaki has been interested in wealth building since he was nine years old, when he and his best friend Mike started learning the necessary skills and mindsets from Mike’s father, who at the time was in the process of building what would become one of Hawaii’s wealthiest business empires. “Rich dad,” who remains nameless throughout the book Rich Dad, Poor Dad, began mentoring the boys in 1956 and continued teaching them for another thirty years. Robert and Mike sat in on meetings with his advisors, worked in a variety of areas in his different businesses and departments, and learned how to think as wealth builders. Kiyosaki’s own father was a teacher and Superintendent of Education with a radically different mindset from rich dad, and Kiyosaki’s writing is distinguished by his struggles with both ways of thinking and the solutions he finally devised.

As a young man, while developing his financial understanding and building his assets, Kiyosaki worked for a variety of companies, including Standard Oil, Xerox, and the Marine Corps. His aim at the time was to both earn and learn, and when he was ready, he started his own international business. In addition, he invested in real estate and the stock market as well as continuing to educate himself financially. Passionate about money, education, and helping others, he and his wife Kim—also an investor—started their financial education company, the Rich Dad Company, known for its highly educational CASHFLOW games for both adults and kids. Kiyosaki has authored a number of books, including Rich Dad, Poor Dad, which has been a bestseller for a number of years. He has also co-authored books with his wife Kim as well as with Donald Trump, and he has influenced thousands of people around the world to change their financial thinking, habits, and destinies.

Those looking for specific financial advice from Rich Dad, Poor Dad will be disappointed. Robert Kiyosaki’s aim in writing the book seems geared more toward illustrating the philosophical mindset of the wealthy than toward giving detailed technical financial information. Its goal is to change the overall financial thinking of the poor and middle class—to inspire and motivate them to think and act like the wealthy. Kiyosaki knows that for a dream to become a reality, it must first be preceded by appropriate patterns of thought and emotion. Only once these are established are they likely to become the habits that lead to a different destiny.

The book follows the format of the story of a man on his way to great riches who takes on the tutelage of two young boys interested in learning about wealth building. One of the boys is his son, Mike, and the other—Robert Kiyosaki—is his son’s best friend. According to the story, it is 1956, and though Kiyosaki is only nine years old, he already possesses the passion and drive needed to succeed.

Rich dad, as Kiyosaki calls him, decides to teach the boys using life lessons rather than book lessons. The agreement is that he will teach them if they work for him. Himself an eighth-grade dropout, he knows that hands-on experience is a much faster and more memorable teacher than any information gleaned from a book, and he mimics life by putting the boys through the paces in an effort to awaken them to the facts as quickly as possible. At the same time, he uses simple concepts and diagrams to help the boys understand the philosophies and techniques of the rich. Finally, he has them work in different departments and sit in on meetings with his advisors so that they gain a solid understanding of the elements of business and wealth building. Kiyosaki organizes the six main lessons taught by rich dad into individual chapters, adding more philosophies and practical suggestions toward the end.

Against this foreground of wealth-building lessons is the backdrop of Kiyosaki’s contrasting upbringing by his own parents, who subscribed to the conventional but limited wisdom of getting an education, finding a job, saving, and borrowing. This is the classic mentality of the poor and middle class. The middle class compounds things further by adding the regular purchase of luxuries on credit. The result is that both classes struggle financially. The book’s goal is to work through the attitudes that cause this struggle and to describe the alternative approaches used by the rich.

Kiyosaki’s style is simple, direct, humorous, and energetic, designed to capture the average person’s interest and motivate people to learn more without becoming overwhelmed by too many technical details. For those interested in knowing more, he makes various suggestions, but his goal is not so much to teach specific strategies as it is to awaken the individual financial genius that finds its own solutions for the unique situations we all encounter. He calls this genius “financial intelligence,” and his mission is to improve our individual and collective financial future by teaching a subject that has been missing from our school curricula for far too long.

The Rich Don’t Work for Money—They Have Money Work For Them

Much of Rich Dad, Poor Dad is about this key concept, which teaches people to change their mindset from one of earning an income through working to learning how to manage their money so that it can create income for them, ultimately giving them the option to work or retire whenever they want. The book introduces us to the idea of shifting as quickly and efficiently as possible from earned income (salary and wages) to passive income (usually from real estate investments) and portfolio income (such as stocks, bonds, and royalties).

 

Financial Literacy

Kiyosaki maintains that most people do not succeed financially because they only know the old method of learning a trade or profession, working, saving, and borrowing. He believes that schools should also teach financial literacy, which consists of four basic skills:

  1. accounting
  2. sales and marketing
  3. investing

Without a knowledge of accounting, which includes understanding income statements and balance sheets and how they relate, people could—and often do—spend as quickly as they earn regardless of their salaries, leaving them no further ahead. Without sales and marketing skills, they might have a great product but lack the ability to gain people’s interest. Without a knowledge of investing, they could easily miss out on opportunities to create or maximize additional income because they lack the technical understanding that enables them to make wise choices when building their asset columns. Finally, without a knowledge of legal entities and tax law, they will pay far more in taxes than necessary.

 

Minding Your Own Business, or Paying Yourself First

Minding your own business, also known as “paying yourself first,” means focusing on building assets in order to generate money with money instead of working for it. This requires knowing the difference between an asset and a liability, which Kiyosaki defines differently from the norm. An asset is simply an income-generating investment such as real estate, stocks, or bonds, while a liability generates expenses. “Minding your business” means making the asset column, as defined above, a priority before bills, taxes, and luxury items—the last being the bane of the middle class, who spend on credit and then find themselves in financial trouble. The idea behind this approach is not to avoid financial responsibility but to stimulate financial creativity.

 

The Power of the Corporation

Kiyosaki is of the opinion that most people spend roughly a third of their working lives earning money for the government. Understanding tax law and legal entities such as the corporation gives them the ability to put their money to maximum use rather than automatically losing a third or more to taxes. In his view, this is one of the greatest secrets of the rich. Corporate taxes can in many cases be less than individual taxes, and the structure of a corporation allows it to cover expenses that would otherwise be paid by the individual. In addition, whereas an employee or self-employed person is normally taxed first and spends the remainder, a corporation spends first and is taxed only on whatever income is left.

 

Inventing Money

Kiyosaki is primarily referring here to the creativity of the rich in inventing opportunities to make or maximize money even in the worst of times or circumstances. One of the first things that rich dad taught his two young protégés was to notice what others missed, and it was this concept that led young Robert and his friend Mike to their first real money-making venture—a lending library for comic books that would have otherwise been thrown away. Kiyosaki had spotted gold where others saw only trash. Later in life, he noticed stock market and real estate opportunities where others saw economic disaster.

Related to this concept is the notion that money is an illusion, meaning that its assigned value is the result of an agreement between parties.

 

Work to Learn, Not to Earn

The title of this concept does not suggest that Kiyosaki does not value earning a good income. However, at the outset of his career, given the choice between a higher income and the opportunity to learn skills that would prove valuable to his business future, he chose the latter. He quit several lucrative and successful career paths with excellent benefits for this reason, but in the process, he learned leadership and sales skills as well as how to fly an airplane—all goals of his. Previously, under rich dad’s tutelage, he also spent time working in accounting, construction, restaurant, and reservations. When he was ready, he started his own company, which gained him valuable business experience. Throughout much of this time, he pumped money into his asset column, investing in real estate and stocks, and he found that his financial goals made him a better employee.

 

Taking Responsibility for Our Attitudes

Unlike books on finance that give specific advice on investing, Rich Dad, Poor Dad works mainly on changing our thoughts and attitudes about wealth building. Many people blame their circumstances—lack of money, their boss, their company, their family situation, their education or lack of it—anything other than their own attitudes and behavior. One of Kiyosaki’s earliest lessons from his rich dad was to learn that when other people or outward circumstances seem to push you around, it is in fact life pushing you around in order to teach you something. Rich dad tried to give Kiyosaki an early taste of this by putting him through various situations in an effort to get him to recognize that he had a choice and to take responsibility for the direction of his own life and wealth instead of blaming society, the economy, his family, his boss, or the government.

 

Two Types of Investors

Kiyosaki distinguishes between two basic types of investors. The first is the cautious investor who prefers packaged investments such as mutual funds. This investment style, though suitable for those uncomfortable with risk, requires starting early. The second type deals with the kind of investing that is the subject of Rich Dad, Poor Dad. These investors create opportunities by noticing what others miss and by putting deals together from scratch. The ability to observe what escapes others is one of the critical skills needed for this type of investing. The two other skills are the ability to raise funds—even when strapped for cash or unable to get a bank loan—and the ability to organize and work with highly knowledgeable and intelligent people as advisors.

                                                                                                                                             

ROI (Return on Investment)

ROI stands for “return on investment” and is one of the most important questions an investor needs to ask when considering a deal or strategy. It includes such specific questions as “How fast do I get my money back?” and “What added bonuses come with this offer?” Examples of the latter are extra lots of land, shares of stock, or a larger piece of land that can be divided into smaller lots. A key to a good ROI is to understand that the real profit is often made at the time of purchase, not at the time of sale.

The concept of ROI should also be applied to hiring advisors. Many who market themselves as advisors are in fact nothing more than salespeople. A great advisor might cost you more in the short run, but in the long run, he or she should help your business to save or earn far more than someone whose main goal is to sell product and earn fees that can eat up the investment’s earnings. Look for someone who provides you with valuable information that produces an excellent ROI and who has your best interests at heart, and be sure to treat that person fairly.

 

The Importance of Giving

This idea has a similar effect to the practice of paying yourself first. Though both ideas might seem counterintuitive or impractical to some, making the commitment to give inspires creative financial thinking and action. Kiyosaki also sees giving as a universal law—one that his rich dad practiced and taught—that, once activated, will bring far more in returns and can include not only money but information, smiles, friendship, love, and whatever else a person might desire. The impetus, however, must stem from real generosity, not just the desire to receive.

Although Rich Dad, Poor Dad focuses more on concepts and philosophies than on people, it does mention a few individuals who have had a significant financial impact. Those who did feature strongly in Robert Kiyosaki’s own life and, consequently, in the book are mostly not mentioned by name. However, because of their importance to both the details and the overall story and idea, they have been included in the following list.

 

Rich Dad

There is some doubt as to whether “rich dad” was a real person. Kiyosaki has been quoted as saying that he was asked to protect the privacy of the family and therefore agreed not to reveal rich dad’s or the family’s identity. For some, the notion that rich dad might be a myth has cast a negative light on the entire book, while others consider the issue irrelevant. Whether he existed or not, the model Kiyosaki used, which does exist in real life, was of a man who lived and thought according to certain wealth-generating precepts and who built a multi-million dollar empire which at a minimum included warehouses, construction, retail, and restaurants. Rich dad was said to have not only built this empire but to have left a considerable legacy to his family and donated significantly to charity. In an obituary posted online on February 1, 2009 by the Honolulu Advertiser, Curtis Lum cites Alan Kimi of the Hawaiian hotel family as saying that rich dad was based on Richard Wassman Kimi, who enjoyed passing on his business knowledge and who did, in fact, teach Robert Kiyosaki.

 

Ralph Kiyosaki

Ralph Kiyosaki, Robert Kiyosaki’s biological father, is referred to throughout the book as Robert’s poor but educated dad. His function in the book is to act as a foil for rich dad’s ideas by representing the concepts that hold many people back from achieving significant wealth. He was a teacher and Superintendent of the Department of Education of the state of Hawaii during the 1960s. After running unsuccessfully for the position of lieutenant governor, he was blacklisted and lost his job. Although he had earned a good salary, Ralph Kiyosaki struggled financially and thought of himself as someone who would never be rich. In the end, he died broke.

 

Mike

In Rich Dad, Poor Dad, Mike is the name of rich dad’s son and Robert Kiyosaki’s best friend during boyhood. On Robert’s father’s recommendation, the two boys studied wealth building under rich dad’s guidance. Mike, who is still friends with Kiyosaki and may represent Alan Kimi of the well-known Hawaiian hotel family, went on to successfully manage his father’s considerable empire.

 

Kim Kiyosaki

Kim Kiyosaki has been married to Robert since 1984. She is his partner in both life and business and is herself an investor, entrepreneur, author, and speaker. Although she and Robert are founders and partners in The Rich Dad Company, which created the CASHFLOW games, and although they have been through a great deal together as evidenced by their co-authorship of the book How We Got Out of Bad Debt, Kim has had her own career from the beginning and is a strong advocate for women’s financial education and independence.

 

Ray Kroc

Ray Kroc bought the McDonald’s chain from the original owners in 1961 and built it into one of the largest fast food chains in the world. In spite of his talent for improving systems, Kroc considered real estate his main business, rather than hamburgers or fast food, and McDonald’s is now one of the world’s major holders of prime real estate.

 

Harland Sanders

Better known as Colonel Sanders, Harland Sanders was one of rich dad’s favorite examples of someone who thought big and did not give in to defeat. Sanders began selling Kentucky Fried Chicken franchises at an age when most people are thinking about retirement, trying 1,009 times before finally succeeding.

 

Warren Buffett

A top hedge fund investor, noted philanthropist, advisor to the President, and one of the richest men in the world, Warren Buffett is considered the most consistently successful investor of the twentieth century. In spite of his phenomenal success, he lives relatively frugally and gives all but 1% of his wealth to charity.

 

Donald Trump

Real estate and business magnate, author and celebrity, Donald Trump has his hand in a number of ventures. Trump is famous for many things, including his billionaire status, his financial ups and downs, his flamboyant style, and his negotiating skill. He and Robert Kiyosaki have co-authored several books aimed at improving both individual and global economy.

 

Peter Lynch

Like Warren Buffett, Peter Lynch is a well-known value investor with an excellent record at “beating the street.” He has a worked for Fidelity Investments in various capacities since the 1960s, authored several books, and his heavily involved in philanthropy. In Rich Dad, Poor Dad, he is cited as coining the word “noise,” the negative talk so popular with what Kiyosaki calls the “Chicken Littles” of this world. Lynch’s counsel is to ignore this “noise.”

 

Bill Gates

Co-founder of Microsoft and therefore a major force in the internet revolution, second richest person in the world, and a noted philanthropist, Bill Gates has been a key force in shaping contemporary business and life. Kiyosaki lists him as an example of someone who derives most of his income from portfolio investments.

In the introduction to Rich Dad, Poor Dad, Robert Kiyosaki tells us how he got his financial education from two fathers—a “rich” one and a “poor” one. His biological father was highly educated, successful, and well paid, yet he lacked the financial understanding of his other “father”—in reality, his friend Mike’s father—who, despite his relative lack of formal education, taught the boys his considerable knowledge about money and business. The challenge that Kiyosaki faced growing up was that it wasn’t yet obvious which of the two dads was “rich” and which was “poor.” Mike’s father was busy building income-producing assets and therefore initially refrained from the trappings of wealth, yet he gradually built a family empire worth millions of dollars. By contrast, Kiyosaki’s biological father left only debts.

Kiyosaki valued having to deal with two contrasting opinions because they forced him to think for himself rather than merely adopt one set of views without question. He contends that one of the major failings of our school and social systems is the neglect of an adequate financial education. Having two fathers with radically different points of view about money allowed him to see the importance of not only learning financial techniques and information but also of working through the mental and emotional programming inherited from our families. He is convinced that adding financial education to our schools’ agendas will go a long way toward solving the various national crises that have either already arisen or are evolving—crises such as the national debt and the possibility of insufficient Medicare and Social Security.

In dealing with two fathers with markedly different attitudes about money, Kiyosaki was able to see the long-term effects of thinking patterns on life outcomes. Examples of issues he worked through include:

  • essential attitudes toward money and wealth (for example, money being the root of evil)
  • finding a good job versus buying or starting a good company and creating jobs
  • asking ourselves how we might afford something rather than assuming that we can’t afford it
  • understanding how money works for us instead of only thinking in terms of working for money
  • taking responsibility for our financial well-being instead of expecting our family, spouse, company, or government to take care of us (known as “entitlement” mentality)
  • shaping the future by how we think in the present.

Kiyosaki ends the introduction with Robert Frost’s “The Road Not Taken,” a poem that has greatly inspired him over the years. In the end, after listening and reflecting on his two fathers’ conflicting viewpoints, he chose to follow the advice of his rich dad. Rich Dad, Poor Dad is a simplified explanation of the six essential lessons he learned over a period of thirty years starting at the age of nine—lessons that he says, in Robert Frost’s words, “made all the difference.”

Making Money Work for You

 

Part of the success of Rich Dad, Poor Dad is no doubt related to Kiyosaki’s ability to clarify financial concepts in a simple and entertaining manner. He explains the key lessons of wealth building from the point of view of a nine-year-old, the age when he first began to take an interest in the subject. After feeling the sting of exclusion from the rich kids’ excursion, he and his young friend Mike decided to go into business together so that they, too, could become rich. Their first business venture—making nickels out of lead from melted-down toothpaste tubes—was stopped in its tracks for obvious legal reasons, but they did receive high marks for originality and initiative from Kiyosaki’s dad, along with the idea to ask Mike’s dad for help.

It’s here that the real story begins. Kiyosaki’s biological father was a schoolteacher who, though by no means poor, considered it beneath himself—or at least contrary to his chosen life path—to think too much about money. Mike’s father, on the other hand, owned several restaurants, warehouses, a chain of stores, and a construction company, and Robert’s father had heard of his money-making talent through their mutual banker. And so it came about that early one Saturday morning, two young boys had their first meeting with the man who for several decades would be their mentor.

One thing that quickly becomes apparent is that wealth building involves more than just a series of techniques: it assumes a mentality that is proven by a person’s actions. Mike’s Dad—we’ll call him rich dad from now on—wasted no time putting the boys through several important tests. The first was a test of their decisiveness. The boys were given the option to learn by working for rich dad—or not at all. They were informed that they had to make up their minds immediately and that they could not even ask questions. Naturally, they said yes, and that led to the next test: they had to be willing to give up their Saturday mornings and to swallow their pride while working for next to nothing at a job that could only be described as boring. Rich dad’s assessment of the value of this lesson was correct. The boys quickly learned that dusting grocery shelves for three hours in return for a total of thirty cents per day was something they would rather not do for the rest of their lives. That experience would eventually start their mental wheels turning in new directions. It was the quickest way to drum into their heads the first of the six major lessons they would learn from rich dad:

The rich don’t work for money—they have money work for them.

But before verbally clarifying this lesson, rich dad waited till Robert was ready to quit. Even when the young Kiyosaki did reach that point, he was still too entrenched in the old, “poor” way of thinking to come up with the right sort of solution on his own. His reaction was still typical of the employee “entitlement” mentality that looked for raises and benefits from the boss or company, and rich dad knew that. He also knew that because Kiyosaki’s real father was a schoolteacher, Robert’s image of teaching and learning still resembled traditional school methods; but rich dad wanted him to experience how life teaches—not with words, but by pushing people around. According to rich dad, most people never dared to take the necessary risks—they simply let life push them around. Some would fight back, but they usually made the mistake of blaming other people or circumstances for their misfortune instead of learning whatever life was trying to teach them. A handful understood, learned the lesson, and took responsibility for their lives.

Tied in with this specific lesson was another related idea that was also being taught through example rather than words. As mentioned earlier, at that period in time, rich dad’s lifestyle did not yet manifest the trappings of wealth. His home was modest and in need of remodeling, his furniture was old … in general, his lifestyle, though adequate, could not be described as fancy or luxurious. Like the ten-cent-an-hour dusting job that required giving up free time and baseball games (Robert’s passion at the time), rich dad’s personal example taught the boys the value of postponing immediate gratification in favor of long-term results.

Following his talk with the young Kiyosaki, rich dad sent him back to join Mike at work—this time with no pay. This would further test the boys’ mettle to see how quickly they would cave in to the usual governing emotions of fear and greed. Rich dad was manipulating the boys’ frustration in order to generate an intense interest in financial education and to galvanize them into thinking in new, creative ways. Three weeks later, rich dad stopped by the superette where they worked, and after taking the boys for a walk and treating them each to an ice cream cone, he tempted them with high wages on the condition that they could bring themselves to get excited about the classic fate of the average employee—constant drudgery, small paychecks, and a negligible retirement fund. They didn’t budge. They were beginning to grasp that money in the form of wages was not the answer to their issues. The needy, emotional part of their souls had been pitted against the rational part, and the rational part had won.

Rich dad had been trying to get the boys to think from a wider, more long-term perspective rather than capitulating to their immediate needs or desires. If they could do this, they could avoid the trap that caught most people, including some of the rich. He wanted them to be governed by reason and knowledge rather than by emotion. This meant not being obsessed with money but also not avoiding it, just as it meant not being governed by the emotions generated by money and desire, yet still being truthful about their feelings. Rich dad saw emotions as energy. Being honest about the nature of that energy would enable the boys to use it in their favor. Not allowing their emotions to govern them would enable them to think more creatively about long-term solutions to the practical financial issues they would encounter.

So what, the boys wanted to know, was the solution? The young Kiyosaki had asked that question during his talk with rich dad three weeks earlier, and rich dad had pointed at Robert’s head, indicating that he needed to use his brains. Now he continued the same discussion, saying that it wasn’t the economy or a person’s boss or the government or any other external circumstance that got someone into financial trouble. Instead, it was fear and ignorance—ignorance of how money works. The problem was compounded by the fact that financial education was not taught in school and that it was a lifetime study, one that few people ever undertook. Learning to not simply react to emotion, as the boys had begun to do, was the first step because it gave them time to choose their thoughts. That way they could avoid the carrot-on-the-stick routine—also likened to the Tar Baby and the Rat Race—that trapped so many.

Rich dad’s idea worked. After their second meeting with him, the boys talked and thought and kept working without pay for several more weeks until one day Robert noticed something he’d never seen before. Not having any money made it impossible to buy even comic books, so wishfully looking back toward the comic books would have been natural. One day, as the two boys were leaving the store, Robert observed Mrs. Martin, the store manager, cutting the front covers of the comic books in half. When he asked her what she did with them, she replied that she threw them out after giving the half covers back to the distributor for credit. The distributor would be coming in an hour, so the boys waited. They found out that they could have the comics as long as they worked at the store and didn’t resell them, to which they agreed. Young Mike and Robert were back in business. They set up a comic library in a basement room of Mike’s house, hired his sister as the librarian, paid her a dollar a week, and charged the neighborhood kids ten cents for two hours of reading, earning them $9.50 a week. All went well until some neighborhood bullies made trouble. Rich dad recommended that the boys shut down the library, but in spite of the trouble, he was happy with what they had learned. At that point, they stopped working at the store: they had now learned the first crucial lesson and were ready to move on to the next one. The boys, for their part, recognized the value of what they had received through their experience.

It’s What You Keep That Counts

 

The primary lesson of Chapter 2 is that it’s not how much money you make that’s important but how much you keep. Stories abound of people who made millions but who, either because of global or personal catastrophes or foolishness, lost it all—sometimes in as little as a year. The stories were not just of lottery winners, sports stars, and stock speculators but of heads of huge, successful national and international companies as well. Even they could not escape the global difficulties—the inflation, the Great Depression, the World Wars, and other calamities—that disrupted so many lives. Our time is no exception to the rule of ups and downs. Kiyosaki correctly maintains that changes are occurring faster than ever and that we need to be ready for them. The answer is not money but intelligence and financial education. Only through these can people stay ahead of inflation, sudden stock market changes, and unforeseen events that inevitably impact the economy.

When Kiyosaki speaks of keeping money, he means not just for one generation but for many. The true measure of financial success is the creation of a stable financial legacy, and that can only be created through a strong and deep foundation based on genuine understanding—what he calls “financial literacy.” He further maintains that one of the great errors in wealth building  today is that people are metaphorically trying to create huge buildings on foundations suitable only for much smaller houses.

Laying a solid foundation for a sound financial education using simple, understandable terms was something that rich dad did for young Kiyosaki and his friend Mike, and in Rich Dad, Poor Dad, Kiyosaki uses those simplified lessons to help people begin to understand the complex subjects that underlie financial understanding. One of the first and most important subjects that Robert and Mike learned from rich dad was accounting. Although numbers are obviously an important aspect of money management in general and of accounting in particular, rich dad added them only later, after the boys had mastered the basic concepts through pictures.

According to Kiyosaki, the most essential and important accounting concept to understand is what constitutes an asset and a liability, and to focus on investing in assets. One of the problems in teaching adults these ideas is that rich dad’s definition of “assets” and “liabilities” differs from the standard definition: an asset is simply defined as something that generates income while a liability generates expenses. According to the standard definition, an asset is something of value capable of generating income, though it might not necessarily be used for that purpose. A home, for example, is normally considered an asset because of its potential cash value. From rich dad’s point of view, however, a house as a home was a liability because it generated no income but incurred debt in the form of a mortgage, taxes, insurance, utilities, and maintenance. Although Kiyosaki does not go into it in detail in this chapter, only a rental property that generates an income would be considered an asset by his definition. The classic problem with the poor and the middle class is that they misunderstand the real nature and purpose of assets and liabilities. This type of thinking that assigns value to non-income-generating assets partly accounts for their expenses typically increasing along with their income, which is why more income by itself cannot solve their financial problems. They need to change their focus so that they spend their money in such a way that it will generate more income rather than more debt.

Kiyosaki illustrates this in a series of what he admits are oversimplified diagrams. The first illustration shows an example of the classic pattern of a poor person’s income statement and balance sheet. The poor person’s job is the sole source of income, which in turn is immediately spent on such standard expenses as taxes, rent, food, clothing, and transportation. There is nothing left over, and as a result, the balance sheet, which lists a person’s assets and liabilities, shows nothing in either column.

The middle-class person’s diagram is not much different in terms of cash flow pattern and financial struggle. The job is still the only source of income, but now the expense column includes payments for the mortgage, car, school loans, and credit cards, all of which are also listed under the liabilities column on the balance sheet. There is still nothing in the assets column, assuming that assets are being defined as income-generating items.

The diagram illustrating a rich person’s cash flow is the first to show a markedly different, though simplified, pattern. Here, for the first time, income is being generated by something other than a job. The assets column of the balance sheet lists real estate, stocks, bonds, notes, and intellectual property, which in turn produce rental income, interest, stock dividends, and royalties. The expenses and liabilities columns are oversimplified, as Kiyosaki himself says, listing only taxes and mortgage payments in the first column and mortgage, consumer loans, and credit cards in the second. It is, of course, assumed that expenses such as food, clothing, car payments, and so on apply to the rich as well, even though they appear on neither the income statement nor balance sheet.

Kiyosaki’s point that he stresses repeatedly is that until we get a handle on our cash flow, no amount of money will solve our financial problems. In fact, additional money often compounds existing financial problems by accentuating or exposing the flaws in a person’s financial thinking and behavior. Expenses tend to rise along with income, and those expenditures tend to be debt-incurring liabilities rather than income-producing assets. The key, therefore, is to learn to spend differently. This requires self-knowledge—typified in Japanese lore by the mirror—and the willingness to question and stand apart from the status quo. Keeping up with the Joneses is not the solution but the problem: it produces the illusion rather than the actuality of wealth.

By the time Kiyosaki and his friend Mike reached their mid-teens, they had profited greatly from listening to rich dad’s meetings with his accountants, lawyers, managers, and other advisors. They already knew that the education they were receiving in school had little to do with real life, at least as it related to making money. Kiyosaki agrees with the importance of learning a trade or profession, but he also knows that many academics know little about wealth building. The standard ideas on building wealth simply weren’t useful, and that made Mike and him less tractable as students and, in Kiyosaki’s case, less likely to listen to his biological father in financial matters.

Kiyosaki uses the final pages of the chapter to review the most important ideas learned so far:

  • that the rich get richer because they spend their money on income-producing assets
  • that the middle class make little to no financial progress because they mistake their home for an asset instead of a liability and because they continuously incur debt rather than investing in income-generating assets
  • that the same people view an increase in salary as a license to spend more and consequently never solve their financial issues
  • that they (the middle class) subscribe to the standard dogma put out by mutual fund managers to diversify, play it safe, etc. Being caught up in the “Rat Race,” they have no time to study investing themselves and thus gain an awareness of the alternatives.

Kiyosaki views the average person’s life as spent working first, for the company and its shareholders; second, for the government via tax payments, which he estimates as comprising at least a third of most people’s income; and third, for the bank in the form of mortgage and credit card payments. His goal is to help shift the emphasis so that people can work more directly for themselves and their families through asset building.

Kiyosaki ends the chapter with his definition of wealth, inspired by Buckminster Fuller. He says that a person is wealthy when the monthly cash flow produced by income-generating assets apart from a job is sufficient to cover monthly expenses. Being rich—a step beyond being wealthy—means having asset-generated income in excess of a person’s needs; but rather than spending it on unnecessary liabilities, Kiyosaki recommends continuing to add income-generating assets, maintaining lower expenses and eventually—once a sound basis is established—taking what most would consider greater investment risks. First, however, he uses Chapter 3 to teach us how to create a solid financial foundation.

Building Your Assets

 

Chapter 3 focuses on the importance of building income-generating assets, a process Kiyosaki calls “minding your own business.” He asserts that many people confuse their profession with their business and therefore end up building wealth for others throughout their careers, leaving themselves with next to nothing upon retirement. Like rich dad, Kiyosaki does not deny the importance of a variety of trades and professions, since that is part of what constitutes a viable culture, but again, he stresses the importance of building your asset column rather than merely working to increase your salary or wages. To illustrate the difference, he begins the chapter with a story about Ray Kroc, who once stated that his real business was not hamburgers or fast food but real estate. Kroc realized that land and location were some of the most important factors in the success of a franchise, with the result that McDonald’s is one of the largest holders of prime real estate in the world today.

In Chapter 3, Kiyosaki also deals in more detail with the definition and purpose of an asset, because he believes that the standard approach creates a skewed picture of a person’s net worth. What are typically called “assets”—a person’s home, car, and various luxury and other items such as golf clubs, furniture, and so on—occasionally appreciate in value but often depreciate as soon as they are used. Their ability to produce income is immediately curtailed and is often not worth as much as the individual’s balance sheet might suggest. Add to that the fact that an asset is taxed as soon as it is sold, and the true cash value decreases even further.

What, then, is the practical solution? What strategy should people adopt while building a solid financial basis? Kiyosaki believes in starting young, before getting caught in the endless “Rat Race” cycle of bills, debt, and working for an income that never seems like enough. Early financial education will help to shape the right attitudes and approach to money and allow the child, teenager, or young adult to stay ahead of what could otherwise easily become a frustrating cycle of financial dependency and struggle.

Regardless of whether a person starts young or not, Kiyosaki reiterates in more detail the strategy briefly mentioned in the previous chapter: keep your job and be an excellent employee while simultaneously maintaining expenses lower than your income and building an asset column consisting of

  • businesses owned by you but managed by others
  • income-generating real estate property
  • royalties from intellectual property of various sorts (books, music, patents, etc.)
  • stocks, bonds, and promissory notes
  • any other items or businesses that do not require your presence, generate income, and have a viable market.

 

The other criterion that rich dad emphasized to his two young students was to focus on acquiring assets they loved. His reasoning, as always, was simple: love is the force that motivates us to care for what we own. Kiyosaki loves real estate, for example, so he buys it. He does not recommend the same approach to those without the same feeling, because they will lack the motivation to deal with whatever problems arise. Another example he gives is his preference for buying stock in start-up companies instead of corporations because he sees himself as an entrepreneur rather than a corporate businessperson. Nor does he necessarily recommend starting your own company, given the high failure rate of start-ups, unless you feel strongly motivated in that direction. This brings us back to the importance of self-knowledge coupled with financial understanding as opposed to blindly following the status quo. In Kiyosaki’s own case, through various experiences starting companies, working for corporations, buying real estate, and investing in stocks and other items, in addition to constantly improving his financial literacy, he gradually got to know his own preferences and developed appropriate strategies.

The message that Kiyosaki transmits here is that there is no single specific investment strategy. Rather, there is an underlying attitude and approach—the kind that builds long-term investments instead of purchasing the latest luxury items because everyone else is doing so. This does not mean that you should never buy luxuries—simply that you should earn them as the result of intelligent asset building. Kiyosaki emphasizes seeing your dollars as your employees and that once a dollar is added to your asset column, it should never be removed. Exactly what that dollar is invested in and how long you hold the investment depends on personal preferences and circumstances, which can change over time. Kiyosaki, for instance, likes to hold start-up stock for less than a year and prefers keeping a rental property for no more than seven years, at which point he trades it in for a better property. The key, as always, is financial intelligence and knowledge, which leads us to Chapter 4 and one of the crucial techniques used by the rich.

Tax Law and the Corporation

 

The fourth precept practiced by the rich—one that gives them considerable advantages over the poor and middle class—has to do with tax law and the legal entity known as the corporation. Kiyosaki begins this chapter by explaining that income tax did not always exist in Britain and America. Taxes were occasionally used to raise money for wars, but England did not have a permanent income tax until 1874, and America only instituted it as late as 1913 with the ratification of the 16th Amendment. He also mentions that taxes were originally conceived as a levy against the rich. It was this that convinced the poor and the middle class to vote for them, though, ironically, it is the poor and the middle class who have suffered most from taxation.

According to rich dad, the government developed an ever-increasing taste for money and, unlike most businesses, rewards inefficiency and redundancy. Kiyosaki’s “poor” dad—his biological father—worked for the government in the Education Department and therefore saw things in opposite terms from rich dad. He believed that government funding was there to help the citizens and viewed additional grant money and employees as beneficial rather than inefficient.

Inevitably, the government’s need for money through taxation soon extended to all classes—not just the rich. However, as Kiyosaki likes to point out, the rich were again quick to use their financial and legal knowledge to devise a way around whatever situation presented itself, in this case, universal taxation. They were aware of the corporation from the days of the old sailing expeditions. A corporation was simply a legal entity invented to limit the potential loss for a given expedition, and now the same idea would function as a means of protecting the income of the rich from what they felt was excessive taxation. Corporate taxes are in many cases lower than individual taxes, and they have the added advantage of being able pay for many expenses before they are taxed, whereas the reverse is true for individuals.

Kiyosaki winds up the chapter by outlining the four major areas of mastery required for a solid financial education which, like most enterprises, is not a one-time but an ongoing event. Those areas are:

  • Accounting – the ability to understand financial statements in detail and to accurately interpret what the numbers are saying
  • Investing – the science of maximizing income through various financial strategies
  • Markets – the understanding of supply and demand, which involves knowing the details of how both investments and markets operate and whether market conditions are right for a given investment
  • Law – a knowledge of the rules governing corporations and the advantages they confer in relation to taxes and protection from litigation. Some advantages of a corporation are that it can
    • pay tax only on the income remaining after expenses are paid, as contrasted with an employee, who is taxed first and pays for expenses from whatever is left over
    • cover certain expenses that would otherwise be paid for by the individual
    • protect property through corporate rather than individual ownership.

 

Kiyosaki recommends Garrett Sutton’s books on corporations, and the chapter ends by strongly advising wealth builders to include the study of the corporate legal entity as part of their overall financial and business plan. To underscore the value of this step, Kiyosaki gives an illustration from his own life—how, when he was still working for Xerox, he was inspired to work even harder while simultaneously creating and managing his own real estate corporation, which then paid for a new Porsche within three years. In Kiyosaki’s estimate, applying a knowledge of tax and corporate law is the equivalent of flying versus walking and is one of the most important things a wealth builder can do.

The Rich Create Opportunities

 

The overall gist of this chapter is that those who are able to build and maintain their wealth are also those who can spot opportunities. Kiyosaki words this as being able to create money, sometimes out of seemingly nothing. It is both a learned skill or series of skills, as explained in the previous chapters, and a state of mind—one that sees possibilities where others see either failure, obstacles, or nothing worthwhile. In short, it is creativity applied to financial problems.

One of Kiyosaki’s own financial solutions as well as a favorite teaching instrument is the game he invented called CASHFLOW. Kiyosaki himself had always disliked lectures, so he developed a more interactive way of teaching people the skills and mindset required for financial literacy. He maintains that CASHFLOW, like life, creates a tailor-made “lecture” for individuals by reflecting their own habitual mentality and tendencies in how they play the game. Many people, however, resist the idea that the outcome of the game is a direct reflection of their own habits. Instead, they blame outward circumstances or what they perceive to be a lack of opportunities or the wrong opportunities rather than recognizing their own choices and lack of creativity as the cause. On the other hand, those with the right financial grounding and level of alertness will take whatever life (or the game) hands them and turn it into a lucrative venture. As Kiyosaki points out, rarely do all the opportunities line up just as we envision them, and if we wait for that to happen, we will miss the valuable opportunities that are right in front of us.

We also have to be alert to change. Yesterday’s rules and advantages are not the same as today’s, and tomorrow’s will again be different. Kiyosaki gives the example of land as once being the measure of value; that subsequently changed to industry and has now become information. The speed of communication and, therefore, action has also changed considerably, and only if we can perceive and take advantage of the implications of these changes will be able to keep up with the new flow. At the beginning of the chapter, Kiyosaki gives Alexander Graham Bell as an example. Bell had tried to sell his new invention, the telephone—along with the company that went with it—to Western Union, but Western Union lacked the foresight to detect exactly how monumental Bell’s influence would be and declined the offer. We all know what happened after that. The question is: would we in the same situation have the foresight and understanding to perceive the opportunity before us, and would we also possess the creativity and boldness to act on it? In Kiyosaki’s mind, this is the primary reason for increasing our financial literacy—to increase our options so that we can more readily spot and take advantage of whatever presents itself to us.

Kiyosaki believes that there are two types of investors: those who buy packaged investments through brokers and those who create opportunities by putting various components together from scratch or hiring someone who knows how to do it for them. For the second type of investor, he believes that there are three skills to be mastered in addition to the four main areas mentioned in Chapter 4. These are:

  • seeing opportunities others miss
  • raising money
  • hiring skilled and intelligent advisors.

Again, he reminds us not to wait for all the dots to connect perfectly and gives examples from his own and others’ lives to illustrate exactly how easy making money can be when people know what they are doing. Briefly, here is what he has to say on the above three points:

  • Seeing opportunities – Opportunities sometimes come disguised as liabilities just as liabilities can masquerade as opportunities. The more knowledge a person has about a certain type of situation and the more financial literacy that person has, the more he or she will be able to spot possibility where others see only problems. A friend of his, for example, noticed four extra lots attached to one that was taken up by a dilapidated, old house. After tearing down the house, he was able to make three times the purchase price because he saw opportunity where everyone else had seen only liability. On the other hand, something like a boat, which might seem like a dream purchase, could become a serious financial burden if acquired at the wrong time and used solely for pleasure rather than as a means to generate income.
  • Raising money – As Kiyosaki points out, there are many ways to accomplish your goals, and raising funds is no exception to this rule. If the bank refuses to lend you money, use your creativity and try other avenues. Kiyosaki himself cites an instance when he borrowed money from a friend and repaid him with interest, a move that made everybody happy. That enabled him to take immediate advantage of a real estate deal, which in turn allowed him to charge a fee that more than covered both the principal and interest of the loan.
  • Hiring outstanding advisors – Hiring people who are more skilled or intelligent than you in a given field is not a sign of poor intelligence or ineptitude but of wisdom and confidence. The willingness to learn and the ability to know what you do not know shows both grace and genuine intelligence and is a key aspect of success.

Kiyosaki ends the chapter by reminding us that our minds are our greatest asset and that the more we know, the less risk we incur. Boldness is also necessary, and mistakes are inevitable—that’s how we learn; but the sooner we understand that what we call money is not “real” but a contract or mutually agreed-upon value that often takes a form other than cash, the sooner we will gain the ability to create vast sums of money with maximum speed and efficiency.

Working to Learn

 

The sixth lesson expounded in Rich Dad, Poor Dad was one of the first that Robert Kiyosaki and his friend Mike learned from rich dad: that for those who wanted to acquire wealth, what they learned from a job was, at least at first, more important in the long run than what they earned. Those who followed our school system’s recommendation to become highly specialized more often than not found themselves, like Kiyosaki’s educated but ultimately poor dad, overqualified and underpaid. Many times, they were only one or two skills away from significantly increasing their income but just as often refused to learn precisely those skills that would make a difference, because they had bought into the idea that all they needed to do was specialize and the money would follow.

This is completely different from how the wealthy train their successors, whether their own children or someone else’s. Their mentoring process, like rich dad’s, stresses generalization—knowing a little about every aspect of the business. As mentioned elsewhere, Kiyosaki worked in many different areas of rich dad’s growing empire, including accounting, restaurant, construction, sales, marketing, and reservations. He and Mike also sat in on the various meetings rich dad held with his bankers, accountants, lawyers, and brokers, because rich dad knew that that would be the best way for them to learn the different facets of the business.

Kiyosaki applied the same principle in fashioning his own career. Rather than aiming for the highest paying job, which he knew would only lead to a highly paid Rat Race, Kiyosaki focused on jobs that would teach him whatever skill or skills he considered most vital to his progress. He studied with the Merchant Marines to learn about international trade, following rich dad’s advice to focus on the Far East as the next up-and-coming area. Upon graduating, he worked for Standard Oil as a third mate. Despite the fact that he was doing well and receiving many benefits, he resigned six months later to join the Marine Corps so that he could learn to fly. He later joined Xerox because they had one of the best sales programs, and selling was at once important to his career and one of his weak points. Eventually, he started his own company, utilizing much of what he had learned in his previous jobs. He has continued to educate himself financially so that he can become more and more skilled in the art of making money with money.

Kiyosaki cites the word “job” as an acronym for “just over broke,” noting that if those with outstanding specialized skills would supplement them with sales, marketing, management and leadership skills as well the four main areas listed in previous chapters, these often highly talented and educated people would multiply their success. If they refuse to do this—as many do—then he suggests that their best bet is to join a union. If, on the other hand, they are willing to learn, then he reiterates that the following skills are among the most important:

  • Sales and marketing, which include learning how to communicate effectively with other people
  • Management of cash flow 2. business systems and 3. people.

The final but important point Kiyosaki makes has to do with attitudes toward giving and receiving. He noticed that his rich dad, like many wealthy families, gave continuously—both as a teacher and a donator of his wealth. Kiyosaki’s educated but poor dad was also a generous man, donating his time and knowledge to others; but when it came to money, he had a sense of scarcity that Kiyosaki maintains is contrary to the mentality of the rich. Nevertheless, Kiyosaki valued the lessons learned from both dads—their generosity, his rich dad’s understanding of business and money, and his poor but educated dad’s concern for education and social welfare— and in his own life, he assimilated and combined both approaches.

Managing Emotions and Attitudes

 

Kiyosaki calls this chapter “Overcoming Obstacles,” but the obstacles he means are those produced by our thoughts and emotions. His first important point is that it’s not the attitude or emotion itself but how we handle it. Everyone encounters internal obstacles of various kinds, but our responses to them are heavily influenced by our training. He says that a person can be financially literate and still be barred by attitudes that prevent him or her from moving on ideas, no matter how sound.

In relation to fear, the first obstacle on the list, he acknowledges that we all have a hero and a coward living inside of us, and he does not judge one as better than the other, but he also knows that our attitudes have a significant influence on our lives. Rich dad’s solution to the fear of losing money through investing was to start early, and Kiyosaki gives the example of the purchase of Manhattan, which was bought for the equivalent of $24. He maintains that if that $24 had been invested at an annual interest rate of eight percent, it would have earned enough by now to buy both Manhattan and a great deal of Los Angeles.

The problem is that most people do not start early, which raises the question of what options remain them. Tied in with this is the main fear that Kiyosaki addresses in this section, namely, the fear of failure or of losing—especially of losing money; but failure and losing are essential elements of winning. Not realizing this, the vast majority play it safe by following the usual equation of investing in low-interest mutual funds, diversifying, and so on. According to Kiyosaki, this is the wrong thing to do for those interested in a quicker return or in winning big. The key, Kiyosaki believes, is to have a clear, determined focus and a high tolerance for risk. He does not believe that those lacking these qualities should change their ways, but he is clear in his assertion that a positive orientation toward risk and failure—not for their own sakes but as inspiration to do better and as learning tools—yields a far greater return than a safe, balanced approach. Rich dad believed that winners are inspired by losing, and Kiyosaki spends a considerable amount of time recounting rich dad’s love of the Alamo story, a symbol of the classic Texan approach, which thinks and acts big and ultimately even turned what was once a military tragedy into a major success as a national tourist attraction.

The second attitude Kiyosaki addresses is cynicism, which he defines as doubt resulting from fear. He reminds us of the Chicken Little story, acknowledging that there is a Chicken Little in each of us and that we need to watch that it doesn’t get the upper hand and prevent us from moving forward. Often it takes the form of “what if” scenarios that lead to paralysis, and Kiyosaki’s recommendation in that case is to take the advice of top investor Peter Lynch, who called it “noise,” implying that we should ignore it. This “noise” may masquerade as “reason” and can come from our own thinking or from external sources such as family, friends, or the media; but the thing to be aware of is that it’s real nature is often fear-based—especially when the source of the “noise” is ignorant of the facts, as is often the case. Instead of maintaining a rational, incisive, long-term outlook, many people respond emotionally to every perceived threat or change, whether imagined or real. The better approach is to become financially educated—to perform “due diligence”—and to understand the hazards of emotional decision-making. As Kiyosaki points out, an astute investor recognizes that the worst economic times often provide ideal opportunities for investing. It is simply a matter of knowledge, intelligence, and maintaining a rational attitude even in times of mass hysteria. Kiyosaki points out more than once that the technical aspects of wealth building are simple—a high-school education will do. What stops people is a lack of courage, not a lack of brains or talent. Instead of using their brains to try new things and to learn from their efforts, they concoct scenarios based on doubt and fear, thus preventing themselves from ever finding out how simple it is to build wealth. He gives three concrete examples from his own life—real estate investing, tax liens with a sixteen percent yield, and undervalued stocks. However, as Kiyosaki constantly reminds us, the key is not a specific investment technique but a comprehensive financial education, the ability to maintain a clear head, and the qualities of persistence, creativity, and courage. It’s these that enable a person to see critical details that others overlook. They make the difference between playing to win and avoiding loss, between focusing on positive solutions and being distracted by negative problems.

The third obstacle, laziness, is a form of avoidance that likes to disguise itself as having too much to do, using activity—whether useful or not—as a way of escaping the need to face important issues. Kiyosaki believes that the remedy is to increase your greed level a little. Another way of wording it, since “greed” has negative connotations for many people, is to affirm your desires. Rich dad taught the boys to say “How can I afford it?” rather than “I can’t afford it,” which he believed shut down the brain and angered or depressed the human spirit. On the other hand, “How can I afford it?” stimulates the creativity that solves problems and leads to positive action. He felt that this was a more honest and productive approach. Although Kiyosaki objects to too much greed, he believes that the desire to improve your life is far healthier than the guilt that is foisted on many for entertaining such desires. Finally, he makes it clear that he is not referring to excessive greed but to that creative impetus that is at the heart of progress.

The fourth obstacle mentioned by Kiyosaki is poor money management, and the specific habit he is referring to is that of paying your creditors before building your asset column. Rich dad called the habit of investing before paying bills and debts “paying yourself first.” His reasoning was that the fear of creditors—whether bill collectors or the government—would drive him to find creative solutions that would enable him to pay them, whereas neglecting his asset column in favor of his bills would keep him going in the same financial circles year after year. He saw the pressure as an opportunity to exercise his financial mental muscle, and he used the fear of screaming creditors as a guarantee for motivation. That way, his financial capabilities would get perpetually stronger, while those who paid themselves last would find their financial muscles growing weaker and weaker.

The final obstacle on Kiyosaki’s list is arrogance, specifically, the type of arrogance that seeks to hide ignorance. It’s a trait he has noticed repeatedly in the world of finance and one he has learned as important to recognize, especially in yourself. Rich dad taught him that it was knowledge that enabled him to increase his own wealth and that he always got into trouble when he would not admit the importance of what he didn’t know. The remedy to this obstacle, as always, is financial intelligence—acknowledging your holes and educating yourself either through a book, a hired expert, or a course.

Tips for Success

 

Kiyosaki begins Chapter 8 with the assertion that we all have a financial genius within us that has been trained to lie dormant, in part because of an old and widespread cultural belief that money is the root of evil. Add to that the fact that our culture and educational system do not train us in the area of financial intelligence, and the result is that most members of our society continue to assume that the best way to earn a good income is by working hard, saving assiduously, and occasionally borrowing, which—as we have learned—is the opposite of what Kiyosaki recommends.

Although he believes that building wealth is simple, Kiyosaki admits that it was not an easy process for him to learn and that much of his difficulties stemmed from the built-in attitudes so prevalent in our culture. Chapter 8 therefore lists ten rules or suggestions aimed at helping people to acquire the attitudes and habits that make for exceptional financial success. These principles are not carved in stone. Rather, they are designed to stimulate individual financial intelligence so that those who wish to write their own can do so as well.

Rule #1  The power of spirit – Kiyosaki strongly recommends having a powerful motivation for becoming wealthy, one that supersedes the difficulties that inevitably present themselves. A strong reason will make the path seem easier, regardless of how many obstacles and sacrifices are involved. He believes that we are driven by a combination of our desires and dislikes, a concept he learned from rich dad, who saw passion as a mixture of love and hatred. Kiyosaki cautions us that if we do not possess this deep-seated drive that we should not bother reading beyond this point.

Rule #2  The power of choice – Here Kiyosaki reiterates his belief that the state of a person’s finances are a reflection of his or her daily decisions. When it comes to wealth building, our important choices fall into three categories: how we spend our time, how we spend our money, and what we choose to learn.

Kiyosaki believes that we should begin by investing in educating ourselves financially, since this can save us considerable time and money long-term. This can include taking workshops and classes, listening to audiotapes, reading books, and—not least—trying out the new ideas we’ve learned. It also means having an open mind and being willing to listen until we genuinely understand a new concept, even if we don’t agree with it. At the very least, we will come away with an alternative approach.

Rule #3  The power of association – This refers to the power of being acquainted with the right people—in this case, those who understand money. Kiyosaki is quick to mention that it does not mean choosing your friends according to the size of their bank accounts or asset columns. It does mean being aware of their beliefs and learning both from those who are wealthy and interested in money as well as those who are not. Do not, however, take financial advice from people who lack a proven positive track record with money. Their greatest gift to committed wealth builders is what not to do, which includes not asking wealthy friends for advice, following the crowd (which usually means being too late), and trying to time the market. Kiyosaki maintains that intelligent investors stay ahead of the trends and position themselves accordingly. He has sought out the wealthy for their knowledge—occasionally becoming friends with them in the process—and profited from valuable legal insider information (not illegal insider trading) and insights.

Rule #4  The power of learning quickly – One of Kiyosaki’s main points—and one that he continually repeats in various forms—is to invest in your financial education. He makes several important statements on this subject in this section, namely,

  1. that the power of the mind is vast, that we tend to become what we study, and that we should therefore be careful about what we feed our minds
  2. that we should learn one formula at a time and master it
  3. that we do this through study followed by action—the step where most people stop
  4. that once we have mastered one formula, we should move on to another.

Don’t worry if you sometimes find yourself among people much smarter and more knowledgeable than you. Kiyosaki has taken a variety of courses—from real estate foreclosure to derivatives trading and chaology—and at times landed in the company of individuals with a far more advanced understanding of the subject. Intellectually challenging situations such as these might not always feel comfortable, but they enabled Kiyosaki to deepen and refine his understanding of investing.

Kiyosaki finishes this section by reminding us that today’s world is too fast-paced to stick with old formulas. He is constantly searching for new, faster, and better formulas, emphasizing that one of the most important skills we can develop is the ability to learn quickly in order to stay ahead of the changes.

Rule #5  The power of self-discipline – This rule is about financial self-discipline or “paying yourself first,” a term taken from George Clason’s The Richest Man in Babylon. Kiyosaki believes this to be the distinguishing characteristic of the rich and that long-term wealth is impossible without it. Simply put, this means investing in your asset column before paying your bills. Rather than bowing to pressure from creditors, use the pressure as inspiration to find creative financial solutions. This does not mean poverty-line living or fiscal irresponsibility, but it does mean minimizing expenses—especially extraneous consumer debts—until the cash flow from your assets is sufficient to cover them.

Rule #6  The power of good advice – Kiyosaki strongly recommends hiring and paying for good advisors—one of rich dad’s cardinal rules and one that Kiyosaki maintained. Do not skimp on what you pay your advisors. The better the caliber of your advisors, the better your business will run. A quality professional should inform and teach you, save you time, and increase your income by helping you to both save and generate money. Some ways to help guarantee this are to make sure that

  1. your broker, accountant, or lawyer is an expert, not just a salesperson
  2. you share the same business mindset (e.g., building assets first)
  3. your broker or other hired professional genuinely cares about your interests.

Look for advisors who are more skilled than you in their areas of expertise. Learning to manage and work with those with superior knowledge is one of the skills of success. Be true to yourself, open and humble enough to learn, and fair to those you hire, and they will give you good results. Kiyosaki also strongly recommends having a board of directors.

Rule #7  The power of getting something for nothing – This principle is about learning to maximize the return on your investment (ROI) as quickly and efficiently as possible. That means at times being willing to move rapidly and decisively on deals that promise a quick return. In Kiyosaki’s real estate example, it meant bidding immediately with a cashier’s check on a property that gave him his money back in roughly three years. It now generates extra income on a monthly basis. In his stock market example, it meant moving quickly on his broker’s advice and then pulling out his initial investment amount once the stock had risen sufficiently to cover it, essentially paying for the stock with the dividends. The point is that investors should check both for a rapid ROI and for investment “freebies”—either extras that come with the investment or assets that can rapidly pay for the initial investment amount, as in the above cases, which then continue earning income year after year.

Rule #8  The power of focus – This rule is about purchasing luxuries with assets. One of the failings of much of modern society is that it has put consumerism ahead of financial intelligence. Kiyosaki estimates that eighty percent of the population is better at creating debt than at maximizing their assets. Governed by their desires, they lack both discipline and financial understanding. Instead of spending on credit, Kiyosaki recommends using our desires to fuel motivation and interest and as inspiration for learning how to build our assets and generate the needed income.

Rule #9  The power of myth – Kiyosaki’s ninth principle is about choosing heroes to emulate. He recommends learning from those who make investing look easy, listing Warren Buffett, Donald Trump, and Peter Lynch among his personal favorites. He studies their methods and subconsciously imitates their style because he recognizes modeling as a great confidence builder and profound learning tool.

Rule #10  The power of giving – This is the simple notion that whatever you want more of in life, you must first give. Kiyosaki’s rich dad understood this principle well and made it a point to give generously whenever he needed money as well as on a regular basis. By contrast, his poor but educated dad, though he gave in other ways, never seemed to have enough cash to extend to charity. Kiyosaki, however, chose to learn from his rich dad and has experienced the phenomenon of receiving many times over what he has given. He also notes that it must come from the heart: giving solely to receive does not have the same effect. This is true regardless of the nature of the gift, whether it’s money, smiles, friendship, knowledge, or love.

Supplemental Action Steps

 

Chapter 9 is a practical supplement to Chapter 8, since Kiyosaki found that some people think that his ten steps are too philosophical. He believes that being both a thinker and a doer has its advantages, but for those inclined more toward action, he offers the following suggestions:

  • Take a moment to assess what you’re doing. If it’s not working, stop doing it and look for a better solution.
  • Search for new ideas, study them, and then try them. Visit bookstores and look for interesting investing ideas. Don’t let someone who has no practical knowledge of the idea talk you out of it.
  • Find someone who has done what you’re considering and offer to take that person out to lunch in exchange for tips and information. People are often only too happy to share what they know, and their practical knowledge and experience will give you extra insight.
  • Take classes and workshops. These can be found online and through newspapers and are often inexpensive or free. However, expensive classes may also be worthwhile, so if a good educational opportunity comes along, do not skimp. Think in terms of your ultimate ROI.
  • Make a lot offers. You cannot know the person’s position in advance, so simply make the offer and take it from there. Kiyosaki always includes an escape clause to allow himself a way out. It can be something as simple as stating that the offer is subject to your partner’s approval. He adds that you don’t have to reveal your partner’s identity, jokingly inserting that his partner is his cat and that if he doesn’t like the deal, he simply calls his cat to discuss it. He gives this specific example to illustrate that the whole process is a game and should not be taken too seriously.
  • Jog, drive, or walk a given area every month to note any changes. This can be done on the way to and from the store or while exercising. If the area is depressed, look for details indicating improvement. Talk to retailers, especially new ones, moving company drivers, and the mail carrier, since these people often have a lot of information about the neighborhood.
  • Look for bargains, no matter what the market. Kiyosaki notes that whereas consumers flock to shopping sales, in markets such as stock and real estate, they wait until prices start to go up and run from stock market crashes and corrections (the equivalent of a consumer sale). He reminds us that the real money is made at the time of purchase, not at the time of sale.
  • Learn to shop in the right places. Kiyosaki bought the equivalent of a condominium purchased by his neighbor for half the price because he shopped in the foreclosure department. He learned how to do this by spending a little time and money on a real estate investment class, while his neighbor went through a broker who had no personal real estate investing experience.
  • Look for buyers first, then look for sellers. Think creatively, and think big. If you find a deal that is larger than what your prospective buyer is seeking, find a way to divide it into smaller pieces. Kiyosaki found a large piece of land, sold part of it to a friend who wanted a smaller lot, then bought the rest of it and retained it as an asset.
  • Think in large terms—that is, think wholesale. Often retailers give discounts for large purchases, so if you’re looking to buy a specific item, find out whether anyone you know has the same interest, and arrange for a larger discounted purchase.
  • Take lessons from history. It’s important to think big, but don’t forget that many companies and individuals started small—sometimes with nothing more than an idea.
  • This is one of the most important distinctions between those who achieve and those who do not.

Kiyosaki ends the chapter by noting that the above suggestions are just some of the steps he’s taken that have helped him to spot and take advantage of opportunities. Above all, he stresses action and tells us to do it now!

Closing Remarks

 

Chapter 10 is simply a quick summary of Kiyosaki’s main idea with a specific example of how financial intelligence and education can produce far more income with more efficiency and in less time. Without understanding how money works, we are relegated to the old formula of working for money rather than having money work for us. Kiyosaki cites the instance of a friend who was trying to save for his children’s college fund and his own retirement. Using the old method, his friend had managed to save a few hundred dollars a month. By learning and trying some real estate investment techniques, this friend—with Kiyosaki’s help—was earning several thousand dollars a month within a few years. This made him well able to afford his four children’s college educations and even allowed him and his wife to retire early.

Kiyosaki used this example to illustrate that it takes neither a great deal of money nor a great deal of education to start on the road to financial freedom. The main thing is to change our financial thought processes and habits. Specifically, this means changing earned income into either passive or portfolio income as soon as possible. Earned income refers to salary, wages, or fees paid to employed or self-employed individuals; passive income usually relates to income from real estate investments; and portfolio income refers to money earned through stocks, bonds, and similar assets.

Kiyosaki offers his CASHFLOW games as an excellent interactive educational tool for learning effective financial thinking and behavior patterns, stating that they have helped hundreds of people to change their financial destinies. CASHFLOW 101 and CASHFLOW for Kids lay the foundation, while CASHFLOW 202 teaches more advanced investing techniques.

He ends by once again giving us a call to action, reminding us that we choose daily whether we want to be rich or poor, and urging us to share our financial understanding and knowledge with our children so that we and they can make the most of life.

It is a few weeks that Travis and Old Yeller are laid up, and both of them are in incredible pain and suffering from fevers.  Mama mixes up several antidotes for Travis and tries to feed him and Old Yeller whenever they will eat.  Mama ends up taking over all of the chores with Travis laid-up and Little Arliss is not much help to her because he is so young and gets bored easily.  Bud Searcy comes by one day with Lisbeth and a puppy.  Lisbeth asks Travis how he is feeling and, wanting to sound tough, Travis tells her that he is doing alright.  Lisbeth tells Travis she has a surprise for him, and she presents him with a speckled puppy.  Travis seems to hurt Lisbeth’s feelings when he tells her that the puppy will be perfect for Little Arliss, because she leaves him alone afterward.  Travis feels bad he just believes he already has a dog and once Old Yeller is better they will not want to wait around for a puppy to keep up with them; the puppy would be better for Little Arliss because it would entertain him.  Lisbeth gives the puppy to Little Arliss, and Travis sees her look in at him as she and Bud Searcy are leaving.  Bud Searcy then tells Mama that since her husband is gone and Travis cannot help with chores he will leave Lisbeth to help out.  Mama wonders if the little girl will be of much help, but Bud Searcy assures her that Lisbeth is very tough and willing to help out.  As he leaves he tells Lisbeth to behave herself.

Travis and Mama both believe that Lisbeth is too little to help out much around the house, but she proves the two of them wrong.  Lisbeth works hard at her chores without being asked and is always looking for more ways to help out.  Lisbeth and Little Arliss both help Mama to gather corn and though gathering corn is not usually a job that Travis likes to do he finds that he wishes he could be outside helping them.  Travis feels as though his pride is bruised when this little girl can come in and do all of his chores for him, but he takes some solace in knowing that she cannot mark the hogs or kill animals for meat.  One day, Spot does not show up for her milking and when she returns in the morning Travis calls to Mama that she is back; Mama goes out to see Spot, but quickly yells and runs back into the house.  Spot had turned on Mama and tried to attack her so Mama wonders if she ate a poisonous pea-vine and went crazy, but Travis thinks that she probably has hydrophobia.  Everyone watches Spot carefully over the next few days while she walks around in circles and ignores her calf.  The bull called Roany wanders into the yard also, acting just as strangely as Spot though seemingly weaker.  Old Yeller knows the family is danger when he sees the bull, and he growls because the bull is heading toward Little Arliss and Lisbeth.  Travis calls for Mama to get his gun, but Mama runs after the children instead.  The bull tries to run for Mama but falls over, giving Travis the opportunity to shoot him.

Travis and Mama know that they must bring the dead roan bull somewhere to burn the body because being so close to the house it may contaminate the drinking water.  However, they find that Jumper cannot drag the carcass, so they must gather wood to burn the body where it lies.  The fire is huge but still takes two and a half days to completely burn the body; when wolves smell the meat they are drawn to the area but stay away from the fire and from Old Yeller, who is acting as a guard.  Travis remembers that Bud Searcy’s brother contracted hydrophobia, and he wishes that Papa would return home soon.  Mama tells Travis that he must kill Spot as well, and they will have to burn the heifer’s body to be sure that the other cows are not infected.  Travis follows Spot until she is in a place where it will be safe to burn her body without the danger of lighting the woods on fire, and he kills her.  Travis’ leg is in pain when he returns to Mama tells him to rest, and she and Lisbeth go out to gather wood and burn Spot’s carcass.  Travis tells the reader that had he known what was going to happen next he would have tried harder to keep them at home that day.  Travis falls asleep and when he wakes he see Little Arliss playing with the puppy though Mama and Lisbeth have still not returned; he realizes that it probably took a long time to gather wood.  Travis knows that Papa should be coming home soon, and he wonders if Papa will be bringing him a horse.  He mostly wants Papa to come home because of the hydrophobic plague.

As darkness begins to set in, Travis gets worried about Mama and Lisbeth, but he realizes that the task at hand may have taken a while and he cannot think of anything that would be a danger to them.  Travis brings Little Arliss and the puppy inside, and they eat a couple bowls of cornmeal and milk together.  When Travis is putting Little Arliss to bed, he hears dogs fighting outside and hears Mama yell for him to make a light and come outside with his gun.  Travis makes a light out of bear grass and heads outside with his gun where he is horrified to see Old Yeller fighting with a large wolf which Mama says is mad.  Travis does not want to fire at the wolf right away because he fears hitting Old Yeller, but when the wolf gets on top of the dog Travis gets his chance, and he shoots.  The wolf is dead, and Old Yeller licks Travis’ hand; the two of them collapse onto the ground together, and Mama sits with them.  Mama tells Travis that they stopped for water at Birdsong Creek and the wolf almost got her, but she hit it in the head with a stick and then Old Yeller kept it distracted while Mama and Lisbeth got away on Jumper.  Mama tells Travis that they got lucky, but Old Yeller is not so lucky; Travis realizes that Mama is telling him that Old Yeller is probably going to be mad now, and he needs to be killed.  Mama offers to do the job for Travis, but once he realizes that she is right, he reluctantly and sadly calls Old Yeller to him and then shoots him in the head.

Travis is so sad about Old Yeller that he cannot eat, sleep, or cry and feels empty inside.  Travis spends a lot of time thinking about how Old Yeller helped his family and Mama tries to talk with Travis about it to make him feel better, but it does not work.  Lisbeth reminds Travis that the puppy is part of Old Yeller, but Travis only thinks that the puppy has not helped to keep his family alive like Old Yeller did; he feels bad for shooting his dog when he did not even do anything to deserve it.  Soon the rain comes, and the hydrophobic plague is washed away from the land.  Papa comes home in the morning, thinner than he was when he left but happy to have money and a horse for Travis.  Travis appreciates the horse, but Papa can tell something is wrong with him.  Papa gets the story from Mama, and after dinner, he walks down to the creek with Travis and tells him that he knows about Old Yeller.  He tells Travis that he did exactly the right thing, just as a grown man would do, and he is proud of him.  Papa tells Travis to think about the good parts of each situation because if he dwells on the bad then all of life will be bad.  Travis understands what his father is saying, but he is still sad.  A week later, Travis hears Mama yelling at the puppy for stealing cornbread, Little Arliss crying because Mama hit the puppy, and Papa laughing at the whole situation; Travis feels a little better.  When Travis returns from riding his horse he sees Little Arliss playing naked in the water with the puppy and Travis starts laughing uncontrollably.  He decides that he will bring Little Arliss and the puppy squirrel hunting because if the puppy is going to act like Old Yeller he may as well be of use.

Vin is in her room, piles of paper all around her on the floor. She continues to sort through the pages, rearranging them as she rereads different parts. She even starts to take notes of some quotes that she wants to remember. OreSeur watches her, commenting that she should use the desk instead of the floor. Elend walks in, and he is amazed that she is researching. He is also impressed with her penmanship, based on the pretty letters in her notes. Elend takes Vin with him to meet the messenger that has come from his father’s army. Vin   is shocked to find that this messenger is also the man that was following her, the watcher. The messenger’s name is Zane, and he acts like an ambassador. Later, Vin and OreSeur wait outside for Zane. The two Mistborn spar, jumping from one rooftop to another. Zane says that Vin is different from the rest. She shouldn’t allow herself to be used by them. Vin doesn’t know what he means. When Zane leaves, Vin is sure she wants to spar with him more.

Zane comes back to his camp, or his father’s camp. He has a guard summon is father to the strategy tent. While waiting, he gives one of the soldiers strategic positions of the forces in Luthadel. Straff comes in and Zane tells him about the day’s activities, including what was said between Zane and Elend. They talk over a cup of tea. Straff, being a tineye, burns tin and smells poison in the tea he’s drinking. He knows Zane is always trying to poison him. He defiantly drinks the tea anyway and dismisses Zane. After, Straff summons one of his mistresses, a woman named Amaranta, who prepares a concoction of medicines in a special tea for Straff. He drinks the new tea, hoping he’ll live again this time.

Sazed has traveled six weeks worth of distance in six days, using his metalminds from time to time. Whenever a metalmind runs out, he leaves it on the ground, trying to lessen the amount of weight he has to carry. He notices several pillars of smoke ahead, sure sign that there is an army or camp of some kind. He is surprised to see that the army camp is made up of koloss, a dark blue kind of monster barbarian, once controlled by the Lord Ruler. Sazed is found by a koloss patrol. They force him to come down from the tree he was hiding in and follow them into the camp. Sazed is surprised once again to see that the man controlling these koloss is Jastes Lekal, a one-time friend of Elend Venture. Jastes says that he plans to conquer Luthadel as his own. He ends up letting Sazed go, under the condition that Sazed tell Elend about what he has seen. Sazed leaves, feeling even more urgency about getting to Luthadel.

Elends meets with his advisors–Ham, Breeze, Dockson, and Vin. Tindwyl is there, too. They try to talk Elend out of this plan he has to go into his father’s camp and trick him into fighting Cett. They don’t think Elend can con someone like that, but Elend is insistent that he can manipulate his father any time he wants. Plus, Elend argues, he’ll have Vin with him, in case Straff tries to take his own son hostage. Vin, listening in to the conversation, discovers through bronze that Breeze is soothing Elend to make him more confident. After the meeting, Tindwyl chastises Elend for not acting more like a king. Kings cannot doubt themselves. They must always feel that they are the right man for the job and convince others of the same through sheer confidence. The discussion is interrupted when Elend gets word that Cett’s daughter has arrived in Luthadel, looking for Breeze.

Cetts daughter, Allrianne, has left her father’s camp and come to Luthadel to see Breeze, whom she affectionately calls Breezy. Breeze is completely embarrassed by this, but the rest of the group gets a good laugh at his expense. Allrianne says she hated staying in her father’s camp; she needs comforts only a city can bring, like fresh water and a bed. After Allrianne leaves to freshen up, the group decides it may be beneficial to keep her. It may prevent her father from attacking too soon.

Vin, hides, suspended in the mists, just above Keep Venture. She spies on Ham as he walks across a courtyard. As she follows him, as a predetermined time, OreSeur jumps from behind some boxes and howls, scaring Ham. Ham reacts by flaring pewter. This confirms to Vin that he is not the kandra imposter. Vin admits to Ham that she is out of atium, meaning she’ll die the next time she fights a Mistborn with atium. She wonders is there is a secret to killing someone with atium. Ham doesn’t think so, although there have been some theories about how to do so. It may be possible, for example, to surprise them somehow. After that, Vin has a heart-to-heart with OreSeur. They talk about the way kandra are often treated, beaten by their own masters. They spot someone approaching the keep’s walls. It turns out to be Sazed, who has returned with, as he puts it, “problems and troubles.

Sazed is telling the group in the kitchens late at night, what he saw in the Koloss camp. They are not happy to know that a third army is on its way to Luthadel. Sazed does not know how Lekal is controlling the creatures, but the group does know that 20,000 koloss could beat an army of at least four times that many humans, meaning there is nothing stopping them from reaching and taking Luthadel. Finally, Sazed also share his fear regarding the mist killing people. He thinks something was released when the Lord Ruler was killed, although he never personally saw the mist kill anyone. Cett’s daughter comes walking in, half disheveled, asking what’s going on. They dismiss her and the group breaks apart, everyone either going to bed or to some corner to thin. Vin takes OreSeur outside to patrol. Back in his room, Sazed meets Tindwyl, an old friend of his. She criticizes him for returning and having strange theories about the mist.

Vin is outside, thinking about the beating she hears to the north, just like the writer of the log book, the supposed Hero of Ages. Zane finds her, and again he tries to convince her to leave Elend and Luthadel, claiming that she is being used by them and that she can do much better on her own, free to do as she pleases. Vin insists that she is very happy doing what she is doing and that no one is forcing her to do anything.

Vin is woken by a quiet bark of warning from OreSeur. She reacts by jumping out of bed, reaching for a dagger, and downing a vile of metals. She does all this before she realizes that the person that was “sneaking up on her” is actually Tindwyl the Terriswoman. Tindwyl obligates her to go shopping with herself and Allrianne, something Vin knows she will detest. They take a carriage to the market, the three women and OreSeur, who everything still assumes is just an ordinary wolfhound, along with Spook, who is forced to go to carry the girls’ bags. Vin manages to find a dress that she likes, and Tindwyl arranges for the dress to be made special for a Mistborn. Meanwhile, a someone has identifies Vin and a large crowd has gathered outside the storefront. Vin reluctantly goes outside to talk to them. They obviously worship her, calling her the Heir to the Survivor–Kelsier. She tries to say something that will inspire hope, but she feels that she is really just lying to them. Meanwhile, Elend is at the wall when Straff’s men attack. The guards and archers on the wall are in a total panic, and they barely kill a few of the invading wave before it retreats to the Venture camp. This was a test, just to try out Luthadel’s defenses, it is explained to Elend. Straff is sending a message, just before Elend is supposed to go out to the camp and talk to his father.

Vin opens the box sent from the dress maker, happy to find that the new dress is very well designed for a Mistborn, allowing her to move and fight freely. It even has secret hiding places for her daggers and some vials of metal. OreSeur does not think going is a good idea, since Vin and Elend would be alone in Straff’s army camp. Vin knows she must go anyway. Elend and Vin ride into the camp. Over the meal, Elend tries to manipulate Straff, but the man seems to catch on too quickly. Then he sends Vin out of the tent, so they can talk alone, father and son.

Straff and Elend talk inside, and things don’t seem to be going very well for Elend. Straff says he’ll just have Elend killed and demand Luthadel to open the gates to him. Elend says that if he is killed, Vin will kill Straff. Vin is outside, listening. She begins to manipulate Straff’s emotions, making him feel afraid. Finally, she smoothes away everything–every emotion he has, leaving him feeling empty and dead inside. The trick works, and Elend and Vin get out of the camp safe. Meanwhile, Zane has a little chat with Vin outside the tent, telling her that she is nothing but a knife to Elend. After they are gone, Straff commands Zane to kill Vin. Back in Luthadel, Elend learns that the assembly has voted to remove him as king.

The group meets together to see what they’re going to do about the assembly’s vote. They try to figure out if the assembly already has someone else in mind to put on the thrown, or if they simple want to send a warning to Elend because he has been ignoring them of late. The discussion leads to an argument between Breeze and Ham, as always, and Vin gets a taste of kandra humor when OreSeur whispers that he could always eat one of them and solve the argument. Later, Elend gets another lesson from Tindwyl about how a proper kind should act.

At night, Vin and OreSeur have a talk. OreSeur doesn’t think it’s healthy for Vin to keep herself awake for long periods of time, burning pewter to stay strong. He also doesn’t like the way Vin treats Zane, who should be her enemy. In the middle of the conversation, Vin realizes that she’s figured out what the Deepness is.

Sazed is in his room, studying and transcribing the rubbings he found. He knows that these few pages of transcribed text could keep him busy for months or even years. Vin enters through his window and wants to talk to him about the deepness. Sazed talks about if the deepness is even real or if it’s just a made-up story, some propaganda spun by the Lord Ruler. Vin says she thinks it’s real and tells Sazed that she thinks it’s actually the mist itself. The log book and the rubbings don’t say the mist actually killed people but that people died because of the mist. That could be because a permenant mist that covered the ground would kill crops and live stalk, leaving people to die of starvation. Vin also tells Sazed about the mist spirit that has been following her.

The assembly gathers, and Elend gets an opportunity to explain what he has done with his father. He uses twenty minutes to tell of the situation with the two armies and how his meeting with Straff went. He tells them that he used Vin’s power to threaten Straff, a move that may protect the city for some time yet. Meanwhile, Vin tries to pay attention to Elend’s meeting. She sees Zane in the crowd, and he smiles at her. They then have nominations for who should run for king. Elend and Lord Penrod are nominated, and, lastly, Cett is nominated. The man reveals himself to be in the crowd.

Vin watches in shock as Cett reveals himself to the crowd and to the assembly. He uses his army outside the gates to threaten the people into voting for him. He also tells the crowd about the koloss army not too far away, a fact that Elend hasn’t told anyone.

Vin sits in her room, studying the stacks of papers she has there. OreSeur is there with her, and they talk about the religious beliefs of the kandra. They practically worship the Contract above all else, the agreement they have with their human masters. Meanwhile, Elend discovers that some of the wells in Luthadel are being poisoned by someone, probably one of the armies outside. Vin talks to Dockson, and in the conversation, she determines that he can’t be the spy. She and OreSeur turn their attentions toward a new option: Demoux, a captain of the guard.

Elend works to find a way to convince the assembly to name him king again, while Vin wants to tell him her theory about Demoux. Tindwyle gets upset with Sazed when she finds out that he helped write part of the laws Elend put into place a year ago. Vin leaves the group and finds Zane, who immediately attacks her. She thinks he wants to spar, like before, but the fight becomes aggressive and Vin must fight him to survive. Zane tells her that he was ordered to kill her and that this attack was a warning. There are also many refugees coming from the koloss army, on their way to seek refuge in Luthadel. After giving his two warnings, Zane leaves.

Vin tries on another custom-made dress. Tindwyl tells her that Elend has nearly learned as much as he can from her; he’ll now have to learn to be a good leader through experience. Elend prepares his armored escort and carriage to go and see Cett. Breeze decides not to go, since he and Cett have history, which would only make the situation worse. When Elend and Vin actually enter the keep Cett is staying in and talk to the man, they discover just how sincere he is. He doesn’t want his daughter back, trusting that Elend will take good care of her. Cett wants Elend to step down from the election for king, and in return he won’t have Elend killed when he is made king. They also talk about the fact that no atium was found in all of Luthadel. Finally, Cett dismisses the two.

Sazed wanders through warehouse full of refugees from the koloss attacks, trying to help and health where he can. Tindwyl comes in and talks to him. She wants to see what he’s found–the rubbings he’s been transcribing. Meanwhile, Breeze has been listening in on the conversation, soothing both people in a way that would make them more friendly to each other. He walks among the refugees, trying to sooth away bad emotions and make them feel better. Elend and Ham come in, and Elend wants to make sure all the people have the clothes they need. Later, Breeze goes into the keep and has a secret meeting with Clubs. Though they always seem to hate each other, they drink together and talk; they’ve struck up a strange companionship. Allrianne walks in and tries to steal Breeze away. Vin, watching from outside, discovers that Allrianne is a rioter, since she was rioting Breeze’s emotions. She and OreSeur then go to find Demoux, still certain that he is the kandra spy. They find him in a little meeting of the church of the Survivor. He can’t be a spy, Vin decides. Then who is?

Sazed and Tindwyl sit together in the study, pouring over the rubbings, searching their metalminds for any references to the deepness or Hero of Ages. It’s morning, meaning they’ve been at it all night long. Tindwyl knows the course of actions Sazed takes is different from what the keepers want, but she is willing to stay with him and study these things further. Meanwhile, Elend and Ham walk along the wall. Ham comments that Elend looks more kingly than ever. As they walk, Elend announces that he has an idea to help Luthadel’s situation.

Vin, Elend, and the rest of the crew arrive early for the day of the election for king. Before the voting begins, Vin, trying to figure out what Elend has up his sleeve, discovers that he has joined the church of the Savior, in an effort to curry votes from the skaa members of the assembly. Suddenly, a groups of allomancers attack Elend and Cett. Vin manages to fight off the men, getting badly hurt in the process. After the fighting, the vote is moved to a more secure location, and the assembly members each announce their vote. Surprisingly, Penrod, a nobleman from the assembly is chosen the new king. Elend hands over his crown and leaves.

Straff Venture is angry that Zane sent a group of his allomancers to their deaths while Vin still lives. Zane promises that he has a plan to take care of her. Meanwhile, Straff meets with Penrod, the new king of Luthadel. Penrod is planning to give Luthadel to Straff, opening the gates to him and handing over the kingship.  Straff, on the other hand, doesn’t want to enter the city while Vin still lives. Later, Zane tells Straff that he has been poisoned again. Zane leaves, and Straff is forced to ride hard back into the camp so his mistress can make him another antidote tea.

Vin awakes to see that Elend is with her. He tells her that he is not king, and he reports that OreSeur, who was badly hurt in the fight, is currently digesting a new set of bones. Vin feels that Elend is now scared of her somehow because of the way she fought those allomancers. Vin goes back to sleep, and awakes to find Zane there. He accuses her, saying that she could have killed those attackers easily had she not been so distracted with protecting Elend and other innocents. Later, OreSeur visits Vin, in another dog’s body. They talk more about the Contract that binds all kandra. Vin uses brass and duralumin to push strongly on OreSeur’s emotions. Even though he at first does not react at all, with enough force, Vin hurts him very badly, and she felt like she were controlling him for a moment. She apologizes for hurting OreSeur, and he leaves to get some rest. Vin promise to never tell anyone what she’s discovered about kandra.

Sazed and Tindwyl continue to talk about the things they are learning. Something doesn’t make sense about the rubbings, written by Kwaan. It seems that Kwaan did not trust Alendi, but he also knew Alendi was a good man. But if Kwaan knew Alendi was good, why did he have his nephew, Rashek, to mislead or even kill Alendi? Elend comes in and asks for advice. After a discussion, he decides that being king isn’t about a title, but about doing something to help others. He returns to his closet and retrieves the white suite, the one made for a king.

Elend is hard at work, helping the people. He’s sending men out to dismantle the wooden parts of keeps and houses to use as firewood. The many refugees are cold and hungry, and he wants to help them. Someone comes with news that one of the gates under the river has been broken. That is how someone has been getting into the city and poisoning the wells. Also, other reports say that an Inquisitor is lurking about the city. Elend decides to go out and talk to Jastes, with the koloss army, himself. He rides out and meets Jastes, unable to make any kind of deal. On the way out, Elend manages to fight and kill one smaller koloss, earning the sword and pouch as his own. He looks into the pouch and discovers how Jastes is controlling the koloss. He’s paying them.

Vin sees Elend, now returned from his meet with the koloss army, inured and resting. Zanes comes and says that Cett was the one that planed the attack at the voting ceremony. Vin gets angry and decides to attack Cett. Zane and Vin attack the keep that Cett has been staying at in Luthadel. Together, they kill guards and hazekillers. Fueled by rage, Vin kills quickly, working her way to Cett’s room. She realizes that Zane is using atium, while she has none, and yet she’s killing just as easily as he is. They finally get to Cett’s room, where he is with his son. Vin fights them at first, but when she discovers that neither of them is an allomancer and that Cett doesn’t have a single allomancer with him, she leaves them behind, injured and scared.

The crew sees that Cett’s army is now leaving, a result of Vin’s attack on his keep the night before. Elend does not know why Vin attacked Cett like that. Some in the crew think she’s crazy, but Elend just sees her as determined. They also discover that the “coins” Jastes has been using to control   the koloss are fake, wooden coins painted gold. Elend goes to find Vin, who is hiding in the city. He finds her with OreSeur’s help. She says she must leave Luthadel and go north, to Terris. Elend says he trust her to do the right thing. They have one large bead of atium, and Vin gives it to OreSeur to hold for her.

Sazed and Tindwyl compare notes, studying the rubbing and other references they’ve managed to find. Tindwyl admits that she doesn’t believe in these prophecies, her interest in them being purely academic. Sazed, on the other hand, thinks Vin might actually be the next Hero of the Ages. While they talk, they discover that someone–or something–has torn a piece from one of the transcription pages. Vin comes in, while they try to figure out at what point were they both gone or occupied to not have seen an intruder going through their things. Vin asks Sazed how she can know if she’s in love. They talk about trust. After Vin leaves, Elend comes in and starts asking similar questions. Elend thinks he and Vin are too different to make a couple, but Sazed says that, to him, they are more alike than they think. After Elend leaves, Sazed realizes that Luthadel is going to fall soon; he needs to get both Elend and Vin out of the city before that happens.

Sazed calls a meeting with the members of the crew: Dockson, Breeze, Ham, and Clubs. He doesn’t invite Elend, Vin, or Spook. They talk about how the city is sure to fall. Straff apparently is in no hurry to take Luthadel. Instead, he’ll back off and let the koloss attack the city first. The koloss will win and enter the city, pillaging as they go. Then, with the koloss weakened and tired from the fight, Venture will ride in like a hero and save the city, defeating the koloss and taking Luthadel for himself. Sazed says that Elend and Vin need to get out of the city before these things happen. He wants Spook and Tindwyl to go with them. The rest of the group will have to stay and fight and die. Meanwhile, Vin feels she must follow the drumming she hears all the time. In Straff’s camp, Zane is attacked by his father’s men. He defeats them, but spares his father. He leaves, saying that tonight he will take Vin with him and leave Luthadel. He tells Straff that he should wait for the koloss to attack and then take the city.

Vin is in her room with OreSeur when Zane visits. He wants her to come with him, but she says she can’t because she doesn’t want to leave Elend. When Zane sees that she won’t go, he attacks her. They fight. When Zane starts to burn atium, Vin asks OreSeur for the large bead, a bead Zan had given her before. OreSeur doesn’t respond to her command. Vin discovers that OreSeur is not OreSeur. He is TenSoon, Zane’s kandra. Of course! There was no other spy. The bones they found were TenSoon’s and he had killed OreSeur! Zane corners Vin, but Vin uses a massive soothing to take control of OreSeur/TenSoon and attack Zane from behind. She then cuts the bead of atium fro TenSoon. But this is another trick. The bead is lead, with only a thin layer of atium. Soon, Vin is left helpless against a Mistborn killer with atium. Vin decides that Zane can see what she’s about to do, or, rather, what she plans on doing. If she attacks without thinking, though, she can, see in Zane’s reaction what she is going to do, only to change it at the last possible second. The trick works, and Vin defeats Zane. After Zane dies, she thanks OreSeur/TenSoon for helping her win. His contract is void, and he must return to his people. Vin goes to find Elend.

Elend is in his study when Vin comes in, bloody from her fight with Zane. She tells him that she killed him. He calls for Sazed, who comes to help with the wounds. While she is there, on the ground, she asks Sazed if he knows any wedding ceremonies. Of course, he knows hundreds. Vin asks which one is the shortest, and Sazed recalls one that only requires a declaration of love between the bride and groom before an ordained witness. Vin and Elend both say that they love each other, and Sazed declares them married. The wounds are clean, and Sazed sends Vin to get some rest. He also gives them a fake map to find the Well of Ascension. If the couple follows the map, they’ll be gone from Luthadel for a long time.

Elend and Vin prepare to ride out of the city. Tindwyl decides to stay in Luthadel. Spooks gets ready to go, and Allrianne will ride out, at Breeze’s insistence. So the four of them ride out, Vin quickly having to fight pursuers from Straff’s army. Once they are free, Allrianne breaks off to find her father’s army. Meanwhile, some of the crew watch as the escape, now sure of their own coming doom. Straff Venture hears of the escapes, but he has problems of his own now. He’s getting sick, which he knows is the result of poisoning from his son, Zane. He sends for his mistress, Amaranta, to fix him an antidote, but he discovers that she isn’t preparing what she normally does. She is actually killing, as she has for a long time. There never was any poison. Zane never tried to kill his father. But Amaranta, in her constant fixing of teas for Straff, has been causing him to become addicted to a rare drug. Without that drug, Straff will die. Straff, in a rage, kills Amaranta and then swallows as much powder from her medicine cabnet as he can, hoping to accidentally swallow some of the drug he needs before he loses consciousness.

Allrianne has made her way to her father’s camp, with the help of some bandits she’s tamed with her rioting. Her father, Cett, is not happy to see her. She convinces him to go back and join the winning party in the battle that is to come, although Cett promises that will likely be Straff. Meanwhile, Elend wakes up on the third morning out of Luthadel. He and Vin share a tent now, and he finds himself surprisingly comfortable on the hard ground, with Vin next to him. They get up and prepare the fire. It’s just the three of them: Elend, Vin, and Spook. Meanwhile Straff wakes up in bed. His men have taken care of him, and they’ve isolated the plant he needs to stay alive. When he hears that Vin and Elend have left the city, the men ask if they should attack now. Straff says no; they should pull back and wait for the koloss. Sazed meets with the others to plan a strategy for when the koloss attack. They plan to have a group of men at each gate. Saze and Tindwyl get a little time together, but then the warning drums begin to beat.

Vin is thinking about how the mist is staying later and later every day, instead of just disappearing with dawn, when she feels the pulsing of the mist spirit coming from Elend’s tent. She runs in, just in time to see the outline of that spirit lift some kind of knife to attack Elend, who is sleeping on the ground. She attacks the spirit and it disappears. Elend wakes up and never knows what was happening. She leaves Elend to sleep a little more and goes out to speak with Spook. He thinks someone is following them. Meanwhile, Sazed and the crew get ready, since it looks like the Koloss are about to attack. Men are at each gate, with one crewmember there to help. Straff sees that the koloss are attacking, but he tells his men to wait. Vin and Elend attack the camp of people that have been following them. It turns out to be Jastes. He’s lost control of the koloss, so he just left them. Elend kills Jastes because of his crimes against Luthadel. Vin discovers that the drumming sounds are getting softer, meaning the well is to the south, in Luthadel, and not in the Terris mountains.

Breeze works at his assigned gate, soothing soldiers by the dozen, helping them to be brave and fight well. The koloss pound at the door, while men atop the wall rain arrows down on the attackers. The koloss throw rocks up in return, smashing archers. Meanwhile, Vin runs towards Luthadel, burning pewter. She knows she will run out of pewter long before reaching Luthadel, and she wonders if the effect will kill her. But still she keeps running. Breeze and Clubs talk while the koloss continue to beat the gate. They blame themselves for being stupid enough to be in this mess, and they blame Kelsier for getting them into such responsibilities. Just then, the gates burst open. Meanwhile, Sazed gets word that Breeze’s gate had fallen. He doesn’t think he can really help. He notices that there is a crowd of skaa standing behind the defense force. When Sazed confronts them, telling them that they should flee to safety inside the city, the skaa answer that they are there to witness the fall of the koloss at the hands of Vin, who they are sure will return and make her appearance at Sazed’s gate. Then the gate breaks. Sazed musters his stored strength, growing in size, and faces the lead koloss, shouting for the men to fight. Vin, half collapsing and out of pewter, reaching a small village. At first she thinks to ask for pewter, but then she remembers how she used to travel with Kelsier on a path of metal bars in the ground. She asks for horseshoes, using them to “walk” by leaping, placing horseshoes ahead of her and pulling the ones behind to place further. In this way, she uses the horseshoes like stilts to help her travel in the air.

Outside Luthadel, Straff Venture sees that the koloss have now broken into the city gates. His men are ready to attack the koloss from the rear, but Straff decides to wait longer. Sazed, fighting the koloss, realizes that they need to get the gate closed again in order to survive. Using strength and weight, he manages to fight off the koloss and get the gate closed again. While getting a little break, a messenger comes and says that Tindwyl’s gate fell over an hour ago. Meanwhile, Clubs and Breeze are attacked and forced to run. Clubs is killed, while Breeze hides in a building. Dockson contemplates the root of their failure. He attacks a koloss, only to be cut down. Straff decides not to swoop in a save the city while the koloss are weak. Instead, he’d rather wait for the koloss to kill everyone and burn the city. Then Straff will move in. Meanwhile, Sazed fights on, wondering what happened to Tindwyl. He feels he is going to die, but then Vin arrives and starts killing koloss. Breeze is found by Ham and some others. They want to try to escape.

Vin continues killing koloss, several at a time. Sazed, outside Lord Penrod’s keep, begs the newly appointed king to go with them as they try to escape. Penrod insists on staying inside his keep. Vin continues to fight the koloss, but now she is almost completely out of pewter, steel, and almost every other metal. In desperation, to save some skaa from certain death, she super-soothes them, like she’d done to TenSoon, controlling the koloss with her mind. Sazed is standing outside Penrod’s keep when Vin walks up with koloss in tow. She orders Penrod to gather his men and put out the fires in Luthadel. Vin will take care of the koloss throughout the city. Later, Sazed finds Tindwyl’s dead body among the slain soldiers. He feels that all the faith, all the religions, he has always treasured is now useless. His life, he believes, has been a sham.

Straff wakes up and takes a sample of the drug he needs to stay alive. He gathers his men, expecting to be able to take the city now. But the koloss come out with the remaining soldiers of Luthadel. Vin jumps from among the koloss, sailing through the sky with a giant sword, cleaving Straff and his horse in half on impact. Allrianne watches these events from her father’s camp. She charges after them to help Luthadel’s army, forcing her father and his men to ride after her. Straff’s army surrenders, and Janarle, Straff’s general, is named the new Lord of the Venture army. Janarle, Penrod, and Cett all swear loyalty to Elend as their Emperor. Vin, needing rest, leaves Sazed in charge of the Empire until Elend can return to Luthadel.