
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
- Checking – Charles Schwab Investor Checking
- 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%
- Ramit really regrets including bank interest rates 10+ years ago in the original book (back then, many banks were paying 5% interest)
- 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
- Checking – Charles Schwab Investor Checking
- 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
- So invest/save whatever you can NOW – the earlier you start the better (due to compound interest)
- 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)
- Have a discussion with your partner about their expectations for the ring (most people never do this)
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”
- So go all out, spend money in this area BUT save HARD elsewhere
- 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