I Will Teach You To Be Rich

I WILL TEACH YOU TO BE RICH: NO GUILT. NO EXCUSES. NO BS. JUST A 6-WEEK PROGRAM THAT WORKS

Author: Ramit Sethi

My Rating: 9/10

Length: 352 Pages

Buy on Amazon

Description

Buy as many lattes as you want. Choose the right accounts and investments so your money grows for you—automatically. Best of all, spend guilt-free on the things you love.

Personal finance expert Ramit Sethi has been called a “wealth wizard” by Forbes and the “new guru on the block” by Fortune. Now he’s updated and expanded his modern money classic for a new age, delivering a simple, powerful, no-BS 6-week program that just works.

I Will Teach You to Be Rich will show you:
• How to crush your debt and student loans faster than you thought possible
• How to set up no-fee, high-interest bank accounts that won’t gouge you for every penny
• How Ramit automates his finances so his money goes exactly where he wants it to—and how you can do it too
• How to talk your way out of late fees (with word-for-word scripts)
• How to save hundreds or even thousands per month (and still buy what you love)
• A set-it-and-forget-it investment strategy that’s dead simple and beats financial advisors at their own game
• How to handle buying a car or a house, paying for a wedding, having kids, and other big expenses—stress free
• The exact words to use to negotiate a big raise at work

The Book In 3 Sentences

1. Spend On What You Love, Cut Back on What You Don’t. If you love something, spend money (or time) on it. Conversely, if it’s not important to you, you shouldn’t spend any money (or time) on it.

2. Focus on Getting Things 85% Right. You don’t need to get things perfect in finance. Get it 85% there and then move on.

3. Behavior Trumps Information. Knowing the perfect right answer is less important than taking action. That’s why the book focuses on small, sometimes innocuous behaviors, to slowly move you towards your goal (e.g. open an investment account, but don’t put any money in it.) Or better yet, automating your finances and removing the need to make a decision at all.

My Thoughts & Who Should Read It?

Ramit’s structure, sense of humor, and easy to follow/understand content really kickstarted my personal finance game.

A good primer on being smart with your finances. If you want to read only 1 book on personal finance and want an easier entry point to being smarter with your savings and investing - then read this.

Filled with actionable advice, and literaly word-by-word scripts on what to say when you call your credit card companies, Ramit does an incredible job guiding the reader with strategies to achieve financial literacy in as easy as 6 steps.

How The Book Changed Me

This is the first book I read on personal finance and it really opened my mind. Most of my understanding of finance came from random blogs or thought leaders online, small talk with my friends and family, or YouTube. I never really sat down and read a good book on the topic.

At the end of every chapter, Ramit assigns some “homework” to execute that step on his 6-step program. And I actually followed through, I did everything he said to. From opening a high-interest online savings account (I went with Ally) and a Roth IRA (I choose Vanguard), to calling my credit card companies and negotiating a higher credit line with lower APR.

Also, I always thought investing was for people who have ‘enough money (whatever that means) but it was something I’ll get to later in life. But Ramit shows the power of compounding interest how the best thing you can do to become rich is to start early, even if that means putting just $100 away every month. Below is a screenshot from his book to further explain:

Furthermore, the idea of automated finance blew my mind. Basically setting up a personal financial infrastructure that did everything on autopilot, so you can set it and forget it. Even if you get stranded on an island (as Ramit jokes about), my bills will be paid on time, some money will be sent to my savings account, automatically be investing in my 401K and Roth IRA, and I will be given per month my ‘guilt-free spending money in my checking account. This was a game-changer for me.

My Top 3 Quotes

1. “People love to argue minor points, partially because they feel it absolves them from actually having to do anything. When it comes to weight loss, 99.99 percent of us need to know only two things: Eat less and exercise more. Only elite athletes need to do more. But instead of accepting these simple truths and acting on them, we discuss trans fats, diet pills, and Atkins versus South Beach. When it comes to personal finance, we: (i) don’t track spending; (ii) spend more than we realize – or admit; (iii) debate minutiae about interest rates and hot stocks; (iv) listen to friends, our parents, and TV talking heads instead of reading a few good personal-finance books.”― Ramit Sethi
   
   

2. “Frugality isn’t about cutting your spending on everything. Frugality is about choosing the things you love enough to spend extravagantly on – and then cutting costs mercilessly on the things you don’t love. The mind-set of frugal people is key to being rich.” ― Ramit Sethi

3. “You don’t have to be rich to be a philanthropist, just as you don’t have to be rich to invest.” ― Ramit Sethi

Best Big Ideas

THE SIX WEEK PLAN TO BECOME RICH

Ramit breaks down your plan to become rich into six steps that can be followed over the course of six weeks. I’ll dive into each of those steps below. The steps are:

1. OPTIMIZE YOUR CREDIT CARDS

• Pay off your credit card automatically

• Get all fees waived

• Negotiate a lower APR

• Keep your cards for a long time and keep them active

• Get more credit (if you have no debt)

• Use your rewards

To improve your credit utilization rate, you have two choices: Stop carrying so much debt on your credit cards (even if you pay it off each month) or increase your total available credit.

Pick up the phone and disputing a charge: Mobilize your credit card’s army for you

2. OPEN HIGH-INTEREST, LOW-MAINTENANCE BANK ACCOUNTS

• Avoid brick n’ mortars banks.

• Ramit recommends Charles Schwab and Capital One as banks to consider and Bank of America and Wells Fargo as banks to avoid.

Banks will also try to trick you by demanding “minimums,” which refer to minimum amounts you must have in your account to avoid fees or to get “free” services like bill pay. These are B.S. Imagine if a bank required you to keep $1,000 sitting in its low-interest account. You could be earning twenty times that much by investing it.

3. OPEN INVESTING ACCOUNTS

• Open a 401K account and investment (Roth IRA) accounts.

• The single most important thing you can do to be rich is to start early. And there is nothing earlier than - today.

• Money exists for a reason—to let you do what you want to do. Yes, it’s true, every dollar you spend now would be worth more later. But living only for tomorrow is no way to live. Consider one investment that most people overlook: yourself.

4. START YOUR CONSCIOUS SPENDING PLAN

• Don’t create a budget

• Be frugal, don’t be cheap. Frugality, quite simply, is about choosing the things you love enough to spend extravagantly on— and then cutting costs mercilessly on the things you don’t love.”

• Use a tracking tool to see where your money is going, e.g. Mint

Think about your goals. Ask yourself if you’d rather spend $10 on lunch or save $10 toward a house or a car. If you would rather spend the money on lunch, by all means, enjoy lunch! You save money so that you can spend it later on the things that make you happy.

A Conscious Spending Plan involves four major buckets where your money will go:

• Fixed costs (50-60% of take-home pay)

• Investments (10%)

• Savings goals (5-10%)

• Guilt-free spending money (20-35%)

5. AUTOMATE EVERYTHING

If you’re paid on the 1st of the month, Ramit suggests switching all your bills to arrive on or around that time, too.

5th of the month: Automatic transfer to your savings account. Log in to your savings account and set up an automatic transfer from your checking account to your savings account on the 5th of every month.

5th of the month: Automatic transfer to your Roth IRA.

7th of the month: Auto-pay for any monthly bills you have. Log in to any regular payments you have, like cable, utilities, car payments, or student loans, and set up automatic payments to occur on the 7th of each month.

7th of the month: Automatic transfer to pay off your credit card. Log in to your credit card account and instruct it to draw money from your checking account and pay the credit card bill on the 7th of every month—in full.

6. START INVESTING

• Use Index funds, not individual stocks

• Ramit advises against advisors - no one can accurately predict the stock market.

These are the five systematic steps you should take to invest:

Rung 1: If your employer offers a 401(k) match, invest to take full advantage of it and contribute just enough to get 100 percent of the match. A “401(k) match” means that for every dollar you contribute to your 401(k), your company will “match” your contribution up to a certain amount. This is free money and there is, quite simply, no better deal.

Rung 2: Pay off your credit card and any other debt. The average credit card APR is 14 percent and many APRs are higher. Whatever your card company charges, paying off your debt will give you a significant instant return.

Rung 3: Open up a Roth IRA and contribute as much money as possible to it. 

Rung 4: If you have money left over, go back to your 401(k) and contribute as much as possible to it (this time above and beyond your employer match).

Rung 5: If you still have money left to invest, open a regular non-retirement account and put as much as possible there. e. Also, pay extra on any mortgage debt you have, and consider