Cashflow Quadrant

Cashflow Quadrant (CQ) by Robert Kiyosaki is an extremely fascinating book on the subject of money. It will motivate you and may even provoke (stimulate) you to leave your current job to start your own business. So I just wanted to summarize it for all of you busy-bees out there who will never read it even after my multiple cajoling.

So here is a 3 minute primer on Cashflow Quadrant. Here how it looks like. What Kiyosaki suggests is that there are four completely different mindset and qualities that exist at the 4 quadrants of the CQ. And from his personal and empirical analysis, he has observed that people on the Right side are better off at escaping the rat race than people on the Left side.

Note that the arrows here are suggestive of how you can reach from the LEFT side of the quadrant to the right side. The directions are suggested so as to maximizing your chances of successfully reaching the 4th quadrant of Investor. This is suggested as it takes changing or developing some of your deep seated attitudes before hopping to another quadrant. Just to add to this, no quadrant is, per se, better off than another when it comes to making money. A high paying employee may be sometimes better off than an average investor. But in order to achieve financial freedom, one must have active incomes from at least 2 quadrants. And as I mentioned in the previous blog (Rat Race), your PI > Expenses. So your income coming from quadrant where you active involvement is zero should slowly catch-up and then cross your expenses.

Let me explain this with a simple example. Say your monthly expenses are 50K, so all you need to achieve first to get out of rat race is to generate 50K in passive income. Now you can make this with rents from property, dividends and interests from stocks and bonds, or best of all positive cashflows from your won business. I know it’s a tough call, but just imagine the results.

So I’ll leave that decision to you. I just wanted to introduce you all to the CQ. So if you want more juice, read the book. Else wait for my subsequent posts on money-making. Just to add a final note here. I have myself decided to be out of Rat Race by Dec 2011. So let’s race to hit the escape velocity.....

Happy Reading till next post.

Rat Race

You wake up in the morning, get ready & commute to work. You come back late at night, spend some time with family and you're back to work the next day. Work takes maximum amount of your time and in return you get salary for it. You get so dependent over the time to this salary, that you can't imagine risking it for any other thing. You start learning how to grow in your JOB, how to become a manager one day, how to grow your annual income so that you can buy a fancier car, house or any other gizmo. And then you get a baby, those little cuties that will now start its claims on your income in an exponential manner. Did it ever occur to you that you are running an endless race?

Let me call this a rat race. Did you imagine growing up to be rat like this who keeps chasing salaries at the end of every month for his sustenance? I certainly did not. I expected and still do that any man who is competent enough should have enough time at his disposal for all his pleasures; like spending time with your loved ones, kids, hobbies, movies, games and what not. Ahhh I know some of you will say well work is worship. Well don't read ahead if you're one of the work worshippers. I have better things to worship.

So let me unravel this simple formula to get out of this rat race.

If Your Monthly Income < Your Monthly Passive Income, you're in the rat race.

But if, your Monthly Income > Your Monthly Passive Income, tadaaa you're out of the rat race.

Once you're out of the rat race, you are a free bird. No more getting tied to your work like a donkey. NO more commuting to your office like a herd of sheep. No more accepting all the twits (read management) in your office. You are now a man who can be himself. You are liberated. And I truly believe that now onwards you will be more effective in everything you do, your boring job too if you still wanna do it. Or who knows you might one of those blessed ones, who truly love their jobs.

Let me demystify this further with a simple example. Say your monthly expenses are 50K, so all you need to achieve first to get out of rat race is to generate 50K in passive income. Now you can make this with rents from property, dividends and interests from stocks and bonds, or best of all positive Cashflow from your won business. I know it's a tough call, but just imagine the results. I personally have decided to be out of rat race by Dec 2011.

I'll be posting another blog on the subject of Cashflow very soon. So let's race to hit the escape velocity…….

Happy Reading till next post.

A Safer World: Uprooting Terrorism

The city of Mumbai witnessed one of the most brutal terrorist attacks on Wednesday, Nov 26th. The sheer magnitude and manner with which the terrorists entered and attacked the city completely shocked the entire nation. People around the world were taken aback by the sheer audacity with which these young looking men carried their mission, killing roughly 200 people with complete impunity.

The wounds this incident has inflicted on the hearts of my countrymen will not heal in a short span of time. The spirit of Mumbai with which we have often been attributed is nothing but a shameful mask of our indifference and complete apathy. Indians don’t feel the pain till it happens to a member of their family. Kashmir has been burning for almost 3 decades now; Naxalis have been active in the eastern states from time immemorial; but we were never even impacted with the news of such activities. It was all happening at a safe distance from us and  just another piece of statistical information to be read and forgotten.

But this time, the anger is palpable and some really tough questions are being asked. I will not indulge in another set of retorts to reiterate hundreds of such questions which are being posed by every other news channel in the country. As a fellow countryman, I would like to present my perspective on resolving the root cause of Terrorism and how to deal with it.

I believe that one requires immense motivation and conviction to carry out such an heinous act of terrorism. We should peek into the psyche of these young terrorists to find out what provoked them to carry out these acts. I believe that any act of injustice acts as a trigger that stimulates some minds to take such a monstrous path. Let us all be conscious of any perpetrator of such gross injustices, which converts minds to extremism, and stop them. Let us all resolve to strengthen, both in execution and conviction, our Judiciary and Law Enforcement Agencies. Let there be not another Kashmir, Godhra, 1984 Sikh Riots, Orissa Riots or any other similar unfortunate incident in this country.

Secondly, we must beef up our intelligence systems and all law enforcement agencies. Its appalling to even compare the kind of arms our police are using when measured against the Kalashnikovs of the terrorists. The communication networks around the continent must be monitored by intelligent voice pattern matching and recognition systems. It’s an irony that India is the outsourcing and IT hub of the world and we ourselves don’t seem to have any national identity and security system in place. I guess these are extremely achievable goals. 

Lastly, I feel that India must adopt a harsher stand on all insurgency and terrorist incidents. We must not be recognized as a soft state which remains tolerant to such episodes. Also important is the fact that we must contain the virus of corruption which is highly rampant in our country. Corruption acts as a termite hollowing the entire administrative apparatus of our country. All the administrative positions in our country, including the police and law enforcement agencies, have a price ticker attached to them. And if one has to reach these positions, it’s their money and political linkages rather than their sheer capability which becomes the selection criterion. Let all positions be taken by an individual who truly earns it. 

We should all try to build a consensus this time and then create some citizen apparatus to counter this threat to our country. Let there be action and not just empty talks.

Do drop in your suggestions too. 
 

The Secret

I just completed reading “The Secret”. And I feel the author has done a good marketing maneuver by naming it “The Secret”. It kinda draws you to it. At the core, the book has basically put the old wine in a new glamorous bottle. But then, the age old wisdom needs to be iterated in a newer manner every now and then to appeal to and reach out to the larger audiences.

The core principle the book brings out is the prominence of the Law of Attraction at the thought level. Whatever your predominant thoughts are, you are attracting that into your reality. Its so rightly said in the book, Thoughts become Things. If you really think about it, it’s a beautiful message as it not only helps you to become aware of your thoughts but then also nurture them to carve your future. So now onwards better mind your thoughts and be sure of your wishes because the Universe will respond to it by granting it to you. 

I will recommend the book to all of you who need some refilling of inspiration in your life. The book does a very good job of collating all such related inspirational quotes and structures them in a simple manner. It could be your next bedside inspirational book.

Stay beautiful and keep nurturing better thoughts. 

Omar Abdullah's Speech

Hi everyone. I just want you all to listen to this speech once. So I'm just pasting the link here as a means to spread this message.

http://in.youtube.com/watch?v=-mr2Fjw5A0A

I seriously doubt the future of our country if this is the way the biggest boardroom of the country is run. When will the ministers of our country realise the gravity of tasks at their hand? When will they rise above realpolitik & stand up to bring forth reforms that will march our country to the path of a developed one. 

I seek some answers

I am a taxpayer. I pay taxes assuming they would be employed to improve the overall infrastructure of the country. But to my dismay, I see the condition of my nation worsening day by day. There are a few eye-catching architectural feats which the Government does boast with extreme vigor but why don’t I see the conditions around my surroundings improve.

I live in Bangalore which is highly regarded as the IT hub of the country. The local government collects considerable amount of taxes but the situation on the ground is worsening. I spend approximately 90 minutes in commuting to my workplace. Ideally it should take a mere 30 minutes. This way I lose an hour of productivity on daily basis. It’s not difficult to calculate the national loss in man-hours if you consider this across all the major Indian cities. At the same time commuting in such coarse traffic is too sapping. You really need to maintain your patience to bear it on a daily basis.

The world is highly competitive place and these issues, howsoever trivial we may consider them, work against our competitive edge. I still believe that India’s major competitive edge is it’s the cost-arbitrage that big multinationals gain by establishing their shops here. I don’t believe in the tremendous talent pool that we Indians often boast off. This will become manifest if you just look at the quality of education in our colleges. Also with the growing salaries of the Indian professional, the cost-arbitrage seems to be diminishing with every passing day.

The Indian markets are attracting lots of foreign & domestic players with an alluring and expanding middle-income group. But I have my own apprehensions regarding the growing incomes of the Indian Professional. Trees never grow to the skies and so will our salaries. If we ever surpass the Global salary standards then we need to surpass the quality of our contribution too at the global level. That again comes back to the quality of our skills as a nation & the fundamentals we put into making that happen. Rising real-estate prices may augur a home-grown subprime crisis of our own. I really get horrified of the day these prices may fall steeply. The day the price of the loans on our houses becomes greater than the house itself, I doubt the readiness of the person to honor his mortgages.

Some people put forth an argument that we are a young (58 years old) democratic nation and these issues shall remain with us. I challenge the notion of our youth by comparing us with countries like Israel, Japan, China and Singapore. We as a nation need to arise & take up the challenge. Let’s ask our Government to provide their annual Balance Sheets. Let there be transparency and accountability in the annual outlays of the Government expenditures. Let me know as a citizen the granular distribution of my taxes to these initiatives.

I just want to take pride in making building my nation. So I seek some answers.

Am I asking too much?

An Inconvenient Truth

I saw "An Inconvenient Truth" by AlGore just 2 days back. AlGore received a Nobel in peace for his initiatives in spreading environmental awareness towards global warming. And I must say that the Nobel was one of the major influences for me to watch this presentation by Mr. AlGore.

I've been largely a skeptic of man as the primary causal agent of Global Warming. I'd read about environmental fundamentalists , magnetic tilt of the planet and other similar theories suggesting that man and his actions are just another brick in the lane. But having seen this presentation by AlGore, I must say that I've changed sides. I would suggest all of you to at least have a look at it.

His primary message to all of us is to be cognizant of the facts related to Global Warming and the dire repercussions it may trigger. What's at stake here? The answer is planet Earth, our “pale blue dot” in the vastness of the universe which encapsulates all our history, victories, philosophies, tragedies and accomplishments. We have an obligation to leave it intact, if not more beautiful, to our future generations.

Another vital message he leaves is that it doesn't require monumental programs to combat the threat, but simple initiatives at human level which can spark a revolution to save our planet. Some of these are:

1. Changing our lights to compact fluorescent ones to conserve energy.
2. Driving less and car-pooling to minimize our usage of fossil fuels.
3. Recycling more and more and more. Using less paper. Taking lesser prints.
4. Checking air pressure in out tires.
5. Using less hot water. It takes a lot of energy to heat water.
6. Avoiding products with lots of packaging, especially with plastics.
7. Adjusting you air-conditioners and thermostats.
8. Planting a tree. A single tree will absorb one ton of CO2 over its lifetime.
9. Turning off electronic devices when you're not using them.
10. Being a part of the solution.

You can find more information on the subject matter at www.ClimateCrisis.net.

Have a beautiful day.

Writing...

After a long time I'm trying to pen down some thoughts today. I always love writing as it brings me closer to myself, my inner being. It’s tough to lie to yourself and even tougher to window dress your own perceptions. But then that's what effective fiction writing is all about. One needs to get in the psyche of the characters who he is trying to bring to life with words.

I aspire to write with such panache someday. I hope I do. Life has gotten very busy lately, and for good too. Work has been really occupying all this time and learning has been extremely good. But I sometime miss connecting back to my conscience the way I used to do. I'm not a prolific writer or an artist. I have always needed ample amount of time to create any of my compositions or my simple posts here on Thought Garden.

This post is just a reminder to me and my little audience out there that this log is still alive and I'll be back shortly and with much more to offer.

Thanks.

Seeds...

Your work is your only means to immortality.

My greatest learning at work so far....

Well it's been more than six months that I've been working. It still comes as a surprise to people who know me closely coz of my legendary laze. But trust me the experience has been an extremely enthralling one. There have been times when you feel like utterly underutilized and bored. But everyone said that enjoy your honeymoon, your time will come. And guess what, it has arrived with a bang.

I'm kinda flooded with projects that consume me both physically & mentally. And that's the best part of a good job, that it challenges your mental faculties with unforeseen problems & issues. So in order to get a grip on things that were driving me crazy, I came up with my simple rules of engagement at work. I just wanted to pen them down, more so to keep reminding me of my tactics to tackle complexity.

Firstly, the most important attribute you should have at the back of your mind is that its not the knowledge that counts, its your ability to learn & apply what you've learnt that counts. Learnability is more important than what you know.

Secondly, always challenge existing ways of work. Don't just work if anything is assigned to you. Understand it, dig the technology, get the perspective and streamline the process. Remember there are no sacred cows. Be very candid with your observation & always never hesitate to "ask". Stay hungry, stay foolish.

Thirdly, work is a verb. Let it be a verb. Its good to strategize, but at the end of the day execution is the best strategy. Action is Salvation. Wow that has some Zen like aesthetics to it too.

Lastly always think whether your deliverables are directly usable & applicable to the senior management. Be it your manager or clients, just ask yourself, "Is my work gonna be useful to them? Will it help them to simplify their work? Can they reuse it with minimal changes?" Results matter, but the presentation & simplicity of your work is paramount too. Reusablity is the basis of effective delegation.

So that's my first dip into the management theory for mere mortals. Do drop in your comments so that you could see more of Drucker & Omhae synthesized for you. Have a challenging day...