Rich Dad's CASHFLOW Quadrant is a book about how people generate their income, or more importantly, from where they generate that income. Robert Kiyosaki tells us that his Rich Dad described it as one of four quadrants.

These are the four quadrants:

1. Employee
2. Self-Employed
3. Business
4. Investments

Most people generate their income working as employees. These people tend to value job security more than anything else. Many people believe that it is difficult to get rich working out of this quadrant because employees cannot take advantage of the tax benefits that the self-employed and business owners can.

For example, let's say that I am self-employed and you are an employee. We both want to buy a new computer that costs $2000. How much money do we have to earn?

I need to earn $2000 because I am self-employed and the computer is a business expense. I can pay for it with pretax income. You, the employee, have to earn about $3400 because you will be taxed first and only then can you pay for the computer with the money you have left over.

When I started working on a contract basis, the first thing I did was form a legal corporation. When I work, my clients pay my corporation. Although I do have my own corporation, I never really felt like I owned a business. In Rich Dad's CASHFLOW Quadrant, I found out why.

The litmus test for determining if you own a business goes something like this. If you could leave your business for a year and then come back, would the business still be running and be in just as good of shape as when you left it? If yes, you own a business. If not, you are self-employed.

My corporation depends on me for its income. I do not own a business. I am self-employed. In a true business, the owners of the business set up a business system that can run without them.

In the Investment quadrant, you try to generate your income by investing. This is the quadrant that intrigued me the most. Why? When you generate your income from investing, you are not dependent on a paycheck to pay your bills. Isn't that what we are trying to do when we decide we want to get rich?

I had learned a lot about investing from my father, in particular, investing in the stock market. In Rich Dad's CASHFLOW Quadrant, Robert Kiyosaki goes on to explain the seven different levels of investors. They are:

Level 0: Those with nothing to invest; Level 1: Borrowers; Level 2: Savers; Level 3: "Smart" Investors; Level 4: Long-Term Investors; Level 5: Sophisticated Investors; Level 6: Capitalists. I won't go into an explanation of each level but I highly recommend you pick up a copy of this book and read about the seven levels.

At this point, I was able to identify myself as a Long-Term investor. Most of my money was being invested in Mutual Funds targeting long term growth. I also had my retirement accounts invested in Mutual Funds. I was actively involved in my investing and eager to gain as much knowledge as I could.

But one thing was becoming crystal clear. All of that long term investing I was doing was keeping me dependent on a paycheck to pay my bills. My goal was to become paycheck independent and my investing style was not getting me there.

One of the best things I got out of this book was a realization of where I currently was and where I wanted to be in the future. I was generating my income from being self-employed. I wanted to generate my income from investing. Much like planning a trip, once you know your starting point and your destination, you can put together a plan for getting you there. Obviously, the only thing missing was a plan.

When I finished reading Rich Dad's CASHFLOW Quadrant, I had not yet created the principles that form Paycheck Independence Day. So, like most people, I still thought it was important to figure out what to invest in.

At this time, I ran across the fourth book that changed my life, Yes, You Can Be a Successful Income Investor!. Now, I will tell you what I learned from that book.