Are You Ready to Face the Real World

The streets of Waikiki were busy with tourists either going to the beach or re turning from the beach. Most were dressed in swimsuits and rubber slippers covered with sand. Most seemed happy just to be taking some time off from their regular lives from wherever they came.

As I crossed the street to get to the bus stop, I glanced up at the waves, breaking a few hundred yards offshore, and wondered if I had time for an evening set with my friends who surfed out there. The breaking waves, the warm water, and the sun gently sinking were calling to me. Before the bus ar-rived, I stood envious, looking out on the ocean at a way of life I grew up in, surfing until the sun and my energy were gone, and knew today it was best for me to head home. Sadness came over me as I realized that I wasn't a kid anymore and it was time for me to clean up the mess from my past so I could have a better future. The lunch with rich dad and Mike was painful yet beneficial. Going over my financial statements was painful yet truthful. Those simple documents told the story of the lies told up to this point and it was time to change the story. I tucked the brown manila envelope that contained my company's financial statement under my arm as the bus arrived and headed back to a home that I would soon have to give up as well.

Many people ask me today, “How did you start over again?” It seems they are very curious about how one picks up after losing everything and begins again. Many of those that ask have good jobs or established careers and seem to be hesitant at losing what they already established. One young man from Japan asked me, “After you lost everything, did you not feel shame?” Laughingly I said, “I felt many things, and shame was definitely one of the emotions.” I then asked him a few more questions and found out that he hated his job, it did not pay enough. But his job was secure and he would rather suffer for the rest of his life than risk shame and disgrace. I reassured him that his feelings were not limited to him. Many people would rather have some money and some happiness than risk shame and embarrassment going for all that life has to offer.

“How did you get started without a job or without any money?” That's another frequently asked question about this period of my life. There is not one solid or convincing answer to those types of questions. Words alone are limiting, so the answers I normally give are, “I did it because I had no place else to go. I had nothing to fall back on.” I also say, “I took it one day at a time.” I also say, “Those were some of the worst days of my life, I would not want to repeat them, but in retrospect they were some of the best days of my life because they changed the direction of my life. Those days also changed who I became in the process of changing my life.”

Occasionally I say, “I had to choose between my past and my future . . . the choice of my past being the same as my future . . . or my future being much better than my past.” That puzzling statement crinkles a few brows . . . but what I am saying is that most people afraid of change or risk will wind up doing the same thing tomorrow as they are doing today. For many people, surviving one day at a time is better than risking today for a better future. I understand that strategy for life. Today, I occasionally see my friends who are still beach boys on Waikiki Beach and I envy their life—especially when I'm sitting in a 747 flying from London to New York or Los Angeles to Sydney. I, too, often wonder if I have made the right decisions in life. As I am sitting on a plane, eating airline food, my three friends who have been beach boys now for thirty-five years go to the same spot on Waikiki Beach every day, they rent surfboards, meet young coeds that flatter their aging male egos, and they sing and play Hawaiian songs for tips. Tomorrow they will do the same thing at the same spot . . . as in many ways, so will I. The difference I believe is that we wanted different ends to our lives. I wanted a different tomorrow and they want the same tomorrow.

I believe most people fall into one of those two categories . . . and that will determine who will take the risk for the best of life or settle for the same life today . . . and the same life tomorrow. I risked everything because I wanted a much better tomorrow . . . that is the best answer I have for explaining how I stood up again, after I lost everything. I risked, lost, and stood up because I still wanted the same thing . . . a better tomorrow. Most people stay where they are, like my beach boy friends, because today is safe and they want tomorrow to be safe. Unfortunately, most of us know that today will eventually come to an end and tomorrow will begin. Even my beach boy friends know that.

Rich dad knew how big a financial hole I had blown in my financial state ment and in my personal life. As he said when he looked at my business's fi nancial statement a few months earlier, “Your company has financial cancer.” Although he knew I was out of money, had no place to live, and no job to go to, he never offered me a job or any financial support . . . and I did not want or expect any such support. I had been studying with him for over twenty years and I knew what was now expected of me.

My poor dad was very understanding. He offered several times to give me money, but I was aware of his financial position, and he was in very bad financial shape. He was not much better off than me. He had his house but now in his late fifties, he was almost totally dependent upon a small early retirement pension from the teachers union. What little savings he did have, he lost on an ice cream franchise that failed. That was my dad's first foray into the real world of business and the world of business pounded him not for his academic brilliance but his lack of real-world experience. He was also having trouble finding a job because of his age and because of his ego. Having once been the boss—the superintendent of education—I believe he found it tough asking for a job from people much younger than him.

He also got very angry when told that his experience in state government did not transfer over to the business world. He was often told, “You have great work experience, you are definitely successful, but your skills are not what we need. We cannot use what you have spent your lifetime learning.” He then did what many men at his age and in his predicament do, he became a consultant. I do not know if anyone hired him, but the title seemed to quell a pain inside of him.

One of the things that really kept me going was a vow I made at that time and the vow was: “I would never let my own ignorance, arrogance, or fear get in the way of the life I know I can have.” I saw what age, arrogance, lack of practical real-world skills, lack of financial intelligence, lack of up-to-date information, dependence upon a government handout, was doing to my dad and I vowed I would use his example as a lesson, an example of what I would not become. At that moment, I vowed to become a student again and my education began with first cleaning up my personal financial statement . . . a statement that reflected the mess my financial ignorance and arrogance had gotten me in. I then vowed to listen to rich dad and begin to study what most people do not study.

Since the age of nine, rich dad had been an important mentor to me. Now at the age of thirty-two, I vowed to learn more from him as an adult . . . relearn the same lessons as a child but now as an adult. I knew that my surf-ing and rugby days were coming to an end, and as sad as that thought was, I was also looking forward to the future . . . a new and different future . . . a future that gave me more control over the subject of money and the rest of my life. I say this because I did not want to grow up to be like my poor dad, a man who was now a consultant still looking for work as he neared his sixties because he realized his pension was inadequate. I did not want to wait till I was sixty to make the changes I was making in my thirties. I did not want to wait till I was sixty to find out that there was not enough money in my retirement plan for me to live on for the rest of my life. My vow at thirty-two was to clean up my financial life, get educated, and take care of my future today—not tomorrow.

As I was preparing to move out of my apartment, which I could no longer afford, and wondering where I was going to live next, a friend called. He was moving to California for four months on a job assignment and asked me if I would care for his house, water his plants, and feed his dog. So that solved my housing problem—at least temporarily. Money seemed to come in different forms. Checks would appear in the mail, just in the nick of time, from overpayments, refunds, and money from the bill collectors who had finally collected some of the money owed the business. But even though the checks came in, they were infrequent and there were days when I could not eat simply because there was not any money. As tough as things were at times, the reason I say this period of time was a good one is because it gave me time to find out who I was and what I was made of.

Another friend called soon after I moved into the temporary house. This friend was a headhunter, someone who looked for management-level employees. “I have a company that is very interested in you. I told them you were the top salesman for Xerox and for the last four years you have run a national and international sales team of hundreds of salespeople. They're looking for someone just like you. The pay is great. Lots of travel, big expense account, generous benefits, and who knows, you could someday be president of the company. You don't have to relocate. They want you to be the bridge between their Asian and California accounts right here in Hawaii. Are you interested?”

Let me tell you, being broke and desperate, that phone call was like a phone call from heaven. I was higher than a kite. The needy and desperate part of me could feel the call of a high paying job, prestige, title, benefits, a car, and the corporate ladder. Most importantly, I felt loved and wanted again. I too knew I was perfect for the job because I was educated in New York and I also understood the culture of the Japanese, being fourth-generation Japanese-American. I accepted immediately.

Four weeks later, I was one of only three remaining out of sixteen candidates the company had selected from r ? sum ? s. I even purchased a new suit for each interview, trading food money for clothes. On the final days of inter-viewing, I found myself sitting outside the regional vice president's office, but instead of feeling good, I began to feel bad. Something was wrong. My stomach began to turn as I realized that I was doing the same thing my poor dad was doing, the only difference was I was thirty-two and my dad was fifty-nine and we were both interviewing for jobs. The offer of money, security, title, promotion, benefits had called to me and I found out which character inside of me was responding.

For a very long ten minutes, I sat outside the vice president's office and had a conversation with myself. At the end of the ten minutes, I wrote a note that said, “Thank you for your interest in me. I greatly appreciate your time and consideration. It has been good for my self-esteem, but I must move on with my life and that is why I am removing my name as a candidate as a possible employee with your company. Thank you.” I handed the note to the secretary and closed the door behind me. That was the last time I ever applied for a job.

rather than the profession I chose. During this period of time, the two characters I had to choose between were the wimp and the warrior. After facing the real world with nothing, for about two weeks, the wimp in me was winning. Then one day, the warrior won and I felt good for a whole day . . . then the wimp took over again. By the fourth week, the battle was tied. I was a wimp for half the time and a warrior the other half. That is when things finally began to change. Life began to change once I was comfortable with my status of being a person with no money, no job, and no professional status. In other words, I was becoming comfortable with being a nobody. I was no longer a kid, a student, a ship's officer, a military pilot, or an entrepreneur. I had noth-ing and I kind of liked it. It wasn't that bad. I was facing nothing with nothing . . . and the more I could do that, the more the warrior inside of me was grow-ing stronger. One of the reasons I turned down the possibility of the job as national sales manager was because I was in the middle of my own personal experiment and I simply wanted to find out which character would win.

Rich dad often asked this question of his son and me: “If you had nothing . . . no money, no work, no food, no shelter . . . what would you do?” If we answered with, “I'd go find a job to make a few dollars,” rich dad would say you boys are programmed to be an employee. If we answered with, “I'd look for a business opportunity and build or buy a business,” rich dad would say that we were programmed to be an entrepreneur.

If we replied with, “I'd find an investment and then look for investors,” he would say that we were programmed to be investors and entrepreneurs. Rich dad also said, “Most people are programmed from birth to go and look for a job. In fact they go to school to reinforce that programming. If you want to be able to respond with the latter two answers, you will need a different form of education, a form of education he called education for the real world.

In my quiet time alone, I remembered rich dad's little quiz, and now in my moment of nothingness, I began to choose which answer I wanted to be the answer for the rest of my life.

Rich dad called me about six weeks after our Chinese luncheon and asked if I would join him for lunch. Of course I accepted. This time we met at an expensive downtown Honolulu restaurant, the place where the movers and shakers meet to have lunch. Almost everyone there was in business attire. I arrived by bus dressed in shorts and a bright red Aloha shirt, doing my best to pretend I was a man who was rich and no longer needed to dress like everyone else. I doubt if I fooled anyone or if anyone cared. I was having lunch with rich dad and no one else. A suit would not have impressed rich dad because he knew my financial status. Standing to greet me and shake my hand, rich dad asked, “How are things going?”

“Pretty good,” I replied as I took my seat. “I'm getting used to having nothing and being a nobody.”

“No, it isn't,” I said. “Things only get bad when the self-doubt creeps in and I begin to beat myself up for all the stupid things I've done. But I am get ting stronger. The wimp in me is losing his grip and the warrior is getting stronger. I'm about ready to face the real world.”

After I told him about pursuing a high-paying national sales manager's job and then turning it down, a broad smile came across rich dad's face. “That is the best thing I've heard you say in months. You have really decided to change your future. And most importantly, I'm glad you're finding the courage to face the real world.”

Puzzled, I squinted and asked, “Doesn't everyone want to face the real world?”

“Most think they do,” said rich dad, “but if the truth be told, most people today do their best to hide from the real world.”

The waiter came, handed us our menus, filled our water glasses, and quickly told us the specials of the day. “People hide from the real world? How do they do that? Is it only by job security?” I asked.

Rich dad handed his menu back to the waiter and said, “The usual.” He then looked at me and said, “There are many ways people hide from the real world . . . other than job security. Most people today spend their lives running from sanctuary to sanctuary, sanctuaries that protect them from the real world. For example, many people leave the sanctuary of home, and go to the sanctuary of college. After graduation, many run to the sanctuary of a job or profession. If they get married, they then create a sanctuary for their family, and the process continues with people running from safe sanctuary to safe sanctuary. When people lose their job, they often dust off their r ? sum ? and run in search of another sanctuary . . . or if they get divorced, many run in search of another person to create a new home sanctuary with.”

“No, not necessarily, and as long as there is always another sanctuary,” said rich dad, taking a sip from his glass of water. “But problems do arise when a person leaves one safe sanctuary and then cannot find the next sanc tuary. That is what happened to your dad.”

“Yes, your dad,” said rich dad. “Your dad is facing the real world today just as you are facing the real world today . . . and I wonder which of the two of you will do better. The difference is your dad began facing the real world after he was fifty and you are only in your thirties. Both of you are out of work. I find it all interesting to observe.”

“Your dad left the sanctuary of his parents' home, went to a good school, got a good job, and climbed the ladder to success. Is that correct?” “Yes,” I replied.

“So your dad went from safe sanctuary to safe sanctuary until he reached the position and title of superintendent of education. He left home and went to school, got married, and never left the school system. Isn't that correct?”

I nodded my head, saying, “He was a great student so he stayed in a system, or a sanctuary, as you say, that fed his ego and allowed him to achieve. Are you saying he should have left the sanctuary of higher education?”

“Why should he?” said rich dad. “He was smart, a great student, class president, soon head of the system, so he should have just stayed in a system that he did well in. If I were in his shoes, I would probably have done the same thing. But then he chose to leave the system at age fifty, and the world outside the school system is the real world. When it came to finances, your dad was not mentally or emotionally ready for the real world.”

“You mean when he decided to run for lieutenant governor of Hawaii?” I asked.

“Yes . . . your dad being an honest man runs against a corrupt political system . . . and finds that honesty is not the best policy . . . he runs into the real world when he runs for lieutenant governor and loses. After the loss, he then finds himself outside the system he grew up in, the system he did well in, the only real system he knows, and suddenly he must face the real world—and he is not surviving well. On top of that, as soon as he lost his job, your mom dies of an early heart attack. I suspect that she could not stand the embarrassment that comes with any loss or the fact that your dad was now out of work, because the two of them were now outside of the sys tem that once protected them.”

“My mom did take it harder than my dad. Many of her phony govern ment socialite friends stopped calling her or going to lunch with her once my dad lost the election. That included many of her closest friends. The world can be very cruel to people they perceive as losers. They love you when you're on top and forget you when you're down. I believe my mom took my dad's fall from the top harder than anyone else . . . and I believe that is why she died before she was fifty.”

Rich dad sat silently as I talked about my mom. He could tell I missed her very much. After an appropriate length of time, he continued, saying, “After your dad finishes his grieving, he marries again, of course to a schoolteacher. Then he purchases that ice cream franchise and loses his life savings. He then gets divorced because I think the pressure of no sanctuary . . . no safe harbor, is terribly stressful on couples, young or old. So today, your dad is like an orphan. His parents are gone, his wives are gone, his kids can't support him, and the sanctuary he grew up in, the educational system, won't let him back in. Now he takes odd jobs trying to stay alive . . . trying to find the door to the next sanctuary so he can find protection from the real world.”

“If not for his teacher's pension, the real world would crush him,” I said. “He might even be homeless.”

Rich dad agreed. “You kids might have to take him in, which many kids do . . . so the sanctuary of last resort is family . . . if the family can afford him,” rich dad said, looking directly at me. “You can't afford to take care of him right now—can you?”

“It would be tough but I would find a way,” I replied. “But why are we discussing this real-world versus sanctuary stuff?”

“Because your lessons continue,” said rich dad with a smile. “Just because you are in your thirties does not mean you can't learn more. The financial situation you are in is a horrible situation . . . but thank God you face it at age thirty-two. Now . . . you can choose to make this bad experience an even worse situation, which is what losers do, or you can turn this bad situation into the best situation of your life so far. Millions of people are stuck in offices, on farms, in sales jobs, in professions, living in terror of what you are facing today. Many would sneer at you and treat you like a pariah. A few might envy you . . . envy you because at least you've gone through the pain of losing it all.”

“That sounds ridiculous,” I said. “Why would anyone envy me having nothing?”

“Because a few people out there do have vision . . . vision that others do not have or do not want to see,” said rich dad. “Some people are beginning to realize that the challenges facing your generation are greater than the challenges facing my generation. After the year 2000, many of your generation will realize that they will be facing the same financial situation you are facing today. A few of those people with vision would envy you, because you are facing nothing, facing the real world, a world without sanctuaries, today, not tomorrow. Just because your peers have money and success today, does not mean they will have money and success tomorrow. Those who realize it will envy you.”

“Because you're halfway through the process . . . Most people are clinging to a false sense of security, knowing there is less and less job and financial security today,” said rich dad. “So you've screwed up early and now you have time to clean it up and grow from the experience. Are you willing to go forward rather than go backward?”

“I may as well,” I replied. “I'm in the middle of this mess. I'm already fac ing what you call the real world and it's not that bad.”

“Good,” smiled rich dad. “You see, the best thing that happened to me was I faced the real world when I was thirteen years old.” “When your dad died and left you in charge of the business and the family?”

Rich dad explained: “At thirteen, while your dad was in school learning about the ABCs of job security, I was facing the real world—the world he faces today. As a young teenager, I had no education, no money, a broken-hearted and sick mother, a family to take care of, a failing business, and no one to fall back on. In retrospect, it was the best thing that could have ever happened to me. The reason I have so much money today is because I had no sanctuary to hide in . . . and that is why I won't give you a hand right now. If I gave you a hand, offered you sanctuary, I would be delaying the inevitable. If you were of my generation, I would give you a job . . . because for my generation, job security was all you needed. Your generation needs financial security more than job security. Your generation has lots of jobs . . . the fast food restaurants are always looking for help. Your generation lacks the financial education required to achieve true financial security . . . and that lack of education will be the cause of the inevitable.”

“Yes, the inevitable,” said rich dad. “The chances are, your generation will not have the safe sanctuary of Social Security or Medicare, or enough of it, to fall back on, as your dad and I do. Millions of people in your generation will not have any or sufficient retirement money to fall back on. Millions of your generation will not have a DB pension plan or a union pension plan to protect them from the real world. So what you are facing today, is what millions of your generation will begin facing sometime after the year 2010 . . . as I said, long after I am gone.”

I sat there silently as the waiter placed our meals in front of us. I was beginning to understand why both my dads had been such advocates of their employee retirement plans. After the waiter had gone, I said, “So your gen-eration has DB pension plans and my generation may not. And to you, that is a big difference.”

“A monstrous difference,” said rich dad. “You see, the employees who worked for your dad have the government and the unions backing their retirement. My employees only have themselves backing them . . . and most of my employees are not putting any money into their retirement plans. They do not know what they are. Some think they are the same as DB pension plans, the same plans their parents have. Because of this false sense of DB security, most of my employees do not have any savings. They have nice homes, nice cars, and nice TV sets, but nothing else. That worries me. I talk to them about investing, but nice cars and nice TVs mean more to them than a mutual fund or savings in the bank. Besides, they do not know the difference between saving and investing. They think they are the same thing. That is why I am worried for you and your generation. Most of my generation has some protection from the real world. Most of your generation will eventually face the real world, a world that they are not prepared to face and many will be too old to face. There is this massive problem brewing and no one seems to worry about it.”

“So millions of my generation will someday have to face what I am facing today . . . facing the real world with nothing?”

“Yes . . . exactly what I am saying,” rich dad said sternly. “That is precisely what I am saying. The difference is you are facing the real world in 1979 at the age of thirty-two and many of your peers will face the real world after 2010, when they turn sixty-two, or seventy-two, or eighty-two, or, heavens forbid, older . . . but they will face the real world.”

“So my generation's pension plan could run out of money, if they do not contribute enough money to it.”

“More than that,” said rich dad. “Your generation's pension plan could run out of money, even if a person puts a lot of money into it, because your generation's pension plans can be wiped out by a massive stock market crash . . . a crash I predict is coming.”

“So a DB pension plan has protection from a stock market crash and a DC plan does not?” I asked.

Rich dad nodded. “In most cases, but even DB plans have been known to crash due to mismanagement. But the risks are greater for DC pension plans. So the problems are brewing and soon the moment of truth will ar-rive. Soon your generation will find out if this new DC plan works or not. The problem is, your generation will only find out if the plan worked after they retire.”

“You mean my classmates may find out at age sixty-five that their DC plan was inadequate . . . or insufficient?” I asked. “The only way they are going to know is after they retire, when it might be too late to work and replenish it . . . make up the shortfall?”

Rich dad nodded and continued, saying, “Not only are many of your generation not contributing anything to their plans, many who are contributing are not contributing enough, and very few are aware of how risky stocks and mutual funds are. Mutual funds can fall all the way to zero in a market crash. And it will happen, not to all companies or mutual funds, but sometime in the future, your generation will get the wake-up call that their DC retirement is not safe and their retirement sanctuary is at risk. Once your generation realizes that, they will begin to get out of the market . . . a panic will set in and the market will crash . . . and if the panic is large, the crash will be the biggest in the world. The problem is, too many amateur investors are entering the market . . . and it is these amateur investors that are the problem . . . a problem far greater than the flaws in pension reform. That is why I predict most of your generation will face the real world . . . the real world you are facing today. The only question is, how old will they be when they face it?”

“Yes . . . most of your generation. I would say at least 80 percent of your generation will not have enough money to retire on. And millions will be out of money and out of support after the year 2020, after this massive stock market crash occurs. The U.S. government will not be able to afford over 150 million people needing government support just for financial and medical survival.”

“Over 150 million people?” I said again, questioning rich dad's numbers. “There are only 75 million baby boomers.”

“Yes, the number will be well over 150 million because there will be members from my generation still alive and still needing support, as well as millions of immigrants who will add to the numbers, as well as the millions of poor people who already exist. By the year 2030, simply because of medi cal breakthroughs that extend life, half the U.S. population could be requir ing more and more government support because they are not prepared financially to face their old age.”

“And that does not include the millions of federal and state employees who will also be expecting the government to take care of them . . . as promised,” I added. “Lifelong government employees just like my dad.”

“That's correct,” rich dad nodded. “Too many people have been taught to expect the government to take care of them . . . to be the safe sanctuary that protects them from the real world, and that is why this problem will only grow.”

“So many of the kids of the baby boomers will have to support their par ents,” I said.

“More than their parents,” said rich dad. “The kids of the baby boomers, those born after 1970, may be asked to support double families. In other words, if a young couple has two kids, through various taxes, they may have to support an additional four people who cannot afford to support themselves.”

“It's possible. It could lead to a battle for money and life support between the different generations . . . young and old . . . and if the old control the government, the young will definitely be taxed to pay for the old,” rich dad sug-gested. “If the young win in politics, there will be millions of old people, your baby-boom generation, complaining that young people no longer respect their elders.” Rich dad chuckled at that thought.

Still chuckling, rich dad said, “Respect for elders is an idea whose time has passed. I think the coming generations will have less respect for their el ders . . . not more. But I could be wrong. Maybe the children of the baby boomers will be glad to open their wallets and give their elders all the money they want. Who knows? Stranger things have happened.”

We spent the next few minutes eating . . . not really saying much. I sat there thinking about the bus trip home, wondering if I should walk or splurge on a bus ride. I dared not ask rich dad for a ride. Besides, I did not want to waste this opportunity to face the real world and face it with nothing . . . or in this case very little. I had begun to feel lucky about facing the real world at thirty-two instead of at seventy-two, eighty-two, or ninety-two years of age.

As the bill came and rich dad picked it up, I asked him, “How did we get into this mess? How come we have so many millions of people who need a safe sanctuary from the real world?”

“Good question,” responded rich dad as he handed the waiter his credit card. “I think the big difference came when people began seeking security instead of freedom.”

“Don't we all have freedom?” I asked. “After all, this is America, land of the free and home of the brave.”

“Yes, it is America and that is an old song,” smirked rich dad. The problem is, most people think security and freedom are the same word. They are not. In fact, in many ways, security and freedom mean exactly the opposite things.”

“Security and freedom mean the opposite things?” I asked. “Explain that.” “Look, in 1773, the year of the infamous Boston Tea Party, what were the American rebels protesting?” asked rich dad.

“Taxes,” I replied. “We wanted freedom from taxes. Those brave men risked jail or prison by performing a criminal act against Mother England.” “Good,” said rich dad. “So they did not throw the tea overboard in the name of greater job security?”

“And what do we teach in school today?” asked rich dad. “What is the main reason parents and teachers fearfully insist their kids study hard and get good grades? Is it for freedom?”

“No,” I said quietly. “Parents and teachers want their kids to get good grades for job security . . . hopefully a high paying job.” “And what happened to our founding fathers' focus on freedom . . . the freedom brave men and women fought for hundreds of years ago? It's been shoved aside for a focus on job security . . . the fear of not having enough money to put food on the table has replaced freedom as a priority in our society.

“So school is not really about freedom . . . it's about job security and DB pension plans. That is what teachers have . . . but their students will not,” said rich dad. “That is only one reason why there is less and less relevance between school and the real world. Most of the real world will not have DB pension plans . . . but schoolteachers do.

“Yes,” rich dad went on. “And what did you fight for in Vietnam, even though you did not have to go . . . even though you were draft-exempt? Didn't you fight for freedom?”

“Yes . . . but that is because both you and my dad explained that it was a son's duty to fight for his country. I do not know if I would have gone if the two of you had not insisted I go.”

“Right . . . and what did most of your friends' parents do? Didn't they in sist their boys stay in school to avoid the draft? Didn't most of your friends not go to Vietnam because they were smart enough to get into college and receive a college deferment from military service?”

“Do you see how much this country has changed? We were a country founded on the ideal of freedom but now security is far more important than freedom. And security and freedom are not the same ideal and people who seek security are very, very different from those who seek freedom. And that difference—the difference in people—will also lead to the biggest stock market crash in the history of the world. Millions of people are now putting money into their defined contribution plans, into mutual funds, and other investments that they hope will ensure their security. Boy . . . are they in for a rude awakening in the future.

“That is why I am so concerned about ERISA. We are no longer the same people we were when the Boston Tea Party took place. As a people we no longer fight for freedom . . . instead, we are a people who now fight desperately for security. Millions of unwilling and financially unsophisticated people will be pushed into the stock market and, as you know, the stock market is not a place for people who are lovers of security. The stock market is a place for those who want their freedom. I am afraid that those who love freedom will win and those that love security will lose . . . and when they lose, they will face the real world . . . unfortunately at an old age. And that is my prediction.”

“So freedom is not the same as security?” I asked, still not sure that there was a difference.

“Not only are they not the same, they are exactly the opposite. The more security you seek, the less freedom you have.”

“Explain that to me,” I said. “How can more security mean less freedom?” “That job you turned down may have given you a lot of security, but was it not at the price of your freedom? Did it not hinder what you could earn, when and where you worked, and even when you took a vacation?” “Yes, job security would have limited my freedom. For many people, their job security even tells them what time they can eat lunch,” I added. “But don't most people want security more than freedom?” “Exactly,” said rich dad. “That is their choice. But always remember that the more you have of one, the less you have of the other. In fact, the more security you have, the more trapped you become. Just look at the people in the world who have the most security. They're called prison inmates. They have a house, food, free time, exercise yard . . . they have maximum security, but they have no freedom.” Rich dad paused for a while, letting the idea of maximum security settle in. He then said, “Look at people who depend primarily on Social Security. They have a little financial security but at the cost of their freedom . . . the freedom of lifestyle. People who depend upon Social Secu-rity are some of the poorest people in America and with the least freedom.” “So you want me to choose between security and freedom. Freedom takes courage and strength and if you lack courage and strength you lose your freedom,” I said. “So freedom is not free,” I added.

“No way,” said rich dad. “Do you remember coming home from Vietnam and having people spit on you and call you ‘baby-killer'?”

“Well people spit at me, but no one spit on me. But I do understand what you mean. We fought for the right for them to have the freedom to do that . . . even though we did not like it.”

“That is why the song goes, ‘Land of the free and home of the brave.' Freedom takes courage . . . it takes bravery . . . and you are in the middle of facing that test of courage and bravery inside of you right now. If your courage wins, even when you have nothing . . . you will find a freedom few people ever know . . . even if they live in the land of the free . . . they are not free. The need for security robs them of their freedom.”

We were soon on the sidewalk, rich dad waiting for the valet to bring his car. “Want a ride?” he asked.

“No thanks,” I said with a very big smile. The warrior character in me was feeling pretty good, even though I still had no money and did not want a job. I wanted to face the real world with nothing for as long as I could and let the stronger person inside of me get stronger. I wanted freedom, freedom from the tyranny of needing a job or a lifestyle dictated by how much money I had. The talk with rich dad had given me a greater insight into what it took to live in his world, the real world he had to face when he was thirteen. “I kind of like the real world and I want to make it as real as possible,” I said to rich dad with a smile as the valet brought him his car. “I want to face the real world today rather than tomorrow.” Rich dad smiled, waved, and drove off with the valets envying his car.

During this period of facing the real world with nothing, I had the free time to reflect back on my life and recall some very important lessons I had forgotten. One cool morning, while I sat on Waikiki Beach, watching the waves, my mind drifted back a few years, to a day my Marine Corps squadron was preparing to go into battle. Early, before the sun was to rise, our com manding officer stood before all the pilots flying that day and said, “Remem ber that the lives of our men are an integral part of this mission. Great leaders and great pilots bring their men home alive. If you take care of your men, your men will take care of you.”

On another day during this period of having nothing and facing the real world, my mind drifted back over twenty-five years, back to Sunday school and hearing my teacher asking the question, “Are we not our brothers' keep ers?” It seemed that I had forgotten that lesson also.

So 1979 was a turning point for me. I realized that in my desperation to become rich, I had forgotten many lessons from my youth. Now in my thir ties, not only was I not rich, I had become someone I was not proud to be. It was time to make some changes. So while the truth hurt, the benefit is that I learned some priceless lessons, not only about myself, but also about the future. It was time to change my future.

About six months into my experiment, the person who had taken over the remains of the nylon and Velcro wallet business called. He said, “This business is a bigger mess than I had expected. Will you come back and give me a hand?”

Thinking for a moment, I agreed and went back to the business as his partner, the agreement being that if I did not improve the business I would not be paid. In other words, I was true to rich dad's number one rule, the number one rule from the book Rich Dad Poor Dad: The rich don't work for money. I was now a partner with equity, building a business . . . and if the business did not become profitable, I did not get paid.

By this time, I had several other business ventures going that were profitable. One of the business ventures I was in was a joint venture with a local radio station doing promotions and product sales. The venture would eventually become one of the most successful radio retail merchandising promo-tions in the history of U.S. radio. I was able to move into my own place and afford a car again—but most importantly, I began to repay the investors who had trusted me and loaned me money. Many refused to take the money, since they had already written the losses off, and instead asked me to call them for my next business venture.

In 1981, I merged the growing nylon and Velcro wallet company with my success in rock and roll radio. In 1981, the rock band Pink Floyd called and my nylon and Velcro wallet company began building licensed logo products for the band. Bands and performers such as Van Halen, Boy George, Judas Priest, the Police, and Duran Duran asked us to manufacture similar products for them and soon the wreckage of the first company turned out to be bigger and stronger than the first company I started. In 1982, MTV hit in a big way and we were off to the stars again. This time I was a lot less foolish, had more business savvy, had better advisors, and I was more honest and far less afraid of failing again and facing the real world. By this time I knew that if I failed, I could stand up again . . . and stand up taller and faster. I know the real world can still knock me down. I am wise enough to realize that stock markets go up and stock markets go down. I also know that mutual funds are not safe. Even though I know a massive stock market crash could potentially also wipe me out—even if I have limited stocks and mutual funds—the difference is that although I do not want that to happen again, I am not as afraid of it happening again. I have already gone through the embarrassment of losing everything. I have enjoyed the process of getting it back and more. Today, having already faced the real world with nothing, I know I will learn even more if I am knocked down. I know I will bounce back even faster, and I am preparing daily for the biggest stock market crash in history.

Unfortunately, my real dad never recovered, and the older he got, the less able he was to take on the harshness of the real world. In 1982 he was sixty-three years old. At that age, there were no more job offers for him, ex-cept jobs as a security guard or at a hamburger joint. He lived in the glory of his past successes, which allowed him to continue to call himself a consul-tant, but if not for his teacher's pension, Social Security, and Medicare the real world would have crushed him. The kids helped him a little . . . but he often rejected that financial help because he was too proud. He had been well prepared and well educated for the world of government education, but outside that world, that sanctuary, he found he was not prepared at all for the real world . . . a world millions of my generation will soon face, prepared or not.

Personally, I have no plans on following my poor dad's plan. I am not counting on lifelong job security, my retirement plan, mutual funds, stocks, Social Security, Medicare, and other forms of government charity to keep me alive in the future. But unfortunately millions of my peers are following in their parents' footsteps, some only now beginning to realize that there is a difference between a DB pension plan and a DC pension plan.

Most are hoping and praying the stock market will always go up and that mutual funds and a diversified portfolio will save them from the real world. I am afraid such simple unsophisticated investor strategies will not work for most people. A major stock market crash will wipe out most mutual funds even if they are well diversified. As we have seen, the stock market is not a place for people who seek security. The stock market is a place for those that seek freedom . . . and unfortunately, many people who seek security do not know the difference.

ERISA may have been signed into law with good intentions. The problem is the act and subsequent amendments to the act had flaws. But the flaws are nothing in comparison to the panic that will occur when the people who spent their lives seeking security find out the real-world stock market can take that security away. That is a flaw the law did not take into considera tion—the flaw that when people who have spent their lives seeking security suddenly find out their security is gone.

The point of this book is to give you some ideas on how to be prepared and do well, regardless if the real-world stock market goes up or the realworld market comes crashing down. The point is to be prepared for whatever happens in the real world of the stock market . . . the real world outside the sanctuaries of home, school, and business. Just as Noah built an ark in the desert, it may be time for you to begin building an ark in your mind while you have the time to build it.