What Is the Price of Being Cheap?

Rich Dad's Guide to Becoming Rich... Without Cutting Up Your Credit Cards
by Robert T. Kiyosaki, Sharon L. Lechter C.P.A.

These days conventional wisdom seems to state that in order to become wealthy you must cut up your credit cards and save by putting the maximum amount of your paycheck into your 401k retirement plan.

Although this plan might work for some people, Robert Kiyosaki urges readers to try a different approach. He outlines how to get rid of "bad debt," including credit card bills, and other unsecured debt, while maximizing "good debt," such as home mortgages or other investments. Kiyosaki's plan will help readers finally break through the psychological barriers of self-doubt that can serve as the biggest obstacle to becoming rich.

Chapter 1

"The price of something is not always measured in money."

- RICH DAD

There are many books that popularize the idea of frugality and living below your means. Many so-called money experts write, speak, or broadcast on radio and TV the virtues of cutting up your credit cards, saving money, putting the maximum amount into your retirement plan, driving a used car, living in a smaller house, clipping coupons, shopping at sales, eating at home, passing used clothes from older kids down to the younger kids, taking cheaper vacations, and other such tips.

While these are excellent ideas for most people, and while there is a time and place for frugality, most people do not like these ideas. The truth for most people is that they love to enjoy the finer things of life that money can buy. For most people, a big home, a new car, fun toys, and expensive vacations are much more fun and desirable than putting money away in a bank. Most of us tend to agree with the wise sages professing frugality and economic abstinence. Yet, deep down, many of us would rather have a platinum credit card without a spending limit... that is paid for by your rich uncle who has more money than all the Arab oil sheiks, private Swiss banks, and Bill Gates combined.

While most of us enjoy the wonderful things money can buy, we realize that it is the unbridled desire for the fun, fine, and fancy things of life that gets many of us in financial trouble. And it is the financial trouble that these desires spawn that causes the money gurus to say, "Cut up your credit cards. Live below your means. Buy a used car."

On the other hand, my rich dad never said to me, "Cut up your credit cards." He never said, "Live below your means." Why would he advise me to do things he personally did not believe in? When it came to the idea of frugality, he did say, "You can become rich by being cheap. But the problem is, even though you're rich, you're still cheap." He would further say, "It makes no sense to me to live cheap and die rich. Why would anyone want to live cheap, die rich, and then have the kids spend your life's savings after the funeral?" Rich dad noticed that people who scrimped and saved all their lives often had children who acted like starving hyenas once the parents were gone. Instead of enjoying their parents' inheritance, they often fought over the money and spent it all soon after they got their hands on what they called their "fair share."

Instead of telling me to live cheaply, rich dad often said, "If you want something, find out the price, then pay the price." He also went on to say, "But always remember, everything has a price. And the price for becoming rich by being cheap is that you're still cheap."

The Different Ways You Can Become Rich

Rich dad went on to explain, "You can become rich by marrying someone for his or her money. But we all know the price of that. I had a classmate in New York who often said, 'It is just as easy to marry a rich girl as a poor girl.' When he graduated, he married into a very rich family just as he said he would. I personally think he was a slimeball, but that was his way of becoming rich."

You can become rich by becoming a crook, and we all know the price of that choice. When I was a kid, I thought a crook wore a mask and robbed banks. Today, I realize that there are many crooks that wear blue suits, white shirts, red ties, and who are often respected members of their community.

There are others who become rich by betting at the casino or racetrack, on the lottery, or blindly throwing their money into the stock market. We know the price of that. During the dot-com mania, I knew many people who were ready to write a check if all you said was, "I'm starting an Internet company."

You can become rich by being a bully and we all know what happens to a bully. Eventually, an even bigger bully comes along, or the bully finds that the only people willing to do business with him or her are people who enjoy being pushed around.

And as described earlier, you can become rich by being cheap and we all know that the world tends to despise rich people who are cheap... people like Scrooge in Charles Dickens's classic A Christmas Carol. Most of us have met people who always want a larger discount, complain about the bill, or even worse, refuse to pay the bill for one frivolous reason or another. A friend who owns a dress shop often complains about the type of customer who buys a dress, wears it to a party, and then returns it a few days later, asking for her money back. And of course, there are those who drive old cars, wear clothes too long, buy cheap shoes, and look poor and yet have millions of dollars in the bank. While these individuals can become rich with such cheapness, there is a price far beyond money for such behavior. I personally struggle with being too cheap at times, and yet I notice that people tend to smile more or like me more when I am generous. For example, when I tip a little extra for good service, it comes back to me in other ways. In other words, people tend to like generous people more than cheap people.

Copyright © 2003 by Robert T. Kiyosaki and Sharon L. Lechter

About the Author

Robert Kiyosaki a financier, author and teacher says "that the main reason people struggle financially is because they have spent years in school but learned nothing about money. The result is that people learn to work for money... but never learn to have money work for them."

Co-author of the Rich Dad series of books and CEO of the Rich Dad Organization, Sharon Lechter has dedicated her professional efforts tot he field of education. She graduated with honors from Florida State University with a degree in accounting, then joined the ranks of Coopers & Lybrand, a Big Eight accounting firm. Sharon held various management positions with computer, insurance, and publishing companies while maintaining her professional credentials as a CPA.