Rich Dad Poor Dad was one of the first money books I ever read. Like millions of others, I took away the famous lesson of the four quadrants: Employee, Self-employed, Business owner, Investor. Escape the left side. Get yourself to the right side.
So I did exactly what the book said. I moved myself into the B quadrant and bought a business.
Long story short 1, that move left me over $200k in debt.
Kyosaki’s quadrants in 30 seconds
If you haven't read it: Kiyosaki divides how people earn into four boxes.
His advice: move yourself from the left side to the right side. Quit the paycheck, own systems.
The diagnosis is inspiring, but after my failure, it left me wondering.
What if I move my dollars, not myself.
When I jumped quadrants personally, I traded my most predictable income stream for risk, right at the moment I started learning. My end result: a tuition of $200k+.
As I rebuilt my finances, I changed it. Don't sort myself into quadrants. Sort dollars.
A dollar sitting in your savings account is an E-quadrant dollar. It works once and then it sits there, losing 3-4% a year to inflation.
A dollar spent is an S-quadrant dollar at best. It bought you something and its career is over.
A dollar in an amortized investment paying monthly? That's a B/I-quadrant dollar. It owns a piece of a system. It sends cashflow home every month. And when it comes back, redeploy it and it hires more dollars.
You don't need to change quadrants. Your money does.
Stay the employee. At least initially.
Two months ago I wrote that the paycheck is the risky asset (https://amplifica-wealth.beehiiv.com/p/when-the-paycheck-is-the-risky-asset). It fails all three of my rules. It's predictable only until the layoff email, you don't own it, and decisions about it happen without you in the room.
That's still true. But the answer isn't to quit it (yet). The answer is to stop letting it be the only worker in the house.
The paycheck is the best funding engine most people will ever have: predictable enough to borrow against, regular enough to feed a system on a schedule. Every month, it recruits new dollars. Your only job is to make sure those dollars get hired into the right quadrant instead of retiring into a savings account.
That's exactly what my system does. The $113k I put in over three years didn't just pay off $94k of debt. It hired $181k worth of B/I-quadrant dollars that now pay me on a schedule I can predict.
Kiyosaki was right that the right side of the quadrant is where wealth lives. He just pointed the advice at the wrong subject.
The picture will evolve over time, but don’t rush the move. Allocate your dollars accordingly first.
Quick audit you can do tonight: look at your last paycheck and ask, dollar by dollar, "which quadrant did this one end up in?" If the answer is mostly E, you don't have a saving problem. You have an unemployment problem for your dollars.
Engineer your future. Amplify your wealth. Live your way.
— Miguel
Thought of the week
The advice "quit your job and bet on yourself" is usually given by people who already won the bet. Nobody tours the podcast circuit to say "I quit my job and it quietly didn't work out."
Survivorship bias wears a lot of costumes. "Bet on yourself" might be its favorite one.
This week, I’m doing precisely that. Sharing with my friends, family and complete strangers that I bet on myself and lost.
For now.
Miguel’s moves this week
Lines of Credit — down to below $5k.
Portfolio — no moves. Reviewing high income ETFs as a 3rd option for my cashflow. Will report back!
Strategy check — more bullish than ever. August will payoff a few more outstanding debts, clearing even more cashflow for the next cycle. After that, I have to seriously consider paying off my car loan and funneling the interest to myself.
In all honesty, we’ve had few referrals for the newsletter. How can I make this more valuable to you?
Disclaimer: All material is provided for educational purposes only and does not guarantee any financial results. This is not financial, legal, or tax advice. I am not a financial professional. Results vary and are dependent on individual effort, timing and circumstances. There is no solicitation to invest.
1 In 2023, I bought a business. A hard-fought success turned into a drawn out journey where I learned some hard lessons. More coming soon: miguelgraf.com