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We are not a politics or general "corporate" news forum. Posts must be news items relevant to investors. If you do like it, there are some additional resources from RichDad.1. If you try and don’t like it, contact and let know us why. We highly recommend you try the game out and see for yourself. Your cash flow is $250 better so you should definitely go for it.
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But you increase your income by renting the house for $750 (net including new mortgage payment). Does it make sense to borrow money to buy this house?Īt 10% interest, you would add $500 of monthly expenses by taking this loan. You don’t have enough cash to pay for the down payment. After paying for your new mortgage your net take-home from renting it out is $750. On your next turn you draw a “big deal” opportunity card to purchase a $150,000 house for 10% down. You have built up some cash, $10,500, after several turns of play. Let’s say your profession is the doctor (see card above). The answer is, when their net cash flow is higher. The question is, if the goal is to have more passive income than expenses, why on earth would any player increase their expenses? The interest is an easy-to-calculate 10% and the amount must be borrowed in increments of $1,000. Players can borrow money in the game too. Third, she would lower her total expenses by this amount and increase her monthly CASH FLOW.Įxample 2 – Connecting Financial Statements by Taking Out a New Loan Second, she would zero out the monthly expense of $750 on her INCOME STATEMENT. So if the player who is the doctor built up enough cash, e.g., by selling stocks or a property, and could pay $100,000 Student Loan liability, what would happen? First, she would zero out the liability on her BALANCE SHEET. Example 1 – Connecting Financial Statements by Paying Down Debt That doesn’t do justice to the other types of learnings that happen during play. Eventually, their passive income increases beyond their expenses and voila! they’re out of rat race.
#PLAY CASHFLOW 202 UPDATE#
As they make deals, they update their personal financial statements. Investments are the way players progress. Lesson 3 – Connecting the Dots Through Play If you don’t have cash in the bank to pay your mortgage at the end of the month, you’re in trouble. The personal finance version of this is simpler than running a company but the principles are the same. While their first month looks like a success with $500k in net income, they are actually cash flow negative! They owe their supplier payment before they are going to receive money to pay it. Unfortunately, Kool Kids customers also take 30 days to pay. It takes just one month to sell all of their inventory for $1,000,000! Seems like it’s time to celebrate … $1,000,000 in revenue - $500,000 cost of goods sold = $500,000 in net income.
#PLAY CASHFLOW 202 HOW TO#
team are social media ninjas and they know how to market. Their supplier sends them an invoice and gives them 30 days to pay it. They get a great deal to buy $500,000 worth of cool products. live with their parents so they have $0 overhead to run their business. Let’s use payment terms as an example of why this is important: Kook Kids Co. Everyone continues playing until they win. Players win when they have enough cash to buy their dream when they land on it. Players use an extra die so they literally move faster but it’s the amount of money in each transaction which is really different. The Fast Track is the outside track on the board. Once a player has greater PASSIVE INCOME than monthly expenses, he/she is officially out of the Rat Race and moves to Phase II, the Fast Track. Players can also bargain and trade with one another. Players have to assess them individually and make a decision. Instead they have to decide on small deals which will incrementally increase their monthly income until they can go for the big ones. Initially, no one has enough resources to purchase big deals. Players transcribe this information to a personal tracking sheet.Īs players take turns going around the Rat Race, they land on opportunity spaces, “small deals” and ” big deals”. This determines their monthly income and expenses. Each player chooses a profession such as lawyer, teacher, business manager, truck driver, etc. Each player selects a dream by placing their colored cheese piece on one of the options around the board, e.g., see the 7 wonders of the world, open a research center for cancer and aids, run for mayor, etc. The overall goal is to achieve your dream.