May 16, 2019

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
  • 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
• 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

• Ramit Sethi (T:@ramit IG: @ramit)  is the author of I Will Teach You to Be Rich (he recently updated it with 80 new pages)
  • His book is one EVERYONE should read
  • Check out his website
• For more Ramit, check out these Podcast Notes:
  • Ramit Sethi on Living a RICH Life – What Got You There with Sean DeLaney
  • How to Create a Rich Life with Ramit Sethi – The School of Greatness

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

Jordan Harbinger Show : business, finance, investing, money, personal finance
Notes By MMiller