Ramit Sethi: I Will Teach You to Be Rich – The Jordan Harbinger Show

Check out the Jordan Harbinger Episode Page & Show Notes

Key Takeaways

  • The Best Bank Accounts
  • Spend extravagantly on the things you love and cut costs mercilessly on the things you don’t
  • Plan for the predictable – start saving NOW for your wedding, having children, etc.
  • Renting an apartment is NOT throwing money away 
    • Run the numbers before you buy a house
  • If you get the big wins right, everything else becomes that much easier – like:
    • Getting a good job
    • Negotiating a high salary
    • Automating your investments
    • Having good relationships
  • Invest/save whatever you can NOW – the earlier you start the better
  • If you’re even thinking about buying a book, buy it
    • Even if you get one good idea from it – it’s worth it

Intro

The Newly Updated – I Will Teach You to Be Rich

  • What’s new?
    • Ramit really regrets including bank interest rates 10+ years ago in the original book (back then, many banks were paying 5% interest)
      • Now they’re <1%
  • One key point in the book – there are many similarities between finances and fitness/diet
    • The commonality – If you keep track of both, you’re much more likely to succeed
    • What gets measured gets managed
  • “It’s actually a psychology book described as a money book”
  • “One of the reasons I wrote this was because I was sick of ordinary people getting mistreated by financial companies”
    • SO MANY people are getting screwed by fees they’re not even aware of
    • In these Podcast Notes, Ramit mentioned:
      • If you’re paying 1% in fees, this can reduce your investment returns by over 25%
      • If you’re paying 2% in fees, this can reduce your investment returns by over 63%

The Best and Worst Bank Accounts

  • Best
    • Checking – Charles Schwab Investor Checking
      • One of the benefits – You never have to pay an ATM fee (no matter which ATM you use)
    • Savings – Capital One 360 (mainly due to the higher interest rate)
    • Investment – Vanguard 
      • This is where Ramit puts the majority of his money (either in investment accounts or a Roth IRA) – they have the lowest fees and tend to be the most trusted
  • Worst
    • Wells Fargo and Bank of America
    • “Those two banks probably represent 85-90% of the problem emails I get from people. They do the most unethical stuff.”

Automatic Transfers and Savings

  • Ramit covers this in Chapter 5 of his book
  • “I spend less than 1 hour a month on my money and that’s something achievable for anyone”
  • How?
    • Ramit set up a bunch of automatic transfers which send money from his paycheck directly to his checking/savings accounts, investment accounts, retirement accounts, and a guilt-free spending sub-account

Buying a House vs. Renting

  • So many people say:
    • “It’s the best investment”
    • “Do it for the tax advantage”
    • “You’re just throwing money away on rent otherwise”
  • “These are arguments which sound very intelligent but you’ll realize that if you just peel one layer off, they don’t mean what you think they mean”
  • Ramit rents a place in Manhattan by choice
    • He REALLY urges people to run the numbers

Get the Big Wins Right

  • If you do, your life becomes that much easier. What are some of them?
    • Getting a good job
    • Negotiating a high salary
    • Automating your investments
    • Having good relationships
  • Instead, society likes to get all riled up about the little things (like whether or not we should buy lattes)

EVERYONE Can Live a Rich Life

  • Jordan’s idea of a rich life:
    • Having a job which allows him to be extremely flexible in regards to travel & working whenever he wants
  • Ramit’s idea of a rich life:
    • He LOVES convenience (like having a personal trainer and chef) and travel
    • Being able to order whatever he wants at a restaurant
    • Being able to take a taxi or Uber instead of riding the subway

START NOW

  • “The way you get rich is by starting small. You don’t wait to be rich and then start.”
    • So invest/save whatever you can NOW – the earlier you start the better (due to compound interest)
      • But IT’S NEVER TOO LATE
  • In general (as a rule of thumb) – aim to invest/save 20-30% of your income

Engagement Rings

  • Ramit wrote an excellent article on how to choose an engagement ring – some key points:
    • Have a discussion with your partner about their expectations for the ring (most people never do this)
      • “Somehow guys grow up with his idea that everything about an engagement should be a surprise, and this BLEW my mind”
    • Realize that rings have a resale value of like 10%
    • Start saving for an engagement ring as soon as you can (Ramit started before he even met his wife)

The Money Dial

  • Everyone has an area where they LOVE to spend money
    • So go all out, spend money in this area BUT save HARD elsewhere
      • “Spend extravagantly on the things you love, but cut back mercilessly on the things you don’t”
  • Ramit’s money dial – convenience
  • Jordan’s – audio equipment for the podcast
  • Other common money dials – fitness classes, organic food, dinner parties

A Great point

  • Be able and willing to change your mind quickly when you come across new evidence
    • Many people hold onto their opinions far too long due to ego

Money & Relationships

  • Ramit covers this more in Chapter 9 of his book
  • Money arguments tend to get in the way of so many relationships
  • Before getting married, Ramit and his wife sat down to discuss the following:
    • How many kids they wanted to have
    • Where they hoped to live
    • Whether or not they should sign a prenup (which they did)
      • This is actually a pretty complex process – both sides need lawyers
  • Now – every month, Ramit and his wife have a finance meeting to go over their individual and joint spending
    • “Talking about money and making it regular has been transformative for us”

Random

  • Ramit has a great rule – if he’s even thinking about buying a book, he does
    • Even if you get one good idea out of it – it’s worth it

These notes were edited by RoRoPa Editing Services

Bookmark

FREE! THE TOP 10 PODCASTS OF 2018, AND WHAT WE LEARNED

You'll also get our weekly newsletter with the takeaways from our curated list of top podcasts. Unsubscribe anytime.