Richdads-CASHFLOW-Quadrant-

Chapter Nine
owners and employees, in many instances. Having said all of this,
I want to stress that you must follow the required regulations to make
these expenses deductible. I believe in taking advantage of the legal
deductions allowed by the tax code, but I do not recommend breaking
the law.
Again, the key to taking advantage of some of these provisions
is which quadrant you earn your income from. If all of your income
is generated as an employee from a company that you don’t own or
control, there’s little income or asset protection available to you.
That is why I recommend that, if you’re an employee, keep your
job, but begin to spend time in the B or I quadrants. Your road to
faster freedom is through those two quadrants. To feel more financially
secure, the secret is to operate in more than one quadrant.
Free Land
A while back, Kim and I wanted some property away from the
hustle and bustle of the crowded city. We got the urge to own some
acreage with tall oak trees and a stream running through it. We also
wanted privacy.
We found a 20-acre parcel priced at $75,000. The seller was
willing to take 10 percent down and carry the balance at 10 percent
interest. It was a fair transaction. The problem was that it violated the
rule on debt that rich dad taught me, which was: “Be careful when you
take on debt. If you take on debt personally, make sure it’s small. If
you take on large debt, make sure someone else pays for it.”
We passed on the $75,000 piece of land and went looking for
property that made more sense. To me, $75,000 is a lot of debt
because our cash flow would have looked like the next diagram:
200