Wednesday, June 17, 2009

Delayed Gratification

Reading a few of Rich Dad series books, I've gotten myself familiar with this term: delayed gratification.

Basically it means, instead of buying liabilities (home, car, handphone, camera, Coach bags etc) the moment you can afford it, you spend your extra cash on acquiring assets (stocks and paper assets, rental property etc).

Rich Dad call it, converting your earned income into portfolio income and passive income, or letting your money work for you. In other words, you turn your extra cash into something that generates some some income to you at a steady basis.
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It is common sense that an economic crisis also presents opportunities; it is prime time to look for bargain buys in the stock markets and real estates, and expand your wealth.

I look at myself, I'm laden with study loans to clear, sometimes I feel helpless. With my current paycheck, by the time I get rid of those loans, the window of opportunity might be gone.

Then I look around me, I see people around my age that perhaps does not have as heavy a burden as me, and have some excessive cash from their job. Instead of looking for good deals that can generate cash flow for them, I see people throwing in downpayments for their under construction new home, I see people throwing in downpayment for a 1.6L Japanese sedan, I see people throwing in whatever they saved up on a pair of return flight tickets to Rio de Janeiro and hotel accommodation for 1 week, and I see people throwing in whatever they saved up on a new PDA phone and a plasma TV to put in his own room...
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Rich Dad said, not many people can withstand the idea of delayed gratification, and that is why not many people can escape the financial rat race. If you can resist the urge for immediate returns, and invest your time and excessive cash flow into bigger cash flow, one day you will find that you are rich.

I wonder, when I'm done with those loans, what will I do? Will I be able to resist the urge, and will I be able to device a plan that I can follow by then?

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