13
Aug
I Will Teach You to Be Rich by Ramit Sethi – Book Summary
20
Jul
About This Book
Do you want to learn how to be rich and manage your money well? Do you want to pay off your debt, save and invest wisely, and spend on the things you love? Then read I Will Teach You to Be Rich by Ramit Sethi. It’s a book that teaches you a simple and powerful 6-week program that works. Ramit Sethi is a personal finance expert who will show you how to automate your finances, negotiate a big raise, and much more.
Table of Contents
I Will Teach You to Be Rich
No Guilt. No Excuses. Just a 6-Week Program That Works
Author : Ramit Sethi
Publisher : Workman Publishing Company; Revised edition (May 14, 2019)
Language : English
Hardcover : 352 pages
3 Sentenses
5 Quotes
Who Is It For
Actionable Takeaways
💸 Create a Consious Spending Plan
- Get more prescriptive about your spending using You Need a Budget (youneedabudget.com)
- Categorize your spending into four buckets
- Fixed costs (50%–60% of your take-home pay): rent/mortgage, medical insurance, debt
- Long-term investments (10%): 401(k), Roth IRA, etc.
- Savings goals (5%–10%): vacation, wedding, a down payment on a house
- Guilt-free spending money (20%–35%): restaurants, bars, taxis, movies
- Optimize your spending
- Spend on what you love and value, cut costs on things you don't
- Reduce big expenses you cringe at
- Cancel the discretionary subscriptions, such as gym, music, Netflix, and begin buying these things à la carte
- Use the envelope system; when the envelopes are empty, that’s it for the month
- Make more money
- Negotiate a raise
- Get a higher-paying job
- Do freelance work
- Set realistic goals and maintain your plan one hour per week
💳 Optimize Your Credit Cards
- Check your credit score and credit report
- Be familiar with your credit
- Get your report and official score at myfico.com for a small fee
- Obtain your free credit report from annualcreditreport.com
- Choose your own credit cards
- Pick two or three great cards; don’t go card crazy
- Get cash back or travel rewards for your spending
- Don’t sign up for retail store credit cards
- Handle your credit cards effectively
- Set up automatic payments
- Pay off your bills in full every month
- Try to get fees waived, if not, switch to a no-fee card
- Negotiate a lower annual percentage rate (APR)
- Increase your total available credit, if you’re debt-free
- Get the most out of your cards, such as consumer protection and automatic warranty doubling
- Don’t play the zero percent transfer game; it's a waste of time
- Get rid of debt
- Figure out how much you owe
- Negotiate down the APR or restructure your payments
- Set up automatic payment for the largest amount you can afford
- Reduce spending and prioritize debt
- Get out of debt as quickly as possible
🏦 Optimize Your Bank Accounts
- Avoid Bank of America and Wells Fargo
- Open a no-fee, no-minimum checking account
- Avoid setup fees, monthly fees, overdraft fees, and minimums
- Bank to consider: Schwab Bank Investor Checking with Schwab One Brokerage Account (schwab.com/banking)
- Open a high-interest savings account
- Banks to consider:
- Capital One 360 Savings (capitalone.com/bank)
- Ally Online Savings Account (ally.com/bank)
- Marcus by Goldman Sachs (marcus.com)
- American Express Personal Savings (americanexpress.com/personalsavings/home)
- Banks to consider:
- Set up automatic transfers
- Paycheck funds 401(k) and checking account (direct deposit)
- Checking account funds
- Roth IRA
- Savings account (subdivided into saving goals)
- Credit card
- Fixed costs that don't allow credit card payment (like rent)
- Occasional-spending cash
- Credit card funds fixed costs and guilt-free spending
📈 Optimize Your Investments
- Open your 401(k)
- If your employer offers a match, contribute enough to get the full match
- If not, leave your 401(k) account open but contribute nothing
- Open a Roth IRA
- Recommended discount brokerages
- Vanguard (vanguard.com)
- Schwab (schwab.com)
- Fidelity (fidelity.com)
- Choose a Target Date Fund or index funds (see below)
- Set up automatic payments and contribute as much as possible
- Recommended discount brokerages
- Find out if you’re eligible for an Health Savings Account (HSA), and if you are, open your account
- Own only one Target Date Fund to simplify investment, OR
- Pick individual index funds
- Research at the most popular companies: Vanguard, Schwab, T. Rowe Price and Fidelity
- Look for the low expense ratios, around 0.2%
- Look at how well the fund has returned over the last ten or fifteen years
- Make asset allocation using David Swensen's model
- 30% Domestic equities
- 15% Developed-world international equities
- 5% Emerging-market equities
- 20% Real estate investment trusts (REITs)
- 15% Government bonds
- 15% Treasury inflation-protected securities (TIPS)
- Buy three to seven funds
- Rebalance your investments to maintain your target asset allocation every twelve to eighteen months
- Think twice before selling: If you pick a target date fund or build a portfolio of index funds instead, you rarely have to think about selling
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