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

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